OH&S DRAFT
9/14/97
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
a National Banking Association
THE CHASE MANHATTAN BANK,
a New York Banking Corporation,
as Sellers,
THE CIT GROUP/SALES FINANCING, INC.,
a Delaware Corporation
as Servicer,
and
CHASE MANHATTAN RV OWNER TRUST 1997-A,
as Issuer
===============================
SALE AND SERVICING AGREEMENT
Dated as of September 1, 1997
===============================
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.............................................. 1
SECTION 1.1. Definitions................................................................. 1
SECTION 1.2. Usage of Terms.............................................................. 30
SECTION 1.3. Methods of Allocating Payments on
Receivables; Allocations............................................... 30
ARTICLE II
CONVEYANCE OF RECEIVABLES....................................... 31
SECTION 2.1. Conveyance of Receivables................................................... 31
SECTION 2.2. Closing..................................................................... 32
ARTICLE III
THE RECEIVABLES............................................... 32
SECTION 3.1. Representations and Warranties of the
Sellers; Conditions Relating to the
Receivables............................................................ 32
SECTION 3.2. Repurchase Upon Breach or Failure of a
Condition.............................................................. 36
SECTION 3.3. Custody of Receivable Files................................................. 37
SECTION 3.4. Duties of Servicer as Custodian............................................. 37
SECTION 3.5. Instructions; Authority to Act.............................................. 39
SECTION 3.6. Effective Period and Termination............................................ 39
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES.............................. 40
SECTION 4.1. Duties of Servicer.......................................................... 40
SECTION 4.2. Collection of Receivable Payments........................................... 42
SECTION 4.3. Realization Upon Receivables................................................ 43
SECTION 4.4. Maintenance of Security Interests in
Financed Vehicles. ................................................... 44
SECTION 4.5. Covenants of Servicer....................................................... 45
SECTION 4.6. Purchase of Receivables Upon Breach......................................... 46
SECTION 4.7. Servicing Fee............................................................... 46
SECTION 4.8. Monthly Report.............................................................. 47
SECTION 4.9. Annual Statement as to Compliance........................................... 47
SECTION 4.10. Annual Report of Accountants................................................ 48
SECTION 4.11. Access by Holders to Certain
Documentation and Information Regarding
Receivables............................................................ 48
SECTION 4.12. Reports to Holders and the Rating
Agencies............................................................... 48
i
SECTION 4.13. Reports to the Securities and Exchange
Commission............................................................. 49
SECTION 4.14. Maintenance of Fidelity Bond................................................ 49
SECTION 4.15. Satisfaction of Receivable.................................................. 49
ARTICLE V
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO NOTEHOLDERS AND THE CERTIFICATEHOLDERS........................ 50
SECTION 5.1. Establishment of Accounts................................................... 50
Section 5.2. Collections; Applications................................................... 51
SECTION 5.3. Monthly Advances............................................................ 53
SECTION 5.4. Additional Deposits......................................................... 54
SECTION 5.5. Distributions............................................................... 54
SECTION 5.6. Reserve Account............................................................. 56
SECTION 5.7. Net Deposits................................................................ 58
SECTION 5.8. Statements to Certificateholders and
Noteholders............................................................ 58
ARTICLE VI
THE SELLERS.............................................. 60
SECTION 6.1. Representations of Sellers.................................................. 60
SECTION 6.2. Liability of Sellers; Indemnities........................................... 61
SECTION 6.3. Merger or Consolidation of Sellers.......................................... 63
SECTION 6.4. Limitation on Liability of Sellers and
Others................................................................. 63
SECTION 6.5. Sellers May Own Notes and Certificates...................................... 63
ARTICLE VII
THE SERVICER; REPRESENTATIONS AND INDEMNITIES............................. 63
SECTION 7.1. Representations of the Servicer............................................. 63
SECTION 7.2. Liability of Servicer, Indemnities.......................................... 65
SECTION 7.3. Merger or Consolidation of Servicer......................................... 66
SECTION 7.4. Limitation on Liability of Servicer and
Others................................................................. 66
SECTION 7.5. Servicer Not To Resign...................................................... 67
SECTION 7.6. Assignment of Servicing..................................................... 67
SECTION 7.7. Insurance................................................................... 67
SECTION 7.8. Indemnity by Issuer......................................................... 67
SECTION 7.9. Servicer May Own Notes and Certificates..................................... 68
ARTICLE VIII
EVENTS OF SERVICING TERMINATION.................................... 68
SECTION 8.1. Events of Servicing Termination............................................. 68
SECTION 8.2. Appointment of Successor.................................................... 71
SECTION 8.3. Notification to Noteholders and
Certificateholders..................................................... 71
SECTION 8.4. Waiver of Past Defaults..................................................... 71
ii
ARTICLE IX
TERMINATION.............................................. 72
SECTION 9.1. Optional Purchase of All Receivables;
Trust Termination...................................................... 72
ARTICLE X
MISCELLANEOUS PROVISIONS........................................... 74
SECTION 10.1. Amendment................................................................... 74
SECTION 10.2. Protection of Title to Owner Trust
Estate................................................................. 75
SECTION 10.3. Governing Law............................................................... 77
SECTION 10.4. Notices..................................................................... 77
SECTION 10.5. Severability of Provisions.................................................. 78
SECTION 10.6. Assignment.................................................................. 78
SECTION 10.7. Certificates and Notes Nonassessable and
Fully Paid............................................................. 78
SECTION 10.8. Third-Party Beneficiaries................................................... 78
SECTION 10.9. Assignment to Indenture Trustee............................................. 79
SECTION 10.10. Limitation of Liability of Owner Trustee
and Indenture Trustee.................................................. 79
SECTION 10.11. Power-of-Attorney........................................................... 79
SCHEDULES
Schedule A-1 - List of Chase Receivables
Schedule A-2 - List of Chase USA Receivables
Schedule B - Location of Receivable Files
Schedule C - Allocation of Notes and Certificates
Schedule D - Allocation of Fees and Expenses to
Servicer
EXHIBITS
Exhibit A - Form of Servicer's Certificate
Exhibit B - Form of Monthly Report
Exhibit C - Form of Statement to Certificateholders
and Noteholders
Exhibit D - Form of Amended and Restated Servicing
Agreement
iii
Sale and Servicing Agreement, dated as of September 1, 1997
(as amended, supplemented or otherwise modified and in effect from time to time,
this "Agreement") among CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, a
national banking association ("Chase USA") and THE CHASE MANHATTAN BANK, a New
York banking corporation ("Chase," and collectively with Chase USA and their
respective successors hereunder, the "Sellers"), THE CIT GROUP/SALES FINANCING,
INC. ("CITSF"), as Servicer (together with any successor hereunder, the
"Servicer") and CHASE MANHATTAN RV OWNER TRUST 1997-A, as issuer (the "Issuer").
W I T N E S S E T H :
In consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Whenever used in this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Accrued Interest" on a Receivable, as of any date of
determination, means that amount of interest accrued on the Principal Balance at
the related Contract Rate but not paid by or on behalf of the Obligor.
"Accounts" means, collectively, the Collection Account,
the Reserve Account, the Paid-Ahead Account and the Note Distribution Account.
"Actual Principal Balance" means, as of the close of business
on the last day of a Collection Period, (a) with respect to a Precomputed
Receivable, the sum of (i) the Principal Balance thereof as of such day and (ii)
the portion of all Scheduled Payments on such Receivable due and unpaid prior to
such day allocable to principal using the actuarial method.
"Administration Agreements" mean collectively, the CITSF
Administration Agreement and the Chase Administration Agreement.
"Administrators" means each of the Chase Administrator
and the CITSF Administrator.
"Administrative Fees" means late payment fees, extension fees
and transfer of equity and assumption fees with respect to the Receivables.
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. A Person shall not be deemed to be an Affiliate of
any Person solely because such other Person has the contractual right or
obligation to manage such Person unless such other Person controls such Person
through equity ownership or otherwise.
"Aggregate Losses" has the meaning specified in the
Servicing Agreement.
"Aggregate Net Losses" means, for a Distribution Date, the
amount equal to (i) the aggregate Actual Principal Balance of all Receivables
that became Liquidated Receivables during the related Collection Period minus
(ii) the Net Liquidation Proceeds allocable to principal collected during such
Collection Period with respect to any Liquidated Receivables and minus (iii) any
recoveries collected during such Collection Period on Receivables deemed to be
Liquidated Receivables during prior Collection Periods.
"Agreement" means this Sale and Servicing Agreement, dated as
of September 1, 1997, among the Issuer, the Sellers and the Servicer, as the
same may be amended and supplemented from time to time.
"Amount Financed" in respect of a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and related costs.
"Andrews" shall mean Andrews Record Management, Inc.
"Applied Paid-Ahead Amount" means, with respect to any
Precomputed Receivable and any Collection Period for which the amount actually
paid is less than the Scheduled Payment due during such Collection Period, the
Deferred Paid-Ahead Amount with respect to such Precomputed Receivable to the
extent of such shortfall; provided that if such Precomputed Receivable becomes a
Liquidated Receivable during such Collection Period, the Applied Paid-Ahead
Amount with respect to such Collection Period shall equal such Receivable's then
outstanding Deferred Paid-Ahead Amount, if any.
"Authenticating Agent" has the meaning specified in Section
2.13 of the Indenture and shall initially be the corporate trust office of Chase
and its successors and assigns in such capacity.
"Authorized Officer" means any officer of the Owner Trustee,
Indenture Trustee or Servicer who is authorized to act on behalf of the Owner
Trustee, Indenture Trustee or Servicer, as applicable, and who is identified as
such on the list of
2
authorized officers delivered by each such party on the Closing Date.
"Available Amount" means, on any Distribution Date, an amount
equal to the excess of (A) the sum of (i) all amounts on deposit in the
Collection Account attributable to collections or deposits made in respect of
the Receivables in the related Collection Period (including Net Liquidation
Proceeds, any recoveries on Liquidated Receivables and any Applied Paid-Ahead
Amounts), (ii) the Repurchase Amounts for any Receivable repurchased by either
Seller or purchased by the Servicer and the Optional Purchase Amount, if
applicable, and (iii) any Monthly Advances made by the Servicer (with respect to
(ii) and (iii) above,to the extent such Repurchase Amounts, the Optional
Purchase Amount or Monthly Advances are paid on or before the Deposit Date
immediately preceding such Distribution Date), over (B) the sum of the following
amounts (to the extent that the Servicer has not already withheld such amounts
from Collections on the Receivables): (i) any amounts incorrectly deposited in
the Collection Account, (ii) Investment Earnings on the funds in the Collection
Account, (iii) payments on the Receivables not transferred to the Issuer
(including, without limitation, Excluded Administrative Fees, Excluded
Paid-Ahead Amounts and Excluded Forced-Placed Insurance Premiums) and (iv) any
other amounts, if any, permitted to be withdrawn from the Collection Account by
the Servicer (or to be retained by the Servicer from Collections on the
Receivables) pursuant to this Agreement.
"Available Reserve Account Amount" means, for each
Distribution Date, an amount equal to the lesser of (i) the amount on deposit in
the Reserve Account and (ii) the Specified Reserve Account Balance for such
Distribution Date.
"Average Annual Balance" means, for any calendar year or
partial calendar year, the quotient obtained by dividing (x) the Pool Balance as
of the end of each month of such calendar year or partial calendar year, as the
case may be, by (y) twelve (12) or the number of months constituting such
partial calendar year with respect to any partial calendar year.
"Average Delinquency Percentage" means for any Distribution
Date, the average of the Delinquency Percentages for such Distribution Date and
the preceding two (2) Distribution Dates.
"Average Net Loss Ratio" means for any Distribution Date, the
average of the Net Loss Ratios for such Distribution Date and the preceding two
(2) Distribution Dates.
"Basic Documents" means this Agreement, the Certificate of
Trust, the Indenture, the Depository Agreements, the Trust Agreement, the
Administration Agreements and other documents and certificates delivered in
connection therewith.
"Benefit Plan" has the meaning specified in Section
11.12 of the Trust Agreement.
3
"Book-Entry Certificates" means the Certificates, the
ownership and transfers of which shall be made through book entries by a
Clearing Agency or Foreign Clearing Agency as described in Section 3.10 of the
Trust Agreement.
"Book-Entry Notes" means the Notes, ownership and transfers of
which shall be made through book entries by a Clearing Agency or Foreign
Clearing Agency as described in Section 2.10 of the Indenture.
"Bulk Purchase Receivables" means those Receivables purchased
from an unaffiliated finance company pursuant to a bulk purchase and not
originated in accordance with Chase's, Chase USA's or any of their Affiliates'
or predecessors' underwriting criteria.
"Business Day" means a day, other than a Saturday or a Sunday,
on which the Indenture Trustee and banks located in New York, New York,
Wilmington, Delaware and Minneapolis, Minnesota are open for the purpose of
conducting a commercial banking business.
"Business Trust Statute" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as amended from time to time.
"Capital Accounts" has the meaning specified in
Section 5.7 of the Trust Agreement.
"Cedel" means Centrale de Livraison de Valeurs
Mobilieres, S.A.
"Certificate" means a certificate evidencing the beneficial
interest of a Certificateholder in the Owner Trust Estate, substantially in the
form of Exhibit A to the Trust Agreement.
"Certificate Balance" means an amount equal to $44,895,285.54
as of the Closing Date and, thereafter, shall be an amount equal to such initial
Certificate Balance, reduced by all amounts allocable to principal previously
distributed to Certificateholders. The Certificate Balance shall also be reduced
on any Distribution Date by the excess, if any, of (i) the sum of (A) the
Certificate Balance and (B) the outstanding principal amount of the Notes (in
each case after giving effect to amounts in respect of principal to be deposited
in the Certificate Distribution Account and the Note Distribution Account on
such Distribution Date), over (ii) the Pool Balance as of the close of business
on the last day of the preceding Collection Period. Thereafter, the Certificate
Balance shall be increased on any Distribution Date to the extent that any
portion of the Available Amount on such Distribution Date is available to pay
the existing Certificateholders' Principal Carryover Shortfall, but not by more
than the aggregate reductions in the Certificate Balance set forth in the
preceding sentence.
4
"Certificate Depository Agreement" means the agreement among
the Issuer, the Owner Trustee, Chase, as agent for The Depository Trust Company
and The Depository Trust Company, as the initial Clearing Agency, dated as of
the Closing Date, relating to the Certificates, as the same may be amended and
supplemented from time to time.
"Certificate Distribution Account" has the meaning
specified in Section 5.1 of the Trust Agreement.
"Certificate Final Scheduled Distribution Date" means the
August 2017 Distribution Date on which the outstanding principal amount, if any,
of the Certificates is payable.
"Certificate of Trust" means the Certificate of Trust in the
form of Exhibit B to the Trust Agreement filed for the Issuer pursuant to
Section 3810(a) of the Business Trust Statute.
"Certificate Owner" means, with respect to a Book-Entry
Certificate, the Person who is the owner of beneficial interests in such
Book-Entry Certificate, as reflected on the books of the Clearing Agency or
Foreign Clearing Agency or on the books of a direct or indirect Clearing Agency
Participant.
"Certificate Pool Factor" as of the close of business on a
Distribution Date means an eight-digit decimal figure equal to the remaining
Certificate Balance (after giving effect to distributions made on such date) as
of such Distribution Date divided by the initial Certificate Balance as of the
Closing Date. The Certificate Pool Factor will be 1.00000000 as of the Cutoff
Date; thereafter, the Certificate Pool Factor will decline to reflect reductions
in the Certificate Balance.
"Certificate Rate" means [___]% per annum.
"Certificate Register" and "Certificate Registrar" means the
register maintained and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.
"Certificateholder" means the Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purpose of giving any consent, request, waiver or demand pursuant to any of
the Basic Documents, the interest evidenced by any Certificate registered in the
name of either Seller, the Servicer or any Person controlling, controlled by, or
under common control with, either Seller or the Servicer shall not be taken into
account in determining whether the requisite percentage necessary to effect any
such consent, request or waiver shall have been obtained; provided, however,
that in determining whether the Owner Trustee shall be protected in relying upon
any such consent, request, waiver or demand, only Certificates that an
Authorized Officer of the Owner Trustee knows to be so owned shall be so
disregarded.
5
"Certificateholders' Distributable Amount" means for any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount.
"Certificateholders' Interest Carryover Shortfall" means, (a)
for the initial Distribution Date, zero, and (b) for any other Distribution
Date, the excess of the Certificateholders' Interest Distributable Amount for
the preceding Distribution Date, over the amount in respect of interest that was
actually deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus interest on such excess, to the extent permitted by law,
at the Certificate Rate from and including such preceding Distribution Date, to,
but excluding, the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, one month's interest (or, in the case of the
first Distribution Date, interest accrued from and including the Closing Date
to, but excluding, such Distribution Date) at the Certificate Rate on the
Certificate Balance on the immediately preceding Distribution Date, after giving
effect to all distributions of principal to the Certificateholders on or prior
to such Distribution Date (or, in the case of the first Distribution Date, the
Certificate Balance on the Closing Date). Interest shall be computed on the
basis of a 360-day year of twelve 30-day months for purposes of this definition.
"Certificateholders' Monthly Principal Distributable Amount"
means, for any Distribution Date prior to the Distribution Date on which the
Notes have been paid in full, zero; and for any Distribution Date commencing on
or after the Distribution Date on which the Notes have been paid in full, 100%
of the Principal Distribution Amount for such Distribution Date (less the
portion of the Principal Distribution Amount required on the first such
Distribution Date to pay the Notes in full).
"Certificateholders' Principal Carryover Shortfall" means for
any Distribution Date, the sum of (a) the excess of (i) the Certificateholders'
Principal Distributable Amount for the preceding Distribution Date, over (ii)
the amount in respect of principal that was actually deposited in the
Certificate Distribution Account on such Distribution Date and (b) without
duplication of clause (a), the unreimbursed portion of the amount by which the
Certificate Balance has been reduced pursuant to the second sentence of the
definition thereof.
6
"Certificateholders' Principal Distributable Amount" means,
for any Distribution Date, the sum of (i) the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and (ii) the
Certificateholders' Principal Carryover Shortfall for such Distribution Date;
provided that the Certificateholders' Principal Distributable Amount shall not
exceed the Certificate Balance. In addition, on the Certificate Final Scheduled
Distribution Date, the principal required to be distributed to
Certificateholders will include the lesser of (a) any payments of principal due
and remaining unpaid on each Receivable owned by the Issuer as of the last day
of the immediately preceding Collection Period and (b) the amount necessary
(after giving effect to the other amounts to be deposited in the Certificate
Distribution Account on such Distribution Date and allocable to principal) to
reduce the Certificate Balance to zero, in either case after giving effect to
any required distribution of the Noteholders' Principal Distributable Amount to
the Note Distribution Account.
"CFAC" means Chase Financial Acceptance Corporation, a
Delaware corporation, and any successor thereto.
"CFHI" means Chase Financial Holdings, Inc., a Delaware
corporation, and any successor thereto.
"CFMC" means Chase Financial Management Corporation, an Ohio
corporation, and any successor thereto.
"Chase" means The Chase Manhattan Bank, a New York banking
corporation, and any successor thereto.
"Chase Administration Agreement" means the Chase
Administration Agreement dated as of September 1, 1997, among the Issuer, Chase
and the Indenture Trustee, as the same may be amended and supplemented from time
to time.
"Chase Administrator" means The Chase Manhattan Bank,
as administrator under the Chase Administration Agreement, and its successors
and assigns.
"Chase Financial Receivables" means those Chase USA
Receivables owned by CFAC or CFHI before being sold to Chase USA pursuant to the
Purchase and Sale Agreement.
"Chase Receivable" means a Receivable transferred by Chase to
the Issuer pursuant to Section 2.1.
"Chase USA" means Chase Manhattan Bank USA, National
Association, a national banking association, or any successor thereto.
"Chase USA Receivable" means a Receivable transferred by Chase
USA to the Issuer pursuant to Section 2.1.
7
"CIT" means The CIT Group Holdings, Inc., a Delaware
corporation.
"CITSF" means The CIT Group/Sales Financing, Inc., a Delaware
corporation, and its successors in interest as permitted under the Basic
Documents.
"CITSF Administration Agreement" means the CITSF
Administration Agreement dated as of September 1, 1997, among the Issuer, CITSF
and the Indenture Trustee, as the same may be amended and supplemented from time
to time.
"CITSF Administrator" means CITSF, as administrator under the
CITSF Administration Agreement, and its successors and assigns.
"Class A-1 Interest Rate" means [___]% per annum.
"Class A-1 Notes" means $59,500,000.00 aggregate principal
amount of Class A-1 [___]% Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Class A-2 Interest Rate" means [___]% per annum.
"Class A-2 Notes" means $119,000,000.00 aggregate principal
amount of Class A-2 [___]% Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Class A-3 Interest Rate" means [___]% per annum.
"Class A-3 Notes" means $113,000,000.00 aggregate principal
amount of Class A-3 [___]% Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Class A-4 Interest Rate" means [___]% per annum.
"Class A-4 Notes" means $73,000,000.00 aggregate principal
amount of Class A-4 [___]% Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Class A-5 Interest Rate" means [___]% per annum.
"Class A-5 Notes" means $132,000,000.00 aggregate principal
amount of Class A-5 [___]% Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Class A-6 Interest Rate" means [___]% per annum.
"Class A-6 Notes" means $88,000,000.00 aggregate principal
amount of Class A-6 [___] Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Class A-7 Interest Rate" means [___]% per annum.
8
"Class A-7 Notes" means $57,000,000.00 aggregate principal
amount of Class A-7 [___]% Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Class A-8 Interest Rate" means [___]% per annum.
"Class A-8 Notes" means $85,000,000.00 aggregate principal
amount of Class A-8 [___]% Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Class A-9 Interest Rate" means [___]% per annum.
"Class A-9 Notes" means $61,000,000.00 aggregate principal
amount of Class A-9 [___]% Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Class A-10 Interest Rate" means [___]% per annum.
"Class A-10 Notes" means $65,000,000.00 aggregate principal
amount of Class A-10 [___]% Asset Backed Notes, substantially in the form of
Exhibit B to the Indenture.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
The initial Clearing Agency shall be The Depository Trust Company.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other person for whom from time to time a
Clearing Agency effects book-entry transfers of securities deposited with the
Clearing Agency (including a Foreign Clearing Agency).
"Closing Date" means September [ ], 1997.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Collection Account" has the meaning specified in
Section 5.1(a)(i).
"Collection Period" means each calendar month beginning with
September 1997 until Chase Manhattan RV Owner Trust 1997-A shall terminate
pursuant to Article IX of the Trust Agreement.
"Collections" means all collections in respect of
Receivables, including Net Liquidation Proceeds.
"Contract Rate" of a Receivable means the annual rate of
interest stated in such Receivable.
"Corporate Trust Office" shall mean the New York office of the
Indenture Trustee or the Wilmington, Delaware office of the Owner Trustee, as
applicable.
9
"Cutoff Date" means September 1, 1997.
"Cutoff Date Pool Balance" shall be $897,395,285.54.
"Dealer" means the dealer which sold a Financed Vehicle and
which originated or assisted in the origination of the Dealer Receivable
relating to such Financed Vehicle under a Dealer Agreement.
"Dealer Agreement" means any agreement and, if applicable,
assignment under which Dealer Receivables were originated by or through a Dealer
and sold to an Originating Entity.
"Dealer Receivable" means a Receivable (other than a Bulk
Purchase Receivable) originated with the involvement of a Dealer.
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Deferred Paid-Ahead Amount" means, with respect to any
Collection Period and any Precomputed Receivable, the amount, if any, held by
the Servicer pursuant to Section 5.2(b) or in the Paid-Ahead Account with
respect to such Receivable.
"Definitive Notes" means Notes issued in certificated, fully
registered form as provided in Section 2.12 of the Indenture.
"Definitive Certificates" means Certificates issued in
certificated, fully registered form as provided in Section 3.12 of the Trust
Agreement.
"Delaware Trustee" has the meaning specified in
Section 10.1 of the Trust Agreement.
"Delinquency Percentage" means, for any Distribution Date, the
sum of the outstanding Principal Balances of all Receivables which were
60 days or more delinquent (including Receivables, which are not Liquidated
Receivables, relating to Financed Vehicles that have been repossessed), as of
the close of business on the last day of the Collection Period immediately
preceding such Distribution Date, determined in accordance with the Servicer's
normal practices, such sum expressed as a percentage of the Pool Balance as of
the close of business on the last day of such Collection Period.
"Delivery" when used with respect to Reserve Account
Property means:
(a)(i) with respect to "certificated securities"
within the meaning of Section 8-102(1)(a) of the Relevant UCC not held
by the initial Clearing Agency or other "instruments" within the
meaning of Section 9-105(1)(i) of
10
the Relevant UCC, (A) physical delivery thereof to the Indenture
Trustee or its nominee or custodian endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or custodian or endorsed
in blank, or, (B) with respect to a certificated security, possession
thereof by a financial intermediary (as defined in Section 8-313(4) of
the Relevant UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated
securities as belonging to the Indenture Trustee or its nominee or
custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the
Indenture Trustee or its nominee or custodian, or (ii) with respect to
"certificated securities" within the meaning of Section 8-102(4)(a) of
the Relevant UCC held by the initial Clearing Agency or by a "custodian
bank" within the meaning of Section 8-102(4) of the Relevant UCC (a
"Custodian Bank") or a nominee of either subject to the control of the
initial Clearing Agency, the delivery thereof to the initial Clearing
Agency or a Custodian Bank or a nominee of either subject to the
control of the initial Clearing Agency and in bearer form or endorsed
in blank by an appropriate person or registered on the books of the
issuer thereof in the name of the initial Clearing Agency or its
Custodian Bank or a nominee of either and the identification by
book-entry or otherwise on the records of the financial intermediary,
the sending of a confirmation by the financial intermediary of the
purchase by the Indenture Trustee or its nominee or custodian of such
securities and the making by such financial intermediary of entries on
its books and records identifying such certificated securities as
belonging to the Indenture Trustee or its nominee or custodian (all of
the foregoing, "Physical Property"), and such additional or alternative
procedures as may hereafter become appropriate to effect the complete
transfer of ownership of any such Reserve Account Property to the
Indenture Trustee or its nominee or custodian, consistent with changes
in applicable law or regulations or the interpretation thereof;
(b) with respect to any United States Securities
Entitlement that are maintained in the form of entries on the records
of the Federal Reserve System pursuant to Federal book-entry
regulations, the following procedures: entries on the records of a
member bank of the Federal Reserve System identifying such Reserve
Account Property as belonging to a Federal Reserve "depositary"
pursuant to applicable Federal regulations and the sending by such
depositary of written confirmation of the purchase of such Reserve
Account Property to the Indenture Trustee or its nominee or custodian;
the making by such depositary of entries in its books and records
identifying such Reserve Account Property as belonging to, or otherwise
subject to a security interest in favor of, the Indenture Trustee or
its nominee or custodian; and such additional or alternative procedures
as may hereafter become appropriate to effect
11
transfer of ownership of any such Reserve Account Property to the
Indenture Trustee or its nominee or custodian consistent with changes
in applicable law or regulations or the interpretation thereof; and
(c) with respect to any item of Reserve Account
Property that is an uncertificated security under Article 8 (or VIII,
as applicable) of the Relevant UCC and that is not governed by clause
(b) above, registration on the books and records of the issuer thereof
in the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the
Indenture Trustee or its nominee or custodian of such uncertificated
security, the making by such financial intermediary of entries on its
books and records identifying such uncertificated certificates as
belonging to the Indenture Trustee or its nominee or custodian; and
such additional or alternative procedures as may hereafter become
appropriate to effect transfer of ownership of any such Reserve Account
Property to the Indenture Trustee or its nominee or custodian
consistent with changes in applicable law or regulations or the
interpretation thereof.
"Deposit Date" means the Business Day immediately preceding
each Distribution Date.
"Depositor" means each Seller in its capacity as Depositor
under the Trust Agreement.
"Depositor Allocation Percentage" means, for purposes of
allocating payments and distributions to the Sellers in accordance with the
Basic Documents, 12.83% with respect to Chase USA and 87.17% with respect to
Chase.
"Depository Agreements" mean, collectively, the Certificate
Depository Agreement and the Note Depository Agreement.
"Determination Date" means the third Business Day prior
to a Distribution Date.
"Distribution Date" means, in the case of the first Collection
Period, October 15, 1997, and in the case of every Collection Period thereafter,
the 15th day of the following month, or if the 15th day is not a Business Day,
the next following Business Day, commencing with the first Distribution Date.
"Duff & Phelps" means Duff & Phelps Credit Rating Company and
its successors and assigns.
"Eligible Deposit Account" means (a) a separately identifiable
deposit account established in the deposit taking department of a Qualified
Institution, which, except in the case of the Reserve Account, may be Chase so
long as Chase is a
12
Qualified Institution; or (b) a segregated identifiable trust account
established in the trust department of a Qualified Trust Institution, which
shall, except in the case of the Reserve Account, initially be Chase, and may be
maintained with Chase so long as Chase is a Qualified Trust Institution.
"Eligible Servicer" means CITSF, Chase, either Trustee or any
other Person qualified to act as Servicer of the Receivables under applicable
federal and state laws and regulations, which Person services not less than
$100,000,000 in outstanding principal amount of recreational vehicle or motor
vehicle installment sale contracts.
"ERISA" has the meaning specified in Section 11.12 of
the Trust Agreement.
"Euroclear Operator" means Morgan Guaranty Trust Company of
New York, Brussels, Belgium office, in its capacity as the operator of the
Euroclear system.
"Excluded Administrative Fees" means all Administrative Fees
incurred by the Obligors prior to August 18, 1997.
"Excluded Forced-Placed Insurance Premiums" means, with
respect to any Receivable, any forced-placed insurance premium not included in
such Receivable's Principal Balance as of the Cutoff Date.
"Excluded Precomputed Amounts" means, with respect to any
Precomputed Receivable, any Scheduled Payments due thereon prior to the Cutoff
Date.
"Executive Officer" means, with respect to any corporation or
bank, the Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, President, Executive Vice President, any Vice President, the Secretary
or the Treasurer of such corporation or bank, and with respect to any
partnership, any general partner thereof.
"Event of Default" means an event specified in Section 5.1 of
the Indenture.
"Event of Servicing Termination" means an event specified in
Section 8.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expenses" has the meaning specified in Section 8.2 of the
Trust Agreement.
"Farm Credit Entitlement" means a "Security Entitlement" as
defined in 12 C.F.R. Section 615.5450.
13
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLBank Entitlement" means a "Security Entitlement" as
defined in 12 C.F.R. Section 912.1.
"FHLMC" means the Federal Home Loan Mortgage Corporation or
any successor thereto.
"Financed Vehicle" means, with respect to a Receivable, the
new or used Recreational Vehicle, together with all the accessions thereto,
securing an Obligor's indebtedness under such Receivable.
"Final Scheduled Maturity Date" means the last day of
the Collection Period immediately preceding the Certificate Final Scheduled
Distribution Date.
"FNMA" means the Federal National Mortgage Association or any
successor thereto.
"Foreign Clearing Agency" means, collectively, CEDEL and the
Euroclear Operator.
"Funding Corporation Entitlement" means a "Security
Entitlement" as defined in 12 C.F.R. Section 1511.1.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to the Indenture. A Grant of the Trust Estate or of any
other agreement or instrument shall include all rights, powers and options (but
none of the obligations) of the Granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments and all other moneys payable thereunder, to
give and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring Proceedings in the name
of the Granting party or otherwise and generally to do and receive anything that
the Granting party is or may be entitled to do or receive thereunder or with
respect thereto.
"Holder" or "Holders" means, unless the context otherwise
requires, both Certificateholders and Noteholders.
"HUD Entitlement" means a "Security Entitlement" as defined
in 24 C.F.R. Section 81.2.
"Indemnified Parties" has the meaning specified in Section
8.2 of the Trust Agreement.
"Indenture" means the Indenture dated as of September 1, 1997,
between the Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time.
14
"Indenture Trustee" means, initially, Norwest Bank Minnesota,
National Association, as Indenture Trustee under the Indenture, or any
successor Indenture Trustee under the Indenture.
"Independent" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Sellers and any Affiliate of any of the foregoing
persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Sellers
or any Affiliate of any of the foregoing Persons and (c) is not connected with
the Issuer, any such other obligor, the Sellers or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent engineer, appraiser or other expert appointed
by the Issuer and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read the definition of "Independent" in this Agreement and that the signer is
Independent within the meaning thereof.
"Insolvency Event" means, for a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable Federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
15
"Insurance Policy" means, with respect to each Receivable, the
policy of physical damage and all other insurance covering the related Financed
Vehicle or the Obligor.
"Interest Accrual Period" means, with respect to any
Distribution Date, the period from and including the most recent Distribution
Date (or, in the case of the first Distribution Date, the Closing Date) on which
interest has been paid to but excluding the following Distribution Date.
"Interest Rate" means the rate of interest borne by the
Notes of any class.
"Investment Earnings" means, with respect to any Distribution
Date, the investment earnings (net of losses and investment expenses) on amounts
on deposit in the Collection Account and the Paid-Ahead Account.
"Issuer" means Chase Manhattan RV Owner Trust 1997-A, a
Delaware business trust, until a successor replaces it and, thereafter, means
such successor and, for purposes of any provision contained in the Indenture and
required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any of its authorized officers and
delivered to the Indenture Trustee.
"Lien" means a security interest, lien, charge, pledge or
encumbrance of any kind other than tax liens, mechanics' liens or any other
liens that attach by operation of law.
"Liquidation Expenses" means all reasonable fees of third
parties, amounts advanced to satisfy taxes and tax liens and other expenses
incurred by the Servicer in the course of converting any defaulted Receivable
or Financed Vehicle into cash proceeds (including, without limitation, expenses
relating to recovery, repossession, transporting, repair, care, custody, control
and resale of such Financed Vehicle), but shall not include expenses customarily
deducted by third parties from sale proceeds in connection with sales or other
dispositions of recreational vehicles.
"Liquidated Receivable" means a defaulted Receivable as to
which the Servicer has recovered all amounts that its expects to recover either
by sale or disposition of the related Financed Vehicle or otherwise, but in any
event a Receivable shall be deemed to become a Liquidated Receivable no later
than the date on which the Servicer has received the net proceeds from the sale
or disposition of such Financed Vehicle.
"Loss" has the meaning specified in the Servicing Agreement.
16
"Military Reservist Relief Act" means the California Military
Reservist Relief Act of 1991, as amended.
"Monthly Advance" means, with respect to any Distribution
Date, any payment made by the Servicer pursuant to Section 5.3 hereof.
"Monthly Report" has the meaning assigned in Section 4.8
hereof. The form of Monthly Report is attached as Exhibit B hereto.
"Moody's" means Moody's Investors Service, a division of Dun &
Bradstreet Corporation, and its successors and assigns.
"Net Liquidation Proceeds" means the monies collected by the
Servicer (from whatever source) during a Collection Period on a Liquidated
Receivable, net of (i) any payments required by law to be remitted to the
Obligor and (ii) other expenses customarily deducted by third parties from sales
proceeds in connection with sales or other dispositions of recreational
vehicles.
"Net Loss Ratio" means, for any Distribution Date, an amount,
expressed as a percentage, equal to (i) the Aggregate Net Losses for such
Distribution Date divided by (ii) the average of the Pool Balances on each of
the related Settlement Dates and the last day of the related Collection Period.
"New Financed Vehicle" means a Financed Vehicle the model year
of which is the year of origination of the related Receivable or a later year.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3
Note, a Class A-4 Note, a Class A-5 Note, a Class A-6 Note, a Class A-7 Note, a
Class A-8 Note, a Class A-9 Note or a Class A-10 Note.
"Note Depository Agreement" means the agreement among the
Issuer, the Indenture Trustee, Chase, as agent for The Depository Trust Company
and The Depository Trust Company, as the initial Clearing Agency, dated as of
the Closing Date, relating to the Notes, as the same may be amended or
supplemented from time to time or any similar agreement with any successor
Clearing Agency.
"Note Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1(a)(ii).
"Note Final Scheduled Distribution Date" means for (a) the
Class A-1 Notes, the October 1998 Distribution Date, (b) the Class A-2 Notes,
the August 2000 Distribution Date, (c) the Class A-3 Notes, the February 2002
Distribution Date, (d) the Class A-4 Notes, December 2002 Distribution Date, (e)
the Class A-5 Notes, the November 2004 Distribution Date, (f) the Class A-6
Notes,
17
the December 2005 Distribution Date, (g) the Class A-7 Notes, the October 2006
Distribution Date, (h) the Class A-8 Notes, the December 2007 Distribution Date,
(i) the Class A-9 Notes, the December 2008 Distribution Date and (j) the Class
A-10 Notes, the March 2010 Distribution Date.
"Note Owner" means, with respect to a Book-Entry Note, the
person who is the owner of beneficial interests in such Book-Entry Note, as
reflected on the books of the Clearing Agency or Foreign Clearing Agency, or on
the books of a direct or indirect Clearing Agency Participant.
"Note Pool Factor" for each class of Notes as of the close of
business on a Distribution Date means an eight-digit decimal figure equal to the
Outstanding Amount of such class of Notes divided by the original Outstanding
Amount of such class of Notes. The Note Pool Factor for each class of Notes will
be 1.00000000 as of the Cutoff Date; thereafter, the Note Pool Factor for each
class of Notes will decline to reflect reductions in the Outstanding Amount of
such class of Notes.
"Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Noteholders' Distributable Amount" means, for any
Distribution Date, the sum of the Noteholders' Principal
Distributable Amount and the Noteholders' Interest Distributable Amount for all
classes of Notes.
"Noteholders' Interest Carryover Shortfall" means, for any
Distribution Date for any class of Notes (other than initial Distribution Date),
the excess of (x) the Noteholders' Interest Distributable Amount for the
preceding Distribution Date for such class of Notes, over (y) the amount in
respect of interest that was actually deposited in the Note Distribution Account
on such preceding Distribution Date with respect to such class of Notes, plus
interest on the amount of interest due but not paid to Noteholders of such class
on the preceding Distribution Date, to the extent permitted by law, at the
applicable Interest Rate from such preceding Distribution Date through the
current Distribution Date.
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date for any class of Notes, the sum of (x) the Noteholders'
Monthly Interest Distributable Amount for such Distribution Date for such class
of Notes and (y) the Noteholders' Interest Carryover Shortfall for such
Distribution Date for such class of Notes.
"Noteholders' Monthly Interest Distributable Amount" means,
for any Distribution Date for any class of Notes, one month's interest (or, in
the case of the first Distribution Date, interest accrued from and including the
Closing Date to but excluding such Distribution Date) at the related Interest
Rate on the Outstanding Amount of the Notes of such class on such
18
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date). Interest for purposes of this definition (i) on the Class A-1
Notes shall be computed on the basis of a 360-day year for the actual number of
days elapsed and (ii) on the Notes of all other classes shall be computed on the
basis of a 360-day year of twelve 30-day months.
"Noteholders' Monthly Principal Distributable Amount" means,
for any Distribution Date prior to the Distribution Date on which the Notes have
been paid in full, 100% of the Principal Distribution Amount for such
Distribution Date; and for the Distribution Date on which the Notes are paid in
full, the portion of the Principal Distribution Amount for such Distribution
Date required to pay the Notes in full.
"Noteholders' Principal Carryover Shortfall" means for any
Distribution Date, the excess of (x) the Noteholders' Principal Distributable
Amount for the preceding Distribution Date over (y) the amount in respect of
principal that was actually deposited in the Note Distribution Account on such
Distribution Date.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of (i) the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Noteholders'
Principal Carryover Shortfall for such Distribution Date; provided that the
Noteholders' Principal Distributable Amount shall not exceed the Outstanding
Amount of the Notes. In addition, on the Note Final Scheduled Distribution Date
of each class of Notes, the principal required to be deposited in the Note
Distribution Account will include the amount necessary (after giving effect to
the other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the Outstanding Amount
of such class of Notes to zero.
"Note Register" and "Note Registrar" have the meanings
specified in Section 2.4 of the Indenture.
"Obligor" on a Receivable means the purchaser or the
co-purchasers of the Financed Vehicle purchased in part or in whole by the
execution and delivery of such Receivable or any other Person who owes or may be
liable for payments under such Receivable.
"Officer's Certificate" means a certificate signed by the
chairman of the board, the president, the treasurer, the controller, any
executive or senior vice president or any vice president of a Seller or the
Servicer, as appropriate, meeting the requirements of Section 11.1 of the
Indenture.
"Opinion of Counsel" means a written opinion of counsel (who
may be counsel to a Seller or the Servicer) reasonably acceptable in form and
substance to the Indenture Trustee, meeting the requirements of Section 11.1 of
the Indenture (or in
19
the case of an Opinion of Counsel delivered to the Owner Trustee, reasonably
acceptable in form and substance to the Owner Trustee).
"Optional Purchase Amount" means an aggregate of the
following amounts calculated for each Receivable (other than any
Liquidated Receivable) as of the close of business on the last day of
the Collection Period as of which the Servicer exercises its option to
purchase the Owner Trust Estate pursuant to Section 9.1(a): (i) its
Actual Principal Balance, plus (ii) one-month's interest on its Actual
Principal Balance as of the related Settlement Date accrued at a rate
equal to the greater of (A) the weighted average Contract Rate of the
Receivables (based on their Actual Principal Balances as of such
Settlement Date) and (B) the sum of the Certificate Rate and the
Servicing Fee Rate, minus (iii) all Collections of (or allocable to)
interest on each such Receivable received during such Collection Period
(including from any Applied Paid-Ahead Amounts or Repurchase Amounts) and
deposited into the Collection Account.
"Originating Entity" means, with respect to any Receivable,
other than a Bulk Purchase Receivable, the Affiliate of CFAC, Chase, Chase USA
or a predecessor of any of them who originated such Receivable, and, with
respect to a Bulk Purchase Receivable, the Person who originated such
Receivable.
"Outstanding" means, when used with respect to Notes, as of
the date of determination, all Notes theretofore authenticated and delivered
under the Indenture except:
(a) Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for
cancellation;
(b) Notes or portions thereof the payment for which
money in the necessary amount has been theretofore deposited
with the Indenture Trustee or any Paying Agent in trust for
the Holders of such Notes (provided that if such Notes are to
be redeemed, notice of such redemption has been duly given
pursuant to the Indenture or provision therefor, satisfactory
to the Indenture Trustee, has been made); and
(c) Notes in exchange for or in lieu of other Notes
which have been authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Indenture Trustee
is presented that any such Notes are held by a bona fide
purchaser;
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any other obligor upon the Notes, either Seller, the Servicer or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Indenture Trustee shall
be protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that an Authorized Officer of the
Indenture Trustee either actually knows to be so owned or has received written
notice that such Note is so owned shall be so disregarded. Notes so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Indenture Trustee the pledgee's right so
to act with respect to such Notes and that the pledgee is not the Issuer, any
other obligor upon the Notes, a Seller, the Servicer or any Affiliate of the
foregoing Persons.
"Outstanding Amount" means, when used with respect to
Notes, as of any date of determination, the aggregate principal
20
amount of all Notes, or a class of Notes, as applicable, Outstanding as of such
date.
"Owner Trust Estate" means all right, title and interest of
the Issuer in and to the property and rights assigned to the Issuer pursuant to
Article II of this Agreement, all funds on deposit from time to time in the
Trust Accounts (other than the Note Distribution Account) and all other property
of Issuer from time to time, including any rights of the Owner Trustee and the
Issuer pursuant to this Agreement.
"Owner Trustee" means Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under the Trust Agreement, and any successor Owner Trustee thereunder.
"Paid-Ahead Account" means the account designated as such,
established and maintained pursuant to Section 5.1(a)(iii).
"Paid-Ahead Amount" means, with respect to any Collection
Period and a Precomputed Receivable, any amount collected on such
Precomputed Receivable in excess of the sum of (i) the Scheduled Payment due on
such Precomputed Receivable during such Collection Period and (ii) any past due
Scheduled Payments from prior Collection Periods received during such Collection
Period but not representing a Principal Prepayment in full of such Receivable.
"Paying Agent" means: (a) when used in the Indenture or
otherwise with respect to the Notes, the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 of the Indenture and is authorized by the Indenture Trustee to make
the payments to and distributions from the Collection Account and the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer; and (b) when used in the Trust Agreement or otherwise
with respect to the Certificates, the Owner Trustee or any other paying agent or
co-paying agent appointed pursuant to Section 3.9 of the Trust Agreement, and in
the case of the Indenture with respect to the Notes, and the Trust Agreement
with respect to the Certificates, such Paying Agent shall initially be the
corporate trust office of Chase.
"Payment Shortfall" means (i) with respect to any Simple
Interest Receivable and any Collection Period, the excess of (A) the product of
(1) one-twelfth of the Contract Rate of such Receivable and (2) the Principal
Balance of such Receivable as of the related Settlement Date (or, in the case of
the first Collection Period, as of the Cutoff Date) over (B) the amount of
interest, if any, collected on such Receivable during the related Collection
Period and (ii) with respect to any Precomputed Receivable and any Collection
Period, the excess of (A) the Scheduled Payment due on such Precomputed
Receivable during the related Collection Period over (B) the amount with respect
to
21
such payment collected on such Receivable (including any Applied Paid-Ahead
Amounts with respect to such Collection Period).
"Permitted Investments" means, at any time, any one or more of
the following obligations, securities (certificated or uncertificated) or
instruments (excluding any security with the "r" symbol attached to its rating):
(i) obligations of the United States of America or
any agency thereof; provided such obligations are backed by
the full faith and credit of the United States of America;
(ii) general obligations of or obligations
guaranteed as to the timely payment of interest and principal
by any state of the United States of America or the District
of Columbia then rated "A-1+" or "AAA" by Standard & Poor's,
"D-1+" by Duff & Phelps (if rated by Duff & Phelps) and P-1+
or Aaa by Moody's;
(iii) commercial paper which is then rated P-1 by
Moody's, "D-1+" by Duff & Phelps (if rated by Duff & Phelps)
and "A-1+" by Standard & Poor's;
(iv) certificates of deposit, demand or time
deposits, federal funds or banker's acceptances issued by any
depository institution or trust company (including the Owner
Trustee acting in its commercial banking capacity)
incorporated under the laws of the United States or of any
state thereof or incorporated under the laws of a foreign
jurisdiction with a branch or agency located in the United
States of America and subject to supervision and examination
by federal or state banking authorities which short term
unsecured deposit obligations of such depository institution
or trust company are then rated P-1 by Moody's, "D-1+" by Duff
& Phelps (if rated by Duff & Phelps) and "A-1+" by Standard &
Poor's;
(v) demand or time deposits of, or certificates of
deposit issued by, any bank, trust company, savings bank or
other savings institution so long as such deposits or
certificates of deposit are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by
any bank, insurance company or other corporation the short
term unsecured debt or deposits of which are rated P-1 by
Moody's, "D-1+" by Duff & Phelps (if rated by Duff & Phelps)
and "A-1+" by Standard & Poor's or the long-term unsecured
debt of which are rated Aaa by Moody's and "AAA" by Standard &
Poor's;
(vii) repurchase obligations with respect to any
security described in clauses (i) or (ii) herein or any
22
other security issued or guaranteed by the FHLMC, FNMA or any
other agency or instrumentality of the United States of
America which is backed by the full faith and credit of the
United States of America, in either case entered into with a
federal agency or a depository institution or trust company
(acting as principal) described in (iv) above;
(viii) investments in money market funds, which funds
(A) are not subject to any sales, load or other similar
charge; and (B) are rated at least "AAAM" or "AAAM-G" by
Standard & Poor's, "D-1+" by Duff & Phelps (if rated by Duff &
Phelps) and Aaa by Moody's;
(ix) such other investments where either (A) the
short-term unsecured debt or deposits of the obligor on such
investments are rated "A-1+" by Standard & Poor's, "D-1+" by
Duff & Phelps (if rated by Duff & Phelps) and P-1 by Moody's;
and
(x) any other obligation or security satisfying
the Rating Agency Condition;
Permitted Investments include money market mutual funds (so long as such fund
has the ratings specified in clause (viii) hereof), including, without
limitation, the VISTA U.S. Government Money Market Fund or any other fund for
which Chase, the Owner Trustee or an Affiliate thereof serves as an investment
advisor, administrator, shareholder servicing agent, and/or custodian or
subcustodian, notwithstanding that (i) Chase, Norwest Bank Minnesota, National
Association, Wilmington Trust Company or an Affiliate thereof charges and
collects fees and expenses from such funds for services rendered, (ii) Chase,
Norwest Bank Minnesota, National Association, Wilmington Trust Company or an
Affiliate thereof charges and collects fees and expenses for services rendered
pursuant to this Agreement, and (iii) services performed for such funds and
pursuant to this Agreement may converge at any time. The Indenture Trustee
specifically authorizes Chase, Norwest Bank Minnesota, National Association,
Wilmington Trust Company or an Affiliate thereof to charge and collect all fees
and expenses from such funds for services rendered to such funds (but not to
exceed investment earnings), in addition to any fees and expenses Chase, Norwest
Bank Minnesota, National Association, or Wilmington Trust Company, as
applicable, may charge and collect for services rendered pursuant to this
Agreement.
"Person" means a legal person, including any individual,
corporation, limited liability company, estate, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
23
"Physical Property" has the meaning specified in the
definition of "Delivery" above.
"Pool Balance" as of any date of determination means the
aggregate Principal Balance of the Receivables, calculated as of the close of
business on such date.
"Precomputed Receivable" means (i) any Receivable under
which the portion of a payment allocable to earned interest (which may be
referred to in the related Receivable as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the sum of
periodic balances or the sum of monthly balances or any equivalent method or
(ii)any monthly actuarial Receivables.
"Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.5 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Principal Balance" means, as of the close of business on the
last day of a Collection Period, (a) with respect to a Precomputed Receivable,
the Amount Financed minus the sum of (i) that portion of all Scheduled Payments
due on or prior to such day allocable to principal using the actuarial method,
(ii) any payment of the Repurchase Amount with respect to the Precomputed
Receivable allocable to principal using the actuarial method and (iii) any
Principal Prepayment applied to reduce the Principal Balance of the Precomputed
Receivable in full and (b) with respect to a Simple Interest Receivable, the
Amount Financed minus the sum of (i) the portion of all payments made by or on
behalf of the related Obligor on or prior to such day and allocable to principal
using the Simple Interest Method and (ii) any payment of the Repurchase Amount
with respect to the Simple Interest Receivable allocable to principal using the
Simple Interest Method, in each case without giving effect to any adjustments
due to bankruptcy or similar proceedings.
"Principal Distribution Amount" means, for each Distribution
Date, an amount equal to the sum of the following amounts with respect to the
related Collection Period, in each case calculated in accordance with the method
specified in each Receivable, (i) (A) all payments of principal (including all
Principal Prepayments applied during the related Collection Period as described
below) made on each Simple Interest Receivable during the related Collection
Period and (B) that portion of the Scheduled Payments due during such Collection
Period allocable to principal using the actuarial method with respect to each
Precomputed Receivable (or the Principal Balance thereof if such Precomputed
Receivable is prepaid in full during such Collection Period), (ii) the Principal
Balance of each
24
Repurchased Receivable and (iii) the Principal Balance of each Receivable that
became a Liquidated Receivable during the related Collection Period; provided,
however, that (x) payments of principal (including Principal Prepayments) with
respect to a Repurchased Receivable received after the last day of the
Collection Period in which the Receivable became a Repurchased Receivable shall
not be included in the Principal Distribution Amount and (y) if a Liquidated
Receivable is purchased by a Seller or the Servicer pursuant to this Agreement
on the Deposit Date immediately following the Collection Period in which it
became a Liquidated Receivable, no amount will be included with respect to such
Receivable in the Principal Distribution Amount pursuant to clause (iii) above.
Principal Prepayments with respect to Simple Interest Receivables will be
treated as collections for the Collection Period in which they are received, and
Principal Prepayments with respect to Precomputed Receivables will be deposited
into the Paid-Ahead Account or retained by the Servicer pursuant to Section
5.2(b) and treated as collections for the Collection Period in which the related
Scheduled Payment was due.
"Principal Prepayment" means a payment or other recovery of
principal on a Receivable (including insurance proceeds and Net Liquidation
Proceeds applied to principal on a Receivable) which is received in advance of
its due date.
"Proceeding" means any suit in equity, action or law or
other judicial or administrative proceeding.
"Purchase and Sale Agreement" means the Purchase and Sale
Agreement, dated as of August 20, 1997, among CFAC, CFHI and Chase USA, as the
same may be amended and supplemented from time to time.
"Qualified Institution" means a depository institution
organized under the laws of the United States of America or any one of the
States thereof or incorporated under the laws of a foreign jurisdiction with a
branch or agency located in the United States of America or one of the States
thereof and subject to supervision and examination by federal or state banking
authorities which at all times has the Required Deposit Rating and, in the case
of any such institution organized under the laws of the United States of
America, whose deposits are insured by the FDIC.
"Qualified Trust Institution" means an institution organized
under the laws of the United States of America or any one of the States thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times (i) is authorized under such laws to act as a trustee or in any other
fiduciary capacity, (ii) has not less than one billion dollars in assets under
fiduciary management, and (iii) has a long term deposits rating of not less
25
than "BBB-" by Standard & Poor's, "BBB-" by Duff & Phelps (if rated by Duff &
Phelps) and Baa3 by Moody's.
"Rating Agency" means any of Standard & Poor's, Moody's
or Duff & Phelps.
"Rating Agency Condition" means, with respect to any action or
event, that each Rating Agency shall have notified the Sellers, the Servicer,
the Indenture Trustee and the Owner Trustee, in writing, that such action or
event will not result in reduction or withdrawal of any then outstanding rating
of any outstanding Note or Certificate with respect to which it is the Rating
Agency.
"Receivable" means a retail installment sale contract or
purchase money promissory note or other promissory note and security agreement
executed by an Obligor in respect of a Financed Vehicle, and all proceeds
thereof and payments thereunder (other than (i) Excluded Precomputed Amounts,
(ii) Excluded Administrative Fees and (iii) Excluded Force-Placed Insurance
Premiums), which Receivable shall be identified on Schedule A-1 or Schedule A-2
to this Agreement.
"Receivable Files" means, the documents specified in Section
3.3, together with all other documents or records that the Servicer shall add to
such documents from time to time in accordance with its customary procedures.
"Receivables Pool" means the pool of Receivables
included in the Trust.
"Record Date" means, with respect to any Distribution Date,
the Business Day prior to such Distribution Date unless Definitive Notes or
Definitive Certificates are issued, in which case, Record Date, with respect to
such Definitive Notes or Definitive Certificates, as applicable, shall mean the
last day of the immediately preceding calendar month.
"Recreational Vehicle" means new or used motor homes, travel
trailers and other types of recreational vehicles.
"Relevant UCC" means the Uniform Commercial Code as in
effect in the applicable jurisdiction.
"Relief Act Reduction" shall mean the reduction of the rate of
interest payable on any Receivable to a rate below the Contract Rate pursuant to
the Soldiers' and Sailors' Civil Relief Act or the Military Reservist Relief
Act.
"Repurchase Amount" of a Repurchased Receivable (other than
a Receivable purchased by the Servicer pursuant to Section 9.1(a))means the sum
of, as of the last day of the Collection Period as of which the repurchase of
such Receivable is deemed to be effective, (i) its Actual Principal Balance
plus (ii) Accrued Interest thereonto such last day.
26
"Repurchased Receivable" means a Receivable repurchased by a
Seller pursuant to Section 3.2 or purchased by the Servicer pursuant to Section
4.6 or 9.1(a).
"Required Deposit Rating" shall be a short-term certificate of
deposit rating from Moody's of P-1, from Duff & Phelps of "D-1" (if rated by
Duff & Phelps) and from Standard & Poor's of "A-1+," and a long-term unsecured
debt rating of not less than Aa3 by Moody's and "AA-" by Standard & Poor's.
"Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.6.
"Reserve Account Initial Deposit" means an amount equal
to $13,460,929.28.
"Reserve Account Property" means all amounts and investments
held from time to time in the Reserve Account (whether in the form of deposit
accounts, Physical Property, book-entry securities, uncertificated securities or
otherwise), including the Reserve Account Initial Deposit and all proceeds of
the foregoing.
"Reserve Account Transfer Amount" means, for any Distribution
Date, an amount equal to the lesser of (a) the Available Reserve Account Amount
for such Distribution Date and (b) the amount, if any, by which the sum of the
amounts set forth in clauses (i) through (v) of Section 5.5(c), exceeds the
Available Amount for such Distribution Date.
"Responsible Officer" means, (i) with respect to any Trustee,
any officer within the Corporate Trust Office of such Trustee, including any
Vice President, Assistant Vice President, Assistant Treasurer or Assistant
Secretary, and (ii) with respect to the Servicer, the President, any Vice
President, Assistant Vice President, Secretary, Assistant Secretary, or in the
case of clauses (i) and (ii), any other officer of such Person customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Sale Proceeds" has the meaning specified in
Section 9.1(b).
"Sallie Mae Entitlement" means a "Security Entitlement"
as defined in 31 C.F.R. Section 354.1.
"Scheduled Payment" means, with respect to a Precomputed
Receivable, that portion of the payment required to be made by the Obligor
during each Collection Period sufficient to amortize the Principal Balance of
such Receivable under the related actuarial method over the term of the
Receivable and to provide interest at the related Contract Rate. When Scheduled
27
Payment is used with reference to a Collection Period, it means the payment
which is due during such Collection Period.
"Schedule of Receivables" means, collectively,
Schedules A-1 and A-2 attached hereto.
"Securities Act" means the Securities Act of 1933, as
amended.
"Sellers" means collectively, Chase USA, in its capacity as
the seller of the Chase USA Receivables under this Agreement, and each successor
to Chase USA (in the same capacity) pursuant to Section 6.3 and Chase in its
capacity as the seller of the Chase Receivables under this Agreement, and each
successor to Chase (in the same capacity) pursuant to Section 6.3.
"Servicer" means CITSF in its capacity as servicer of the
Receivables under this Agreement, and each successor to The CIT Group/Sales
Financing, Inc. (in the same capacity) pursuant to Section 7.3.
"Servicer's Certificate" means a certificate, substantially in
the form of Exhibit A attached hereto, completed and executed by the Servicer by
its chairman of the board, the president, treasurer, controller or any
executive, senior vice president or vice president pursuant to Section 4.8.
"Servicer Payment" with respect to any Distribution Date,
means an amount equal to the sum of the reimbursement then due to the Servicer
for outstanding Monthly Advances pursuant to Section 5.3 and the Servicing Fee
for such Distribution Date (including any unpaid Servicing Fees for prior
Distribution Dates).
"Servicing Agreement" means the Servicing Agreement, dated May
9, 1997, as amended and restated as of September 15, 1997, and as such agreement
may be further amended, among the Sellers, CFHI, CFAC and the Servicer, a copy
of which is attached hereto as Exhibit D.
"Servicing Fee" with regard to a Collection Period means the
fee payable to the Servicer for services rendered during such Collection Period,
determined pursuant to Section 4.7.
"Servicing Fee Rate" means .50%.
"Servicing Officer" means any officer of the Servicer involved
in, or responsible for, the administration and servicing of Receivables whose
name appears on a list of servicing officers appearing in an Officers'
Certificate furnished to the Issuer by the Servicer, as the same may be amended
from time to time.
"Settlement Date" means, with respect to any Collection
Period, the last day of the Collection Period immediately
28
preceding such Collection Period, and with respect to any Distribution Date, the
last day of the second Collection Period preceding the Collection Period in
which such Distribution Date occurs.
"Simple Interest Method" means the method of allocating a
fixed level payment to principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid principal balance multiplied by the
period of time elapsed since the preceding payment of interest was made and the
remainder of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which
the portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Soldiers' and Sailors' Civil Relief Act" means the Soldiers'
and Sailors' Civil Relief Act of 1940, as amended.
"Specified Reserve Account Balance" means for each
Distribution Date an amount equal to 2.00% (except as described in the following
sentence) of the Pool Balance as of the related Settlement Date with respect to
such Distribution Date, but in any event not less than the lesser of (i)
$8,973,952.86 and (ii) such Pool Balance. Notwithstanding the foregoing, if for
any Distribution Date (commencing with the Distribution Date in December 1997)
(x) the Average Net Loss Ratio exceeds 1.75% or (y) the Average Delinquency
Percentage exceeds 2%, then the Specified Reserve Account Balance shall be 3%;
provided, that, the Specified Reserve Account Balance will revert back to the
amounts specified in the first sentence above if, for any three consecutive
Distribution Dates, clauses (x) and (y) above are not triggered. Upon written
notification to the Indenture Trustee by the Sellers, the Specified Reserve
Account Balance may be reduced to a lesser amount as determined by the Sellers,
so long as such reduction satisfies the Rating Agency Condition.
"Standard & Poor's" means Standard & Poor's Ratings Services,
and its successors and assigns.
"Treasury Entitlement" means a "Security Entitlement"
as defined in 31 C.F.R. Section 357.2.
"Treasury Regulations" means the treasury regulations
promulgated under the Code.
"Trust Accounts" means, collectively, the Certificate
Distribution Account, the Collection Account, the Note
Distribution Account, the Paid-Ahead Account and the Reserve Account.
"Trust Agreement" means the Amended and Restated Trust
Agreement dated as of September 1, 1997, among the Sellers and
29
the Owner Trustee, as the same may be amended and supplemented from time to
time.
"Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including all
property and interests Granted to the Indenture Trustee), including all proceeds
thereof and the Reserve Account.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"Trustees" means, collectively, the Indenture Trustee
and the Owner Trustee.
"United States Securities Entitlement" means a Treasury
Entitlement, a HUD Entitlement, a FHLBank Entitlement, a Funding
Corporation Entitlement, a Farm Credit Entitlement or a Sallie Mae Entitlement.
"Used Financed Vehicle" means a Financed Vehicle the model
year of which is earlier than the year of origination of the related Receivable.
SECTION 1.2. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation." All references herein to Articles,
Sections, Subsections and Exhibits are references to Articles, Sections,
Subsections and Exhibits contained in or attached to this Agreement unless
otherwise specified, and each such Exhibit is part of the terms of this
Agreement.
SECTION 1.3. Methods of Allocating Payments on Receivables;
Allocations. All allocations of payments to principal and interest and
determinations of periodic charges and the like on the Simple Interest
Receivables shall be based on a year with the actual number of days in such year
and twelve months with the actual number of days in each such month. Allocations
of payments to principal and interest on the Precomputed Receivables shall be
based on the related add-on financed charge and related precomputed scheduled
payment calculated in accordance with the Precomputed Method set forth in the
related Receivable.
30
Each payment on a Receivable shall be applied in the manner
described in Section 6.15 of the Servicing Agreement; provided, however, that
the Servicer shall apply any Net Liquidation Proceeds on any Liquidated
Receivable to pay Accrued Interest on such Receivable and then to reduce
the Actual Principal Balance of such Receivable before applying any such
amounts to any Excluded Forced-Placed Insurance Premiums or any other amounts
outstanding with respect to such Receivable.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Receivables. In consideration of
the Issuer's delivery of the Notes and the Certificates to and upon the order of
the Sellers (allocated between the Sellers in accordance with Schedule C
hereto), each Seller does hereby sell, transfer, assign, and otherwise convey to
the Issuer, without recourse (subject to each Seller's obligations herein):
(i) all right, title, and interest of such Seller
in, to and under the Chase USA Receivables listed in Schedule
A-1 hereto (in the case of Chase USA) and in, to and under the
Chase Receivables listed in Schedule A-2 hereto (in the case
of Chase), all proceeds thereof and (A) in the case of any
Simple Interest Receivables conveyed by it, all amounts and
monies received thereon on and after the Cutoff Date and (B)
in the case of any Precomputed Receivables conveyed by it, all
amounts and monies due thereon on and after the Cutoff Date
and any Deferred Paid-Ahead Amounts with respect thereto
(including in the case of such Seller proceeds of the
repurchase by such Seller of the related Receivables pursuant
to Section 3.2 or the purchase of Receivables by the Servicer
pursuant to Section 4.6 or 9.1), together with the interest
of such Seller in the security interests in the Financed
Vehicles granted by the Obligors pursuant to the Receivables
and in any repossessed Financed Vehicles;
(ii) all right, title and interest of such Seller
in any Net Liquidation Proceeds and in any Insurance
Policies;
(iii) all right, title and interest of such Seller
in any proceeds from Dealer repurchase obligations
relating to the Receivables; and
(iv) all proceeds (as defined in the Relevant UCC)
of the foregoing.
In connection with such sale, each Seller agrees to record and
file, at its own expense, financing statements with respect to the Receivables
conveyed by it for the sale of
31
accounts and chattel paper meeting the requirements of applicable state law in
such manner and in such jurisdictions as are necessary to perfect the sale and
assignment of such Receivables to the Issuer. The Sellers shall deliver (or
cause to be delivered) to the Owner Trustee, with copies to the Servicer, filed
stamped copies of, or filing receipts for, any such financing statements.
It is the intention of each Seller and the Issuer that the
assignment and transfer herein contemplated constitute a sale of the
Receivables, conveying good title thereto free and clear of any liens and
encumbrances, from such Seller to the Issuer and that the Receivables conveyed
by it not be part of such Seller's estate in the event of an insolvency. In the
event that such conveyance is deemed to be a pledge to secure a loan, each
Seller hereby grants to the Issuer a first priority perfected security interest
in all of such Seller's right, title and interest in, to and under the items of
property listed in clauses (i) through (iii) above, and in all proceeds (as
defined in the Relevant UCC) of the foregoing, to secure the loan deemed to be
made in connection with such pledge and, in such event, this Agreement shall
constitute a security agreement under applicable law.
SECTION 2.2. Closing. The conveyance of the Receivables shall
take place at the offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth
Avenue, New York, New York on the Closing Date, simultaneously with the closing
of the transactions contemplated by the underwriting agreements related to the
Notes and the Certificates and the other Basic Documents. Upon the acceptance by
the Sellers of the Notes and the Certificates, the ownership of each Receivable
and the contents of the related Receivable File will be vested in the Issuer,
subject only to the lien of the Indenture.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of the Sellers;
Conditions Relating to the Receivables.
(a) Each Seller makes the following representations and
warranties as to the Receivables conveyed by it, on which (i) the Issuer shall
rely in acquiring such Receivables and (ii) the Servicer shall rely in acquiring
any Repurchased Receivables. Such representations and warranties shall speak as
of the Cutoff Date unless otherwise specified, but shall survive the sale,
transfer, and assignment of the Receivables to the Issuer and the pledge thereof
to the Indenture Trustee pursuant to the Indenture.
(i) Schedule of Receivables. The information set
forth in Schedules A-1 and A-2 hereto is true and
correct in all material respects, and the Receivables
32
consist of all receivables owned by such Seller which meet the
selection criteria specified herein.
(ii) Good Title. Immediately prior to the transfer
and assignment of the Receivables conveyed by it to the Issuer
herein contemplated, such Seller had good and marketable title
to each such Receivable free and clear of all Liens and rights
of others; and, immediately upon the transfer thereof, the
Issuer has either (i) good and marketable title to each such
Receivable, free and clear of all Liens and rights of others,
other than the Lien of the Indenture Trustee under the
Indenture, and the transfer has been perfected under
applicable law or (ii) a first priority perfected security
interest in each such Receivable and the proceeds thereof.
(b) Each Receivable conveyed by such Seller hereunder
satisfies the following conditions on the Cutoff Date unless otherwise
specified, on which (i) the Issuer shall rely in acquiring such Receivables and
(ii) the Servicer shall rely in acquiring any Repurchased Receivables, and such
conditions shall survive the sale, transfer and assignment of the Receivables to
the Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(i) Origination. Each such Receivable (A) was
originated by a Dealer and acquired by an Originating Entity from such
Dealer in the ordinary course of business, (B) was originated by an
Originating Entity directly or (C) was a Bulk Purchase Receivable, and
in each case was originated in one of the states of the United States
(or the District of Columbia);
(ii) Security. Each such Receivable is secured by
a Financed Vehicle;
(iii) Direct or Indirect Receivable. Each such
Receivable was originated (A) in the form of a retail installment sales
contract with a Dealer or a purchase money loan from an Originating
Entity through a Dealer located in one of the states of the United
States (or the District of Columbia) or (B) without the involvement of
a Dealer for the financing of a Financed Vehicle, and in each case was
fully and properly executed by the parties thereto;
(iv) Valid Transfer. (A) In the case of any such
Receivable originated with the involvement of a Dealer, if in the form
of a retail installment sales contract, such Receivable was purchased
by an Originating Entity from the originating Dealer and was validly
assigned by such Dealer to such Originating Entity and (B) in the case
of a Chase Financial Receivable, such Receivable was purchased by Chase
USA from CFAC or CFHI, and was validly assigned by CFAC or
33
CFHI, as applicable, to Chase USA pursuant to the Purchase and Sale
Agreement;
(v) No Waivers. No provision of any such
Receivable has been waived, altered or modified in any
respect, except by instruments or documents contained in the
related Receivables File;
(vi) Binding Obligation. Each such Receivable is a
legal, valid and binding obligation of the related Obligor and is
enforceable in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, liquidation and other similar
laws and equitable principles relating to or affecting the enforcement
of creditors' rights;
(vii) No Defenses. As of the Cutoff Date, such
Seller had no knowledge of any facts which would give rise
to any right of rescission, setoff, counterclaim or defense
or of the same being asserted or threatened with respect to
any such Receivable;
(viii) Insurance. The Obligor on each such
Receivable is required to maintain physical damage insurance
covering the related Financed Vehicle in accordance with its
terms;
(ix) Lawful Assignment. No such Receivable was
originated in or is subject to the laws of any jurisdiction whose laws
would prohibit (A) the transfer of such Receivable to the Issuer
pursuant to this Agreement, (B) the ownership of such Receivable by the
Issuer or (C) the pledge by the Issuer of such Receivable to the
Indenture Trustee;
(x) Compliance with Law. Each such Receivable
complies with all requirements of applicable federal, state
and local laws and regulations in all material respects;
(xi) Receivable in Force. No such Receivable has
been satisfied, subordinated in whole or in part or rescinded, and no
Financed Vehicle has been released from the security interest of such
Receivable in whole or in part;
(xii) Valid Security Interest. Each such Receivable
creates a valid and enforceable first priority security interest in
favor of the related Originating Entity in the Financed Vehicle covered
thereby, such security interest is assignable by the related
Originating Entity to such Seller and by such Seller to the Issuer, and
all necessary action with respect to such Receivable has been taken to
perfect the security interest in the related Financed Vehicle in favor
of the related Originating Entity;
34
(xiii) Capacities of Parties. All parties to each
such Receivable had capacity to execute such Receivable;
(xiv) [Reserved];
(xv) No Defaults. As of the Cutoff Date, such Seller
had no knowledge that a default, breach, violation or event permitting
acceleration under any such Receivable existed; such Seller had no
knowledge that an event which with notice and the expiration of any
grace or cure period would constitute a default, breach, violation or
event permitting acceleration under such Receivable existed (except for
payment delinquencies permitted as described herein), and such Seller
has not waived any of the foregoing (except for payment delinquencies
permitted);
(xvi) No Liens. As of the Cutoff Date, such Seller
had no knowledge of any Liens or claims which have been filed for work,
labor or materials affecting a Financed Vehicle securing any such
Receivable, which are or may be liens prior to or equal or coordinate
with the security interest of such Receivable;
(xvii) Equal Installments. Each such Receivable is
a fully amortizing loan with interest at the stated Contract
Rate, provides for level payments over the term of such
Receivable and is either a Simple Interest Receivable or a
Precomputed Receivable;
(xviii) Enforceability. Each such Receivable contains
customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for realization against the
related collateral (except as may be limited by creditors' rights
generally);
(xix) Obligor Not a Governmental Entity. No
Obligor to any such Receivable is the United States of
America or any state or any agency, department,
instrumentality or political subdivision thereof;
(xx) Obligor Not a Relief Act Obligor. If the
Obligor to any such Receivable is in the military (including an Obligor
who is a member of the National Guard or is in the reserves) and such
Receivable is subject to the Soldiers' and Sailors' Civil Relief Act of
1940, or the Military Reservist Relief Act, such Obligor has not made a
claim to such Seller for a Relief Act Reduction;
(xxi) One Original. There is only one original
executed copy of each such Receivable, which, prior to the
execution of this Agreement, was delivered to the Servicer
on behalf of the Issuer;
35
(xxii) Receivable is Chattel Paper. Each such
Receivable is "chattel paper" as defined in the New York and
Ohio Uniform Commercial Codes;
(xxiii) Obligor Not Subject to Bankruptcy
Proceedings. No Obligor of any such Receivable has been
identified on the computer files of such Seller as being in
bankruptcy proceedings as of the Cutoff Date;
(xxiv) No Overdue Payments. Each such Receivable
had no payment that was more than 60 days past due as of the
Cutoff Date;
(xxv) No Repossessions. Each such Receivable was
secured by a Financed Vehicle that, on the Cutoff Date, had
not been repossessed without reinstatement of such
Receivable; and
(xxvi) Maturity of Receivables. Each such
Receivable had a remaining maturity of not less than one
month nor greater than 236 months.
SECTION 3.2. Repurchase Upon Breach or Failure of a Condition.
Each Seller, the Servicer, the Indenture Trustee or the Owner Trustee, as the
case may be, shall inform the other parties in writing, upon the discovery by
such Seller, the Servicer or an Authorized Officer of the Indenture Trustee or
the Owner Trustee of either any breach of a Seller's representations and
warranties set forth in Section 3.1(a) or the failure of any Receivable to
satisfy any of the conditions set forth in Section 3.1(b) which materially
adversely affects the Holders' interest in the related Receivable. Unless the
breach or failed condition shall have been cured by the last day of the
Collection Period following the Collection Period in which such discovery
occurred (or, at the related Seller's option, the last day of the Collection
Period in which such discovery occurred or in which the related Seller received
notice of such breach) the Seller who conveyed such Receivable to the Issuer
shall repurchase such Receivable (together with any Deferred Paid-Ahead Amounts
thereon) the Holders' interest in which was materially adversely affected by the
breach or failed condition, as of such last day. In consideration of the
repurchase of a Receivable, any such Seller shall remit the Repurchase Amount of
such Receivable on the Deposit Date next succeeding such last day in the
manner specified in Section 5.4. The sole remedy of the Issuer, the Indenture
Trustee or the Holders with respect either to a breach of any Seller's
representations and warranties set forth in Section 3.1(a) or to a failure of
any of the conditions set forth in Section 3.1(b) shall be to require such
Seller to repurchase Receivables pursuant to this Section 3.2. The obligation of
the Sellers to repurchase under this Section 3.2 shall not be dependent upon the
actual knowledge of the related Seller of any
36
breached representation or warranty. The Owner Trustee shall have no duty to
conduct any affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Receivable pursuant to this Section 3.2 or the
eligibility of any Receivable for purposes of this Agreement. For administrative
convenience, if Chase is obligated pursuant to this Section 3.2 to repurchase a
Chase Receivable from the Issuer, Chase USA, at its option, may satisfy Chase's
obligation by repurchasing such Receivable upon the same terms as if Chase had
repurchased such Receivable.
SECTION 3.3. Custody of Receivable Files. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Issuer, upon the execution and delivery of this Agreement, agrees to appoint the
Servicer as initial custodian of the following documents or instruments (the
"Receivable Files") which are hereby constructively delivered to the Issuer with
respect to each Receivable:
(i) the original executed Receivable; and
(ii) any and all other documents or records that the
related Seller actually maintained in such file in accordance with its
customary procedures, relating to a Receivable, an Obligor or a
Financed Vehicle.
The Servicer hereby agrees to act as custodian and as agent
for the Issuer hereunder. The Servicer acknowledges that it holds the Receivable
Files actually delivered by the Sellers for the benefit of the Issuer. The
Issuer shall have no responsibility to monitor the Servicer's performance as
custodian and shall have no liability in connection with the Servicer's
performance of such duties hereunder.
SECTION 3.4. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian,
shall hold, or shall cause Andrews or another third-party custodian reasonably
acceptable to the Sellers to hold, the Receivable Files on behalf of the Issuer
for the use and benefit of the Issuer and maintain such accurate and complete
accounts, records and computer systems pertaining to the Receivables as shall
enable the Trustees to comply with their obligations pursuant to this Agreement
and the other Basic Documents.
As custodian, the Servicer shall have and perform the
following powers and duties or shall cause Andrews or such other third-party
custodian to:
(i) hold the Receivable Files on behalf of the
Issuer, maintain accurate records pertaining to each Receivable to
enable it to comply with the terms and conditions of this Agreement,
maintain a current inventory thereof, conduct annual physical
inspections of Receivable Files held by it under this Agreement and
certify to the
37
Issuer annually that it continues to maintain possession of
such Receivable Files;
(ii) implement policies and procedures in writing
and signed by an appropriate officer of the Servicer, with respect to
persons authorized to have access to the Receivable Files on the
Servicer's or any third-party custodian's premises, and the receipting
for Receivable Files taken from their storage area by an employee of
the Servicer for purposes of servicing or any other purposes; and
(iii) attend to all details in connection with
maintaining custody of the Receivable Files on behalf of the Issuer.
In performing its duties under this Section 3.4, the Servicer
agrees to act with reasonable care, consistent with the same degree of skill and
care that it exercises with respect to similar contracts serviced by it for its
own account, except as otherwise set forth in the next succeeding paragraph. The
Servicer shall promptly report to the Issuer in writing any material failure by
it or any third-party custodian to hold the Receivable Files as herein provided
and shall promptly take appropriate action to remedy any such failure. In acting
as custodian of the Receivable Files, the Servicer agrees further not to assert
any beneficial ownership interests in the Receivables or the Receivable Files.
The Servicer agrees to indemnify the Issuer, the Sellers, the
Certificateholders, the Noteholders, the Owner Trustee and the Indenture Trustee
for any and all liabilities, obligations, losses, damages, payments, costs, or
expense of any kind whatsoever which may be imposed on, incurred by or asserted
against the Issuer, the Sellers, the Certificateholders, the Noteholders, the
Owner Trustee and the Indenture Trustee as the result of any act or omission by
the Servicer relating to the maintenance and custody of the Receivable Files;
provided, however, that the Servicer shall not be liable for any portion of any
such amount resulting from the negligence or willful misconduct of the Issuer,
the Sellers, the Certificateholders, the Noteholders, the Owner Trustee or the
Indenture Trustee.
Any original documents relating to the Receivables held by the
Servicer shall be maintained in fire-proof files, except those documents
held by Andrews or by another third-party custodian which does not offer
fire-proof storage. The Servicer shall exercise reasonable care in handling and
delivering the documents in its files relating to the Receivables. The Servicer
shall maintain the privacy of the Obligors in accordance with all applicable
governmental rules.
The Servicer shall retain the information on its computer
systems relating to the Receivables and other data and records (including,
without limitation, computerized records) relating directly to or maintained in
connection with the servicing of the Receivables at the address of the Servicer,
or upon thirty (30) days' advance notice to the Sellers, the Owner Trustee and
the Indenture Trustee at such other place where the servicing offices of the
Servicer are located and shall be readily separable from the other files or
property of the Servicer.
38
(b) Maintenance of and Access to Records. The Servicer, in its
capacity as custodian, agrees to maintain the Receivable Files at its office in
the State of Oklahoma, or at such of its offices, or, at the Servicer's sole
expense, at the offices of Andrews or of any other third-party custodian
reasonably acceptable to the Sellers, as shall from time to time be identified
to the Issuer by written notice. The Servicer, in its capacity as custodian, may
temporarily move individual Receivable Files or any portion thereof without
notice as necessary to conduct collection and other servicing activities in
accordance with its customary practices and procedures, but shall promptly
return such Receivable File as soon as practicable after it is no longer needed
for such purpose.
The Servicer, in its capacity as custodian, shall make
available to either Seller, the Indenture Trustee or the Owner Trustee, or their
respective duly authorized representatives, attorneys or auditors, the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer at such times during normal business hours as either
Seller, the Indenture Trustee or Owner Trustee shall reasonably instruct which
do not unreasonably interfere with the Servicer's normal operations or customer
or employee relations.
(c) Release of Documents. (i) Upon written instruction from
the Indenture Trustee (or, if the Notes have been paid in full, from the Owner
Trustee), the Servicer shall release any document in the Receivable Files to the
Indenture Trustee or the Owner Trustee, as the case may be, its agent or its
designee at such place or places as such Person may reasonably designate as soon
as reasonably practicable to the extent it does not unreasonably interfere with
the Servicer's normal operations or customer or employee relations. The Servicer
shall not be responsible for any loss occasioned by the failure of the Owner
Trustee or Indenture Trustee, its agent or its designee to return any document
or any delay in doing so.
(ii) The Servicer shall release the Receivables Files
relating to Repurchased Receivables to a Seller or the Servicer, as applicable,
or their respective agents or designees notified to the Servicer in writing,
upon actual knowledge of a Responsible Officer of the Servicer or written
instructions from the Indenture Trustee that the Repurchase Amount or
Optional Purchase Amount has been deposited by such Seller or the Servicer
into the Collection Account, at such place or places as such Person may
reasonably designate as soon as reasonably practicable to the extent it does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations. The cost of any such release shall be borne by such
Seller or the Servicer, whichever is the purchaser.
39
SECTION 3.5. Instructions; Authority to Act. The Servicer
shall be deemed to have received proper instructions with respect to the
Receivable Files upon its receipt of written instructions signed by an
Authorized Officer of the Indenture Trustee (or, if the Notes have been paid in
full, of the Owner Trustee). A certified copy of a by-law or of a resolution of
the Board of Directors of the Owner Trustee or the Indenture Trustee shall
constitute conclusive evidence of the authority of any such Authorized Officer
to act and shall be considered in full force and effect until receipt by the
Servicer of written notice to the contrary given by the Owner Trustee or the
Indenture Trustee.
SECTION 3.6. Effective Period and Termination. The
Servicer's appointment as custodian shall become effective as of the Cutoff Date
and shall continue in full force and effect until terminated pursuant to this
Section 3.6 or until this Agreement shall be terminated. If the Servicer shall
resign as Servicer under Section 7.5 or if all of the rights and obligations of
the Servicer shall have been terminated under Section 8.1, the appointment of
the Servicer as custodian may be terminated by the Indenture Trustee or by the
Noteholders representing not less than a majority of the aggregate Outstanding
Amount of the Notes (or, if there are no Notes outstanding, the
Certificateholders representing not less than a majority of the Certificate
Balance then outstanding), in the same manner as the Indenture Trustee or such
Holders may terminate the rights and obligations of the Servicer under Section
8.1. As soon as practicable after any termination of such appointment pursuant
to Section 7.5, the Servicer shall or shall instruct any third-party custodian
to, at the Servicer's expense, deliver the Receivable Files to the Issuer or the
Issuer's agent at such place or places as the Issuer may reasonably designate.
If the Servicer is terminated pursuant to Section 8.1, the Servicer shall
deliver (or caused to be delivered) the Receivable Files as pursuant to Section
8.1. Notwithstanding the termination of the Servicer as custodian, the Owner
Trustee agrees that upon any such termination, the Issuer shall provide, or
cause its agent to provide, access to the Receivable Files to the Servicer for
the purpose of carrying out its duties and responsibilities with respect to the
servicing of the Receivables hereunder.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of Servicer. (a) The Servicer, as agent
for the Issuer, shall manage, administer, service and make collections on the
Receivables (other than Repurchased Receivables) and perform or cause to be
performed all contractual and customary undertakings of the holder of the
Receivables to the Obligors. The Issuer, at the request of an Authorized
Officer of the Servicer, shall furnish the Servicer with any reasonable
documents or take any action reasonably requested,
40
necessary or appropriate to enable the Servicer to carry out its servicing
duties hereunder.
(b) In managing, administering, servicing and making
collections on the Receivables pursuant to this Agreement, the Servicer shall
exercise the same degree of skill and care that the Servicer exercises with
respect to similar receivables serviced by the Servicer for its own account,
except as otherwise specified in Sections 3.1, 3.2 and 6.8 through 6.14
(inclusive) of the Servicing Agreement.
(c) The Servicer may enter into subservicing agreements with
one or more subservicers for the servicing and administration of any or all of
the Receivables. Unless such subservicer has been appointed by CITSF in its
capacity as Servicer and is an Affiliate of CITSF, (i) any such subservicer must
be an Eligible Servicer, and (ii) the appointment of any such subservicer shall
not be made without the prior written consent of the Sellers, which consent
shall not be unreasonably withheld.
References in this Agreement to actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken, by the
Servicer in servicing the Receivables shall include actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken, by a
subservicer on behalf of the Servicer. Each subservicing agreement will be upon
such terms and conditions as are not inconsistent with this Agreement and the
Servicing Agreement and the standard of care set forth herein and therein and as
the Servicer and the subservicer have agreed. All compensation payable to a
subservicer under a subservicing agreement shall be payable by the Servicer from
its servicing compensation or otherwise from its own funds, and none of the
Issuer, the Sellers, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders will have any liability to the subservicer
with respect thereto.
Notwithstanding any subservicing agreement or any of the
provisions of this Agreement relating to agreements or any arrangements between
the Servicer or a subservicer or any reference to actions taken through such
Persons or otherwise, the Servicer shall remain obligated and liable to the
Issuer, the Sellers, the Owner Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders for the servicing and administering of
the Receivables and the other Trust Estate property in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements.
Any subservicing agreement that may be entered into and any
other transactions or servicing arrangements relating to the Receivables and the
other Trust Estate property involving a subservicer in its capacity as such
shall be deemed to be between the subservicer and the Servicer alone, and the
Owner Trustee,
41
the Indenture Trustee, the Certificateholders and the Noteholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the subservicer except as set forth in the next
succeeding paragraph.
Upon resignation or termination of the Servicer, the
successor Servicer may, with the prior written consent of the Sellers (which
consent may not be unreasonably withheld), thereupon assume all of the rights
and obligations of the outgoing Servicer under any existing subservicing
agreement. In such event, the successor Servicer shall be deemed to have
assumed all of the Servicer's interest therein and to have replaced the
outgoing Servicer as a party to each such subservicing agreement to the same
extent as if such subservicing agreement
had been assigned to the successor Servicer, except that the outgoing Servicer
shall not thereby be relieved of any liability or obligations on the part of the
outgoing Servicer as a party to each such subservicing agreement. The outgoing
Servicer shall, upon request of the Issuer, but at the expense of the outgoing
Servicer, deliver, or cause to be delivered, to the successor Servicer all
documents and records relating to each such subservicing agreement and the
Receivables and other Trust Estate property then being serviced thereunder and
an accounting of amounts collected and held by the subservicer and shall
otherwise use its best efforts to effect the orderly and efficient transfer of
any subservicing agreement to the successor Servicer. In the event that the
successor Servicer elects not to assume a subservicing agreement, the outgoing
Servicer, at its expense, shall cause the subservicer to deliver to the
successor Servicer all documents and records relating to the Receivables and the
other Trust Estate property being serviced thereunder and held by such
subservicer and all amounts held (or thereafter received) by such subservicer
(together with an accounting of such amounts) and shall otherwise use its best
efforts to effect the orderly and efficient transfer of servicing of the
Receivables and the other Trust Estate property being serviced by such
subservicer to the successor Servicer.
(d) The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors or by federal, state or
local governmental authorities with respect to the Receivables, investigating
delinquencies, reporting federal income tax information to Obligors, monitoring
the collateral in cases of Obligor default and handling the repossession,
foreclosure or other liquidation of Financed Vehicles in appropriate instances,
filing and processing claims under insurance policies in accordance with its
customary practices, accounting for collections, furnishing monthly and annual
statements to the Issuer with respect to distributions, and making Monthly
Advances pursuant to Section 5.3 hereof.
The Servicer shall be authorized and empowered by the Issuer
to execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the
Indenture Trustee, the Certificateholders, the Noteholders, or any of them, any
and all instruments of
42
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables or with
respect to the Financed Vehicles.
Upon written request of the Servicer and receipt by the Issuer
of an Officer's Certificate setting forth the facts underlying such request, the
Issuer shall furnish the Servicer with any limited powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
duties hereunder, and the Issuer shall not be held liable for such actions of
the Servicer thereunder.
(e) Notwithstanding anything herein or in the Servicing
Agreement to the contrary, none of the Sellers or the Servicer shall be
obligated to purchase any Insurance Policy on behalf of any Obligor, verify if
any Insurance Policy required under a Receivable is being maintained by any
Obligor or be obligated to pursue remedies under any Receivable or applicable
law as a result of any failure of an Obligor to maintain any such Insurance
Policy.
SECTION 4.2. Collection of Receivable Payments. Subject to
Sections 3.1, 3.2 and 6.8 through 6.14 (inclusive) of the Servicing
Agreement, the Servicer shall make reasonable efforts, consistent with the
customary servicing procedures employed by the Servicer with respect to
Receivables owned or serviced by it, to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due, and in connection therewith shall follow such normal collection practices
and procedures as it follows with respect to comparable new or used recreational
vehicle installment sale contracts and promissory notes that it services for
itself. The Servicer shall not reduce or defer scheduled payments, extend any
Receivable or otherwise modify the terms of any Receivable; provided, however,
that, consistent with its customary servicing procedures but subject to Section
6.10 of the Servicing Agreement, the Servicer may, in its discretion, arrange
with an Obligor to defer, reschedule, extend or modify the payment schedule of
any Receivable for credit related reasons that would be acceptable to the
Servicer with respect to a comparable Receivable secured by a new or used
Recreational Vehicle that it services for itself so long as (i) the maturity of
such Receivable would not extend beyond the Final Scheduled Maturity Date and
(ii) if any such modification constitutes a refinancing, the proceeds of such
refinancing shall be used to pay the related Receivable in full. If, as a result
of deferring, rescheduling or extending of payments or any other modification,
such deferring, rescheduling, extension or modification breaches any of the
terms of the preceding sentence, then the Servicer shall be obligated to
purchase such Receivable pursuant to Section 4.6 hereof on the Deposit Date
immediately following the date on which it became aware or received written
notice from the Indenture Trustee or Owner Trustee of such failure. The Servicer
may, in accordance with its customary standards, policies and procedures, in its
discretion, waive any
43
Administrative Fees that may be due or payable under any Receivable.
Notwithstanding anything to the contrary in the Servicing
Agreement, in connection with the settlement by the Servicer of a defaulted
Receivable, the Servicer may forgive a portion of such Receivable, if, in its
discretion, it believes that the acceptance of the settlement proceeds from the
related Obligor would result in the Issuer's receiving a greater amount of
Collections than the Net Liquidation Proceeds that would result from
repossessing and liquidating the related Financed Vehicle.
SECTION 4.3. Realization Upon Receivables. (a) The
Servicer will, consistent with customary servicing procedures and the terms of
this Agreement but subject to the terms of Sections 3.1 and 6.9 through 6.14
(inclusive) of the Servicing Agreement, act with respect to the Receivables in
such manner as it reasonably believes will maximize the receipt of principal and
interest on the Receivables and Net Liquidation Proceeds in respect of defaulted
Receivables; provided, however, that the Servicer shall not be obligated to take
any such action if the Servicer would thereby be required to incur Liquidation
Expenses in excess of the amounts set forth in Section 8.3 of the Servicing
Agreement and CFMC shall have failed to give its written consent to such
incurrence.
In the event that title to any Financed Vehicle is acquired in
foreclosure or by conveyance in lieu of foreclosure, the deed or certificate of
sale shall be issued to the Issuer, or, at its election, to its nominee on
behalf of the Issuer.
(b) The Servicer shall only be entitled to recover Liquidation
Expenses relating to a defaulted Receivable to the extent described in Section
8.3 of the Servicing Agreement. The Net Liquidation Proceeds realized in
connection with any such liquidation with respect to a defaulted Receivable
shall be deposited by the Servicer in the Collection Account in the manner
specified in Section 5.2 hereof. The foregoing shall be subject
to the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its sole discretion that such repair and/or repossession will increase the Net
Liquidation Proceeds of the related Receivable.
(c) Subject to Section 6.13 of the Servicing Agreement, the
Servicer may sue to enforce or collect upon Receivables, including foreclosure
of any security interest in a Financed Vehicle, in its own name, if possible, or
as agent for
44
the Issuer. If the Servicer elects to commence a legal proceeding to enforce a
Receivable or any insurance policy in respect thereof, the act of commencement
shall be deemed to be an automatic assignment of the Receivable to the Servicer
for purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Receivable on the
ground that it is not a real party in interest or a holder entitled to enforce
the Receivable, the Issuer shall take such steps as the Servicer deems necessary
to enforce the Receivable, including bringing suit in its name or the names of
the Holders.
(d) The Servicer may grant to the Obligor on any Receivable
any rebate, refund or adjustment out of the Collection Account that the Servicer
in good faith believes is required because of a principal prepayment or a
principal prepayment of the entire Principal Balance of a Receivable in full.
The Servicer will not permit any rescission or cancellation of any Receivable,
except to the extent required by law or as set forth in this Agreement.
(e) The Servicer may enforce any due-on-sale clause in a
Receivable if such enforcement is called for under its then current servicing
policies for obligations similar to the Receivables, provided that such
enforcement is permitted by applicable law and will not adversely affect any
applicable insurance policy.
SECTION 4.4. Maintenance of Security Interests in Financed
Vehicles. (a) The Servicer shall take all actions that are necessary or
desirable to maintain continuous perfection and priority of the security
interest created by each Receivable in the related Financed Vehicle in favor of
the related Originating Entity, including, but not limited to, the notation on
certificates of title and the recording, filing and refiling of all financing
statements, continuation statements or other instruments. In addition, if the
Servicer discovers any deficiency in the priority or perfection of any such
security interest in a Financed Vehicle or any other defect in the documents
constituting a part of any Receivable which deficiency or defect can be
corrected, the Servicer shall use its best efforts to correct such deficiency or
defect.
(b) In the event that the assignment of the Receivable to the
Issuer is insufficient, without a notation on the related Financed Vehicle's
certificate of title, to grant to the Issuer a perfected security interest in
the related Financed Vehicle, the Sellers hereby agree to serve as the Issuer's
agent for the purpose of perfecting the security interest in such Financed
Vehicle and that the related Seller's listing as the secured party on the
certificate of title is in the capacity as agent of the Issuer.
(c) If the Servicer is unable to foreclose upon a Financed
Vehicle because the title document for such Financed
45
Vehicle does not show the Issuer as the lienholder, the related Seller shall, at
its expense, take all necessary steps to apply for a replacement title document
showing the Issuer as the secured party.
(d) In order to facilitate the Servicer's actions, as
described in Section 4.4(b) hereof, each Seller will provide the Servicer with
any necessary power of attorney permitting it to retitle the Financed Vehicle
related to one of its Receivables. Each Seller hereby appoints the Issuer
(acting through the Owner Trustee or the Servicer) its attorney-in-fact to
endorse, as appropriate, the certificate of title relating to any Financed
Vehicle in order to cause a change in the registration of legal owner of the
Financed Vehicle to the Issuer at such time as such certificate of title is
endorsed and delivered to the Department of Motor Vehicles of the State of
California (or any other state department of motor vehicles) with appropriate
fees. Each Seller will provide the Issuer with any necessary power of attorney
for such purpose.
(e) If the Servicer is unable to retitle the Financed Vehicle,
in the event that the Servicer seeks to foreclose on a Financed Vehicle, then
each Seller, at its expense, will take all actions necessary to act with the
Servicer, to the extent permitted by law, to foreclose upon the Financed
Vehicle, including, as appropriate, the filing of any UCC-1 or UCC-2 financing
statements necessary to perfect the security interest in any Financed Vehicle.
SECTION 4.5. Covenants of Servicer. The Servicer hereby
makes the following covenants on which the Issuer shall rely in accepting the
Receivables:
(i) Security Interest to Remain in Force. The
Servicer shall not release a Financed Vehicle securing a Receivable
from the security interest granted by the Receivable except as
contemplated herein or in Section 6.8 of the Servicing Agreement, or as
required by the terms of such Receivable or applicable law;
(ii) No Impairment. The Servicer shall not impair
the rights of the Issuer in the Receivables or take any action
inconsistent with the Issuer's ownership of the Receivables, except
as expressly provided herein;
(iii) Amendments. The Servicer shall not increase the
number of payments under a Receivable, nor increase the principal
amount of such Receivable which is used to finance the purchase price
of the related Financed Vehicles, nor extend or forgive payments on a
Receivable, except as provided in Section 4.2 hereof and Sections 6.10
and 6.11 of the Servicing Agreement; and
(iv) Claims under Insurance Policies. Subject to
Section 4.1(e) herein, the Servicer shall file and process
46
claims under any Insurance Policy covering a Receivable if the failure
to so file and process would impair the protection or benefit to be
afforded by such insurance policies.
SECTION 4.6. Purchase of Receivables Upon Breach. Each Seller,
the Servicer, the Indenture Trustee or the Owner Trustee, as the case may be,
shall inform the other parties promptly, in writing, upon the discovery by such
Seller, the Servicer or an Authorized Officer of the Indenture Trustee or the
Owner Trustee, as the case may be, of any breach by the Servicer of its
covenants under Sections 4.2 or 4.5 which materially adversely affects the
interest of the Holders in any Receivable (for this purpose, any breach of the
covenant set forth in Section 4.5(iii) shall be deemed to materially adversely
affect the interest of the Holders in a Receivable). Except as otherwise
specified in Section 4.2, unless the breach shall have been cured by the last
day of the Collection Period following the Collection Period in which such
discovery occurred, the Servicer shall purchase any Receivable (together with
any Deferred Paid-Ahead Amounts thereon) materially adversely affected by such
breach as of such last day. In consideration of the purchase of such Receivable,
the Servicer shall remit the Repurchase Amount on the Deposit Date next
succeeding such last day in the manner specified in Section 5.4. The sole
remedy of the Issuer, the Sellers, the Owner Trustee, the Indenture Trustee
or the Holders against the Servicer with respect to a breach pursuant to
Section 4.2 or 4.5 shall be to require the Servicer to purchase Receivables
pursuant to this Section 4.6. The Owner Trustee shall have no duty to conduct
any affirmative investigation as to the occurrence of any condition requiring
the repurchase of any Receivable pursuant to this Section 4.6 or the
eligibility of any Receivable for purposes of this Agreement.
SECTION 4.7. Servicing Fee. The Servicing Fee for a Collection
Period shall be payable on the related Distribution Date pursuant to Section 5.5
and shall equal the sum of (i) one-twelfth of the product of the Servicing Fee
Rate and the Pool Balance as of the related Settlement Date and (ii) any
Administrative Fees paid by the Obligors during the related Collection Period.
The Servicer shall be required to pay from its own account all
expenses incurred by it in connection with its activities hereunder (including
fees and disbursements of independent accountants and auditors, taxes imposed on
the Servicer and not indemnified pursuant to Section 6.2, and other costs
incurred in connection with administering and servicing the Receivables which
are not reimbursable hereunder or under the Servicing Agreement), the annual
fees as set forth in Schedule D hereto and those customary and reasonable
disbursements approved by the Servicer of the Administrators, the Owner
Trustee, the Indenture Trustee, the Paying Agent (including in its capacity
as) the Authenticating Agent, the Note Registrar and the Certificate
Registrar). The Servicer shall not be required to
47
pay any United States federal, state and local income and franchise taxes, if
any, imposed on the Issuer or any Holder or any expenses in connection with
realizing upon Receivables under Section 4.3.
SECTION 4.8. Monthly Report. On or before each Determination
Date, the Servicer shall furnish a report (the "Monthly Report"), which shall be
in substantially the form of Exhibit B hereto (with such additional information
as the Servicer shall elect to include therein), to the Owner Trustee, the
Indenture Trustee, any Paying Agent (under the Indenture and the Trust
Agreement), the Sellers and the Rating Agencies. The determination by the
Servicer of the amount of the distributions to be made pursuant to Section 5.5
hereof shall, in the absence of obvious error, be presumptively deemed to be
correct for all purposes hereunder, and the Trustees and any Paying Agent shall
be protected in relying upon the same without any independent check or
verification. The Servicer shall also specify in the Monthly Report each
Receivable which a Seller or the Servicer is required to repurchase or purchase,
as applicable as of the last day of the related Collection Period and each
Receivable which the Servicer shall have determined to be a Liquidated
Receivable during such Collection Period. The Trustees and any Paying Agent
shall not be required to recompute, verify or recalculate information contained
in the Monthly Report.
Each Monthly Report shall be accompanied by a certificate of a
Servicing Officer substantially in the form of Exhibit A hereto, certifying the
accuracy of the Monthly Report and that no Event of Servicing Termination or
event that with notice or lapse of time or both would become an Event of
Servicing Termination has occurred, or if such event has occurred and is
continuing, specifying the event and its status.
In addition, the Servicer shall, on request of a Trustee,
furnish such Person such reasonably pertinent underlying data on the Receivables
as can be generated by the Servicer's existing data processing system without
undue modification or expense.
SECTION 4.9. Annual Statement as to Compliance. (a) The
Servicer shall deliver to the Trustees and the Sellers within 90 days after
the end of each calendar year commencing March 31, 1998, a certificate signed by
a Responsible Officer of the Servicer, stating that (i) a review of the
activities of the Servicer during the preceding calendar year of its performance
under this Agreement has been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such preceding
calendar year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
48
(b) The Servicer shall deliver to the Trustees and the
Sellers, promptly after having obtained knowledge thereof, a certificate of a
Responsible Officer of the Servicer specifying any event which with the giving
of notice or lapse of time, or both, would become an Event of Servicing
Termination.
SECTION 4.10. Annual Report of Accountants. On or before
March 31 of each year, commencing March 31, 1998, the Servicer, at its expense,
shall cause a firm of independent public accountants which is a member of the
American Institute of Certified Public Accountants to furnish a statement which
opines on, at a minimum, the Servicer's compliance with the minimum servicing
standards set forth in the Uniform Single Attestation Program for Mortgage
Bankers (in accordance with the 1995 revisions thereto). Such examination and
report of independent public accountants will be prepared in accordance with the
requirements set forth in the Uniform Single Attestation Program for Mortgage
Bankers (in accordance with the 1995 revisions thereto). Copies of the annual
statement of accountants shall also be provided to the Sellers, the Rating
Agencies and the Trustees.
SECTION 4.11. Access by Holders to Certain Documentation and
Information Regarding Receivables. The Servicer shall provide to the Holders
access to the Receivable Files in such cases where the Holders shall be required
by applicable statutes or regulations to have access to such documentation.
Access by the Holders shall be afforded without charge, but only upon reasonable
request and during normal business hours which does not unreasonably interfere
with the Servicer's normal operations or customer or employee relations. Nothing
in this Section 4.11 shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section 4.11.
SECTION 4.12. Reports to Holders and the Rating Agencies. (a)
The Indenture Trustee or the Owner Trustee, as applicable, shall provide to any
Holder who so requests in writing (addressed to the Corporate Trust Office of
such Trustee) a copy of any Servicer's Certificate described in Section 4.8, of
the annual statement described in Section 4.9, or of the annual report described
in Section 4.10. The Indenture Trustee or the Owner Trustee, as applicable, may
require the Holder to pay a reasonable sum to cover the cost of the Indenture
Trustee's or the Owner Trustee's complying with such request, as applicable.
The Indenture Trustee or the Owner Trustee, as applicable,
shall forward to the Rating Agencies the statement to Holders described in
Section 5.8 and any other reports it may receive pursuant to this Agreement to
(i) Standard & Poor's Ratings Services, Asset-Backed Surveillance Group, 25
Broadway, New York, New York 10004, (ii) Moody's Investors Service, ABS
Monitoring Dept., 99 Church Street, 4th Floor, New York, New York
49
10007 and (iii) to Duff & Phelps Credit Rating Company, 17 State Street, 12th
Floor, New York, New York.
SECTION 4.13. Reports to the Securities and Exchange
Commission. The Issuer shall file or cause to be filed with the Commission any
periodic reports required to be filed under the provisions of the Exchange Act
and the rules and regulations of the Securities and Exchange Commission
thereunder.
SECTION 4.14. Maintenance of Fidelity Bond. The Servicer
shall, at its own cost and expense, during the term of its service as Servicer
maintain in force a fidelity bond in respect of its officers and employees. Such
fidelity bond shall protect against losses, including forgery, theft,
embezzlement and fraud and shall have such deductibles and be in such form and
amount as is generally customary among Persons which service a portfolio of
recreational vehicle installment sale contracts having an aggregate principal
amount of $100,000,000 or more and which are generally regarded as servicers
acceptable to institutional investors, but in no case shall such fidelity bond
be less than $5,000,000. Regardless of any provisions contained in this
Agreement which require the Servicer to maintain fidelity bond coverage, the
Servicer shall not be relieved of and from its accountability and responsibility
to the Issuer, the Sellers, the Holders and the Trustees for the proper
performance under this Agreement of the duties and obligations to be performed
hereunder by the Servicer.
SECTION 4.15. Satisfaction of Receivable. Upon payment in full
on any Receivable, the Servicer is authorized to execute an instrument in
satisfaction of such Receivable and to do such other acts and execute such other
documents as the Servicer deems necessary to discharge the Obligor thereunder
and eliminate the security interest in the Financed Vehicle related thereto. The
Servicer shall determine when a Receivable has been paid in full. The Servicer
shall process normal payoffs of Receivables by quoting amounts due, accepting
payoff amounts, stamping the original contracts relating to such Receivables
"Paid" and returning them to Obligors, and releasing liens as required. To the
extent that insufficient payments are received on a Receivable credited by the
Servicer as prepaid or paid in full and satisfied, the shortfall shall be paid
by the Servicer out of its own funds.
ARTICLE V
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO NOTEHOLDERS AND THE CERTIFICATEHOLDERS
SECTION 5.1. Establishment of Accounts. (a) The Sellers shall
establish and maintain:
(i) For the benefit of the Noteholders and the
Certificateholders, in the name of the Indenture
50
Trustee, an Eligible Deposit Account for the deposit of
Collections (the "Collection Account") bearing a designation
clearly indicating that the funds deposited therein are held
for the benefit of the Noteholders and the Certificateholders.
(ii) For the benefit of the Noteholders, in the name
of the Indenture Trustee, an Eligible Deposit Account for the
deposit of distributions to the Noteholders (the "Note
Distribution Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the
benefit of the Noteholders.
(iii) For the benefit of the Noteholders and the
Certificateholders, in the name of the Indenture Trustee, an
Eligible Account for deposit of Paid-Ahead Amounts (the
"Paid-Ahead Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the
benefit of the Noteholders and the Certificateholders.
Each Account shall be an Eligible Deposit Account established
initially at Chase.
(b) Should any depositary of an Account or of the Certificate
Distribution Account (including Chase (or an Affiliate thereof)) cease to be
either a Qualified Institution or a Qualified Trust Institution, as applicable,
then the Sellers shall cause the related Account to be moved to a Qualified
Institution or a Qualified Trust Institution, unless the Rating Agency Condition
is satisfied in connection with such depositary's ceasing to be a Qualified
Institution or a Qualified Trust Institution, as the case may be.
All amounts held in the Collection Account and the Paid-Ahead
Account shall be invested by the bank or trust company then maintaining the
account (at the written direction of the Sellers) in Permitted Investments that
mature not later than the Deposit Date next succeeding the date of investment
except, if the Collection Account or the Paid-Ahead Account is maintained with
the Indenture Trustee for investments on which the Indenture Trustee is the
obligor (including repurchase agreements on which the Indenture Trustee, in its
commercial capacity, is liable as principal), such investments may mature on the
next succeeding Distribution Date; provided, however, that once such amounts
have been invested by such bank or trust company, as applicable, in Permitted
Investments, such Permitted Investments must be held or maintained until they
mature on or before the dates described above. Amounts on deposit in the Note
Distribution Account shall not be invested. Investment Earnings on the
Collection Account and Paid-Ahead Account shall be paid to the Sellers in
accordance with their respective Deposit Allocation Percentages.
51
(c) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Accounts and in all
proceeds thereof (excluding Investment Earnings) and all such funds,
investments, proceeds and income shall be part of the Owner Trust Estate. Except
as otherwise provided herein, the Accounts shall be under the sole dominion and
control of Indenture Trustee for the benefit of the Noteholders and the
Certificateholders, or the Noteholders, as the case may be.
Section 5.2. Collections; Applications.
(a) Deposits to the Collection Account and the Paid-Ahead
Account. Subject to Sections 5.2(b) and (c) hereof, the Servicer shall deposit
in the Collection Account, no later than two Business Days after the Closing
Date, any amounts representing payments received on the Receivables on or after
the Cutoff Date through and including the Closing Date (other than Paid-Ahead
Amounts). Subject to Sections 5.2(b) and (c) hereof, the Servicer shall deposit
in the Collection Account as promptly as practicable (not later than the second
Business Day) following the receipt thereof by the Servicer, all amounts
received in respect of the Receivables, including all loan payments from
Obligors, Net Liquidation Proceeds and insurance proceeds (other than Paid-Ahead
Amounts). Subject to Sections 5.2(b) and (c), the Servicer shall deposit in the
Paid-Ahead Account as promptly as practicable (not later than the second
Business Day) following the receipt thereof by the Servicer, all Paid-Ahead
Amounts received in respect of the Receivables. Subject to Section
5.2(b), the Servicer shall deposit $561,500.57, the aggregate amount of Deferred
Paid-Ahead Amounts with respect to the Receivables as of the Cutoff
Date, in to the Paid-Ahead Account.
(b) Monthly Deposits to Collection Account; Deposits to
Paid-Ahead Account other than Daily. Notwithstanding anything in this
Agreement to the contrary, for so long as, and only so long as,
(i) the Servicer or the direct or indirect parent
of the Servicer shall have and maintain a short-term debt
rating of at least "A-1" by Standard & Poor's, "D- 1" by Duff
& Phelps (if rated by Duff & Phelps) and either a short-term
debt rating of P-1 or a long-term debt rating of at least A2
by Moody's, or
(ii) the Servicer obtains a letter of credit, surety
bond or insurance policy (the "Servicer Letter of Credit")
under which demands for payment may be made to secure timely
remittance of monthly collections to the Collection Account
and the Paid-Ahead Account and the Trustees are provided with
a letter from each Rating Agency to the effect that the
utilization of such alternative remittance schedule and any
amendment required to be made to this Agreement in connection
therewith will not result in a qualification, reduction
52
or withdrawal of its then-current rating of the Notes
or Certificates,
the Servicer may make the deposits to the Collection Account specified in
Section 5.2(a) hereof on a monthly basis, but not later than the Deposit Date
following the last day of the Collection Period within which such payments were
processed by the Servicer, in an amount equal to the net amount of such deposits
and payments which would have been made to the Collection Account during such
Collection Period but for the provisions of this Section 5.2(b), and the
Servicer may retain Paid-Ahead Amounts until any Applied Paid-Ahead Amounts
would otherwise be required to be withdrawn from the Paid-Ahead Account and
deposited in the Collection Account. In the event that the Servicer is permitted
to make remittances of Collections to the Collection Account and the Paid-Ahead
Account pursuant to Section 5.2(b)(ii) hereof, this Agreement may be modified,
to the extent necessary, without the consent of any Holder. The Servicer shall
notify the Trustees and the Sellers if the Servicer no longer complies with the
requirements set forth in clause (i) or (ii) above.
(c) Amounts Not Required to be Deposited. The Servicer
shall not be required to deposit in the Collection Account amounts relating to
the Receivables attributable to the following:
(i) Amounts received with respect to each
Receivable (or property acquired in respect thereof) which has
been repurchased by a Seller or purchased by the Servicer,
respectively, pursuant to this Agreement,
(ii) Investment Earnings on funds deposited in the
Collection Account or the Paid-Ahead Account (which amounts
shall be paid to the Sellers on each Distribution Date),
(iii) Amounts to be reimbursed to the Servicer in
respect of nonrecoverable Monthly Advances,
(iv) Net Liquidation Proceeds of any Liquidated
Receivable to the extent such proceeds exceed its Principal
Balance, and
(v) Amounts received with respect to Excluded
Administrative Fees, Excluded Forced-Placed Insurance
Premiums and Excluded Precomputed Amounts.
(d) Permitted Withdrawals from the Collection Account and the
Paid-Ahead Account. The Indenture Trustee, or the Paying Agent on behalf of the
Indenture Trustee, will, from time to time as provided herein, make withdrawals
from the Collection Account and Paid-Ahead Account of amounts deposited in said
Accounts pursuant to this Agreement that are attributable to the Receivables for
the following purposes:
53
(i) to make payments and distributions in the
amounts and in the manner provided for in Section 5.5
hereof;
(ii) to pay to the Sellers or the Servicer with
respect to each Receivable or property acquired in respect
thereof that has been purchased pursuant to Section 3.2, 4.6,
or 9.1(a), all amounts received thereon and not required to be
distributed to Noteholders and Certificateholders; and
(iii) to withdraw any amount deposited in the
Collection Account that was not required to be deposited
therein.
Since, in connection with withdrawals pursuant to clause (ii) of this Section
5.2(d), the Servicer's entitlement thereto is limited to Collections or other
recoveries on the related Receivable, the Servicer shall keep and maintain
separate accounting, on a Receivable by Receivable basis, for the purpose of
justifying any withdrawal from the Collection Account or Paid-Ahead Account
pursuant to such clauses. The Servicer shall keep and maintain an accounting for
the purpose of justifying any withdrawal from the Collection Account or
Paid-Ahead Account pursuant to clause (iii) of this Section 5.2(d).
(e) Deferred Paid-Ahead Amounts on Repurchased Receivables.
With respect to any Repurchased Receivable, the Servicer shall forward to the
Seller or Servicer purchasing such Receivable any Deferred Paid-Ahead Amounts
with respect to such Repurchased Receivable (by withdrawing
such amounts from the Paid-Ahead Account or otherwise).
SECTION 5.3. Monthly Advances. With respect to each Receivable
as to which there has been a Payment Shortfall during the related Collection
Period (other than a Payment Shortfall arising from a Receivable which has been
prepaid in full or which has been subject to a Relief Act Reduction during the
related Collection Period), on each Deposit Date the Servicer shall make a
Monthly Advance but only to the extent that the Servicer, in its good faith
judgment, expects to recover such Monthly Advance from subsequent Collections on
such Receivable made by or on behalf of the Obligor (but only to the extent of
expected interest collections in the case of a Simple Interest Receivable) or
from Net Liquidation Proceeds or insurance proceeds with respect to such
Receivable. The Servicer shall be reimbursed for any Monthly Advance from
subsequent collections with respect to such Receivable. If the Servicer
determines in its good faith judgment that an unreimbursed Monthly Advance shall
not ultimately be recoverable from subsequent collections or that the related
Receivable will be sold pursuant to this Agreement, the
54
Servicer shall be reimbursed for such Monthly Advance from collections on all
Receivables subject to and in the order of priority set forth in Section 5.5. In
determining whether a Monthly Advance is or will be nonrecoverable, the Servicer
need not take into account that it might receive any amounts in a deficiency
judgment against an Obligor. The Servicer shall not make a Monthly Advance in
respect of (i) the principal component of any scheduled payment on a Simple
Interest Receivable or (ii) a Payment Shortfall arising from a Receivable which
has been prepaid in full or which has been subject to a Relief Act Reduction
during the related Collection Period.
The Servicer shall deposit any such Monthly Advance into the
Collection Account in next-day funds or immediately available funds no later
than 12:00 noon, New York time, on the related Deposit Date.
SECTION 5.4. Additional Deposits. The Servicer, or the
Sellers, as the case may be, shall deposit into the Collection Account the
aggregate Repurchase Amount or the Optional Purchase Amount pursuant to
Sections 3.2, 4.6 and 9.1(a), as applicable. All remittances shall be made to
the Collection Account, in next-day funds or immediately available funds, no
later than 11:00 a.m., New York City time, on the Deposit Date.
SECTION 5.5. Distributions. (a) No later than 12:00 noon, New
York City time, on each Determination Date, the Servicer shall calculate the
following amounts with respect to the preceding Collection Period: (i) the
aggregate amount of Collections on the Receivables; (ii) the aggregate amount of
Monthly Advances to be remitted by the Servicer; (iii) the Paid-Ahead Amounts to
be received during the related Collection Period and Applied Paid-Ahead Amounts
allocable to such Collection Period and withdrawn from the Paid-Ahead Account;
(iv) the aggregate Repurchase Amounts of Receivables to be purchased by the
Sellers or the Servicer or the Optional Purchase Amount; (v) the aggregate
amount to be distributed as principal and interest on the Notes on the related
Distribution Date; (vi) the aggregate amount to be distributed as principal and
interest on the Certificates on the related Distribution Date; (vii) the
Servicer Payment; (viii) the amounts required to be withdrawn from the Reserve
Account for such Distribution Date in accordance with Sections 5.5(b) and 5.6
hereof; (ix) any amounts to be deposited into the Reserve Account pursuant to
Section 5.5(b) and 5.6 hereof, and (x) the aggregate amount of unreimbursed
Monthly Advances to be reimbursed to the Servicer.
(b) (i) On each Deposit Date, the Servicer shall instruct the
Indenture Trustee, in writing (based on the information contained in the Monthly
Report delivered on the related Determination Date pursuant to Section 4.8) to
withdraw from the Reserve Account and deposit in the Collection Account the
Reserve Account Transfer Amount (if any) for the related Distribution Date, and
the Indenture Trustee shall so withdraw
55
and deposit the Reserve Account Transfer Amount for such Distribution Date.
(ii) On each Deposit Date, the Servicer shall
instruct the Indenture Trustee, or the Paying Agent on behalf
of the Indenture Trustee, in writing (based on the information
contained in the Monthly Report delivered on the related
Determination Date pursuant to Section 4.8) to withdraw from
the Paid-Ahead Account and deposit in the Collection Account
any Applied Paid-Ahead Amounts (if any) with respect to the
related Collection Period, and the Indenture Trustee or Paying
Agent shall so withdraw and deposit the Applied Paid-Ahead
Amounts for such Distribution Date.
(c) Not later than 11:00 a.m., New York City time, on each
Distribution Date, at the Servicer's direction, the Indenture Trustee, or the
Paying Agent on behalf of the Indenture Trustee, shall cause to be made the
following distributions, to the extent of the Available Amount then on deposit
in the Collection Account and amounts withdrawn from the Reserve Account and
deposited in the Collection Account by wire transfer of immediately available
funds, in the following order of priority and in the amounts set forth in the
Servicer's Certificate for such Distribution Date:
(i) to the Servicer, the Servicer Payment with
respect to such Distribution Date and all unpaid Servicing
Payments with respect to prior Distribution Dates, to the
extent such amounts are not deducted from the Servicer's
remittance to the Collection Account pursuant to Section 5.7;
(ii) to the Note Distribution Account, the
Noteholders' Interest Distributable Amount for all
classes of Notes;
(iii) except as set forth in Section 5.5(d), to
the Owner Trustee for deposit into the Certificate
Distribution Account, the Certificateholders' Interest
Distributable Amount;
(iv) except as set forth in Section 5.5(d), to
the Note Distribution Account, the Noteholders'
Principal Distributable Amount;
(v) except as set forth in Section 5.5(d), to
the Owner Trustee for deposit in the Certificate
Distribution Account, the Certificateholders' Principal
Distributable Amount; and
(vi) except as set forth in Section 5.5(d), to
the Reserve Account, any remaining portion of the Available
Amount.
56
In the event that the Collection Account is maintained with an
institution other than the Indenture Trustee, the Servicer shall instruct and
cause such institution to make all deposits and distributions pursuant to this
Section 5.5(c) on the related Deposit Date.
(d) If the Notes have been declared immediately due and
payable as provided in Section 5.2 of the Indenture, any amounts remaining in
the Collection Account after the distributions described in clauses (i) and (ii)
of Section 5.5(c) shall be distributed as follows: (1) an amount equal to the
Outstanding Amount of the Notes shall be deposited in the Note Distribution
Account, and (2) any remaining amounts shall be applied pursuant to clauses
(iii), (v) and (vi) of Section 5.5(c).
SECTION 5.6. Reserve Account. (a) The Sellers shall establish
and maintain an Eligible Deposit Account (the "Reserve Account") at Norwest Bank
Minnesota, National Association in the name of the Indenture Trustee for the
benefit of the Noteholders and Certificateholders. Pursuant to Section 2.5 of
the Trust Agreement, on the Closing Date, the Owner Trustee shall cause
the Reserve Account Initial Deposit to be deposited into the Reserve Account.
(b) Should any sole depositary of the Reserve Account cease to
be either a Qualified Institution or a Qualified Trust Institution, the Sellers
shall cause the Reserve Account to be moved to a Qualified Institution or a
Qualified Trust Institution, as applicable, unless the Sellers provide the Owner
Trustee with a letter from the Rating Agencies to the effect that the Rating
Agency Condition shall be satisfied in connection with such depositary's ceasing
to be a Qualified Institution or a Qualified Trust Institution, as the case may
be.
All amounts held in the Reserve Account shall be invested by
the bank or trust company then maintaining the account (at the written direction
of the Sellers) in Permitted Investments that mature not later than the Deposit
Date next succeeding the date of investment except, if the Reserve Account is
maintained with the Indenture Trustee, for investments on which the Indenture
Trustee is the obligor (including repurchase agreements on which the Indenture
Trustee in its commercial capacity is liable as principal), which investments
may mature on the next succeeding Distribution Date; provided, however, that
amounts on deposit in the Reserve Account may be invested in Permitted
Investments that mature later than the next succeeding Deposit Date if the
Rating Agency Condition is satisfied.
(c) With respect to the Reserve Account Property:
(i) any Reserve Account Property that constitutes
Physical Property shall be delivered to the Indenture Trustee
in accordance with paragraph (a) of the definition of
"Delivery" and shall be held by the Indenture Trustee, pending
maturity or disposition;
57
(ii) any Reserve Account Property that is a United
States Security Entitlement shall be delivered in accordance
with paragraph (b) of the definition of "Delivery" and shall
be maintained by the Indenture Trustee, pending maturity or
disposition; and
(iii) any Reserve Account Property that is an
"uncertificated security" under Article 8 (or VIII as
applicable) of the Relevant UCC and that is not governed by
clause (ii) above shall be delivered to the Indenture Trustee
in accordance with paragraph (c) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition.
The Indenture Trustee shall, at the expense of the Sellers, take such action as
is required to maintain the Indenture Trustee's security interest in any Reserve
Account Property; provided, however, that (x) the Indenture Trustee shall not be
required to prepare or file any financing statements or continuation statements
and (y) the Indenture Trustee may rely upon the written instructions of the
Sellers as to the method by which the security interest of the Indenture Trustee
may be perfected. Upon written request from the Indenture Trustee, the Sellers
shall provide such instructions and an opinion of counsel with respect to the
method of perfection of such security interest; provided, however, that the
Servicer shall not be obligated to deliver to the Indenture Trustee an opinion
of counsel with respect to the method of perfecting a security interest in any
Permitted Investment the method of perfecting an ownership interest in which was
described in that certain legal opinion of Dorsey & Whitney LLP, special local
counsel to the Indenture Trustee, dated September __, 1997, unless there has
been change in law or the interpretation thereof from the date of such opinion
with respect to the method of perfecting a security interest in such Permitted
Investment.
(d) On each Distribution Date, the Indenture Trustee shall
withdraw from the Reserve Account and pay first, to the Servicer, any amounts
due pursuant to Section 7.4(c) or Section 7.8, second, to the CITSF
Administrator, any amounts due pursuant to Section 21 of the CITSF
Administration Agreement, and third, to the Sellers, in accordance with their
respective Depositor Allocation Percentages, the excess, if any, of the amount
on deposit in the Reserve Account over the Specified Reserve Account Balance for
such Distribution Date (after giving effect to all deposits therein or
withdrawals therefrom on such Distribution Date). Upon any distribution to the
Servicer or the Sellers of amounts from the Reserve Account, the Holders shall
have no rights in, or claims, to, such amounts. Amounts properly distributed to
the Servicer, the CITSF Administrator or the Sellers from the Reserve Account
shall not be available under any circumstances to the Owner Trustee, and none
of the Servicer, the CITSF Administrator or the Sellers shall in any event
thereafter be required to refund any such distributed amounts.
(e) The Owner Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the
58
Reserve Account and in all proceeds thereof and all such funds, investments,
proceeds and income shall be part of the Owner Trust Estate. Except as otherwise
provided herein, the Reserve Account shall be under the sole dominion and
control of the Owner Trustee for the benefit of the Certificateholders.
SECTION 5.7. Net Deposits. As an administrative convenience,
the Servicer shall be permitted to make deposits of Collections, Monthly
Advances, and the aggregate Repurchase Amount of Receivables purchased by the
Servicer or any Optional Purchase Amount for, or with respect to, a Collection
Period net of distributions to be made to the Sellers (to the extent of
Investment Earnings and amounts received with respect to Excluded Precomputed
Amounts and Excluded Forced-Placed Insurance), or to the Servicer (including,
without limitation, the Servicer Payment, amounts received with respect to
Excluded Administrative Fees and amounts to be deducted in the definition of
"Available Amount"). The Servicer, however, shall account to the Owner Trustee
and the Indenture Trustee and to the Noteholders and the Certificateholders as
if all such deposits and distributions were made on an aggregate basis for each
type of payment or deposit. On each Distribution Date, the Servicer shall pay to
the Sellers directly any Investment Earnings on funds deposited in the
Collection Account and the Paid-Ahead Account, together with any amounts
received with respect to Excluded Forced-Place Insurance Premiums and Excluded
Precomputed Amounts.
SECTION 5.8. Statements to Certificateholders and Noteholders.
(a) On each Distribution Date, the Servicer shall provide to the Indenture
Trustee (for the Indenture Trustee to forward to each Noteholder of record
pursuant to the Indenture) and to the Owner Trustee (for the Owner Trustee to
forward to each Certificateholder of record pursuant to the Trust Agreement) a
statement prepared by the Servicer, substantially in the form of Exhibit B (or
such other form that is acceptable to the Indenture Trustee, the Owner Trustee
and the Servicer), with a copy to the Rating Agencies and the Sellers. Each such
statement to be delivered to Noteholders shall include (to the extent
applicable), among other things, the following information as to the Notes with
respect to such Distribution Date or the period since the previous Distribution
Date, as applicable, and each such statement to be delivered to
Certificateholders shall include (to the extent applicable) the following
information as to the Certificates with respect to such Distribution Date or the
period since the previous Distribution Date, as applicable:
(i) the amount of the distribution allocable to
principal with respect to each class of Notes and to the
Certificate Balance of the Certificates and the derivation of
such amounts;
(ii) the amount of the distribution allocable to
interest on or with respect to each class of Notes and
the Certificates;
59
(iii) the amount of the Servicing Fee paid, the
amount of Monthly Advances being reimbursed to the Servicer in
respect of the related Collection Period, and the total
Servicer Payment;
(iv) the Pool Balance as of the close of business
on the last day of the preceding Collection Period;
(v) the Outstanding Amount and the Note Pool Factor
for each class of Notes, and the Certificate Balance and the
Certificate Pool Factor for the Certificates, in each case
after giving effect to all payments reported under clause (i)
above on such date;
(vi) the amount of the Aggregate Net Losses, if any,
for the preceding Collection Period and the derivation of such
amount, the amount of Aggregate Losses for the year to date
and, with respect to the January Distribution Date for each
year, the Average Annual Balance for the preceding year;
(vii) the Noteholders' Interest Carryover Shortfall
for all classes of Notes, the Noteholders' Principal Carryover
Shortfall, the Certificateholders' Interest Carryover
Shortfall and the Certificateholders' Principal Carryover
Shortfall, if any, in each case as applicable to each class of
Notes and Certificates and the change in such amounts from the
preceding statement;
(viii) the aggregate Repurchase Amounts with respect
to the Receivables, if any, that were repurchased by either
Seller or purchased by the Servicer with respect to such
Collection Period;
(ix) the balance of the Reserve Account as of such
date, after giving effect to changes therein on such date, the
Specified Reserve Account Balance on such date and the
components of calculating any such required balance;
(x) the amount of Monthly Advances included in
the Available Amount; and
(xi) the balance of the Paid-Ahead Account as of
such date, after giving effect to any changes therein on such
date.
Each amount set forth pursuant to subclauses (i), (ii) and (iii) with
respect to the Notes or the Certificates shall be expressed as a dollar amount
per $1,000 of the initial principal balance of such Notes or the initial
certificate balance of the Certificates, as applicable.
60
ARTICLE VI
THE SELLERS
SECTION 6.1. Representations of Sellers. Each Seller makes
the following representations as to itself on which the Issuer shall rely in
acquiring the Receivables. The representations shall speak as of the execution
and delivery of this Agreement, and shall survive the sale of the Receivables to
the Issuer and pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(i) Organization and Good Standing. Such Seller has
been duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, with
power and authority to own its properties and to conduct its
business as such properties are currently owned and such
business is presently conducted, and had at all relevant
times, and has, power, authority, and legal right to acquire
and own the Receivables transferred by it to the Issuer.
(ii) Power and Authority. Such Seller has the power
and authority to execute and deliver this Agreement and the
other Basic Documents to which it is a party and to carry out
their respective terms, such Seller has full power and
authority to sell and assign the property to be sold and
assigned to the Issuer by it as the Owner Trust Estate and has
duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery, and
performance of this Agreement and the other Basic Documents to
which it is a party has been duly authorized by such Seller by
all necessary action.
(iii) Valid Sale; Binding Obligations. This Agreement
effects a valid sale, transfer, and assignment of the
Receivables transferred by such Seller to the Issuer,
enforceable against creditors of and purchasers from such
Seller; this Agreement and each of the other Basic Documents
to which it is a party constitutes a legal, valid, and binding
obligation of such Seller enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law.
(iv) No Violation. The consummation of the
transactions contemplated by this Agreement and the
other Basic Documents and the fulfillment of the terms
hereof and thereof do not conflict with, result in any
breach of any of the terms and provisions of, nor
61
constitute (with or without notice or lapse of time) a default
under, the charter or bylaws of such Seller, or conflict with
or breach any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default
under, any indenture, agreement, or other instrument to which
such Seller is a party or by which it is bound; nor result in
the creation or imposition of any lien upon any of its
properties pursuant to the terms of any such indenture,
agreement, or other instrument; nor violate any law or, to the
best knowledge of such Seller, any order, rule, or regulation
applicable to such Seller of any court or of any federal or
state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over such
Seller or its properties.
(v) No Proceedings. There are no proceedings or
investigations pending, or, to the best knowledge of such
Seller, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality
having jurisdiction over such Seller or its properties: (a)
asserting the invalidity of this Agreement, any other Basic
Document, the Notes or the Certificates, (b) seeking to
prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this
Agreement or any other Basic Document, (c) seeking any
determination or ruling that might materially adversely affect
the performance by such Seller of its obligations under, or
the validity or enforceability of, this Agreement, any other
Basic Document, the Notes or the Certificates, or (d) relating
to such Seller and which might adversely affect the federal or
state income tax attributes of the Notes or the Certificates.
SECTION 6.2. Liability of Sellers; Indemnities; Payment of
Fees. Each Seller shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by such Seller in such capacity under
this Agreement and shall have no other obligations or liabilities hereunder.
Notwithstanding Section 15.1 of the Servicing Agreement, the Sellers acknowledge
that the indemnities in Section 10.2 of the Servicing Agreement shall survive
the execution of this Agreement.
The Sellers shall indemnify, defend and hold harmless the
Issuer, the Servicer, the CITSF Administrator, the Owner Trustee and the
Indenture Trustee from and against any taxes that may at any time be asserted
against any such Person with respect to, and as of the date of, the sale of the
Receivables to the Issuer or the issuance and original sale of the Notes and the
Certificates, including any sales, gross receipts, general corporation, tangible
or intangible personal property, privilege, or license taxes (but not including
any taxes asserted with respect to ownership of the Receivables or
62
federal or other income taxes, including franchise taxes measured by net
income), arising out of the transactions contemplated by this Agreement and the
other Basic Documents, and costs and expenses in defending against the same.
Subject to Section 6.4 hereof, each Seller shall indemnify,
defend, and hold harmless the Issuer, the Servicer, the CITSF Administrator,
the Owner Trustee and the Indenture Trustee from and against any loss, liability
or expense incurred by reason of (i) such Seller's wilful misfeasance, bad
faith, or negligence in the performance of its duties hereunder, or by reason of
reckless disregard of the obligations and duties hereunder and (ii) such
Seller's violation of federal or state securities laws in connection with the
registration of the sale of the Notes and the Certificates.
The Sellers agree to pay, and shall indemnify, defend, and
hold harmless the Owner Trustee, the Indenture Trustee, the Issuer, the
Servicer, the CITSF Administrator, the Certificateholders and the Noteholders
from and against, any taxes that may at any time be asserted with respect to
the transfer of the Receivables to the Issuer, including, without limitation,
any sales, gross receipts, personal or real property, privilege or license
taxes (but not including any federal, state or other taxes arising out of the
creation of the Issuer and the issuance of the Notes and Certificates or
distributions with respect thereto) and costs, expenses and reasonable counsel
fees in defending against the same.
The Sellers shall indemnify, defend, and hold harmless from
and against, and pay to the Trustees all reasonable costs, expenses, losses,
claims, damages, and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties herein contained in
accordance with the terms and conditions herein and in the Indenture and the
Trust Agreement, as the case may be, except to the extent that such costs,
expense, loss, claim, damage or liability: (a) shall be due to the willful
misfeasance, gross negligence or bad faith of such Trustee; (b) relates to any
tax other than the taxes with respect to which the Sellers shall be required to
indemnify such Trustee pursuant to this Agreement; (c) shall arise from such
Trustee's breach of any of its representations or warranties set forth in the
Trust Agreement or the Indenture, as applicable; (d) shall be one as to which
the Servicer is required to indemnify such Trustee.
Indemnification under this Section 6.2 shall include
reasonable fees and expenses of counsel and expenses of litigation. If such
Seller shall have made any indemnity payments to the Issuer, the Servicer, the
Owner Trustee or the Indenture Trustee, respectively, pursuant to this Section
6.2 and the Issuer, the Servicer, the Owner Trustee or the Indenture Trustee,
respectively, thereafter shall collect any of such amounts from others, the
Issuer, the Servicer, the Owner Trustee or the Indenture Trustee, respectively,
shall repay such amounts to such Seller, without interest. The indemnities under
this
63
Section 6.2 shall survive the resignation or removal of an indemnitee, or the
termination of the Trust Agreement and this Agreement.
The Sellers shall pay the disbursements of the Issuer, the
Administrators, the Owner Trustee, the Indenture Trustee, the Paying Agent, the
Authenticating Agent, the Note Registrar and the Certificate Registrar to the
extent not payable by the Servicer pursuant to Section 4.7, including, without
limitation, the fees and disbursements of counsel to the Owner Trustee and the
Indenture Trustee.
SECTION 6.3. Merger or Consolidation of Sellers. Any
corporation or other entity (i) into which either of the Sellers may be merged
or consolidated, (ii) which may result from any merger, conversion, or
consolidation to which either of the Sellers shall be a party, or (iii) which
may succeed to all or substantially all of the business of either of the
Sellers, shall be bound to perform every obligation of such Seller under this
Agreement, shall be the successor to such Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement. Such Seller shall give prompt written notice of any merger or
consolidation to the Issuer, the Owner Trustee, the Indenture Trustee, the
Servicer and the Rating Agencies.
SECTION 6.4. Limitation on Liability of Sellers and Others.
Each Seller and any director, officer, employee or agent of such Seller may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder or under any other Basic Documents. No Seller shall be under
any obligation under this Agreement to appear in, prosecute, or defend any legal
action that shall be unrelated to its obligations under this Agreement or any
other Basic Document, and that in its opinion may involve it in any expense or
liability.
SECTION 6.5. Sellers May Own Notes and Certificates. Each
Seller or any of its Affiliates may in its individual or any other capacity
become the owner or pledgee of Notes or Certificates with the same rights as it
would have if it were not a Seller or an Affiliate thereof, except as otherwise
provided in the definition of "Outstanding" specified in Section 1.1. Notes or
Certificates so owned by or pledged to a Seller or any Affiliate thereof shall
have an equal and proportionate benefit under the provisions of this Agreement,
without preference, priority, or distinction as among all of the Notes or
Certificates, as applicable.
64
ARTICLE VII
THE SERVICER; REPRESENTATIONS AND INDEMNITIES
SECTION 7.1. Representations of the Servicer.
The Servicer hereby makes the following representations on
which the Owner Trustee and the Indenture Trustee on behalf of the Issuer shall
rely in accepting the Receivables in trust and authenticating the Certificates
and the Notes, respectively. The representations are made as of the execution
and delivery of this Agreement (or as of a date another Person becomes Servicer
pursuant to Section 7.3 or Section 8.2), and shall survive the sale of the
Receivables to the Issuer.
(i) Organization and Good Standing. The Servicer is
a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has the
corporate power to own its assets and to transact the business in which
it is currently engaged. The Servicer is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction
in which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Servicer or on the Notes, the Certificates or the transactions
contemplated by this Agreement.
(ii) Authorization; Binding Obligations. The
Servicer has the power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated under
this Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement.
When executed and delivered, this Agreement will constitute the legal,
valid and binding obligation of the Servicer enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies.
(iii) No Consent Required. The Servicer is not
required to obtain the consent of any other party or any consent,
license, approval or authorization from, or registration or declaration
with, any governmental authority, bureau or agency in connection with
the execution, delivery, performance, validity or enforceability of
this Agreement the failure of which so to obtain would have a material
adverse effect on the business, properties, assets or condition
(financial or otherwise) of the Servicer or on the Notes, the
Certificates or the transactions contemplated by this Agreement.
65
(iv) No Violations. The execution, delivery and
performance of this Agreement by the Servicer will not violate any
provision of any existing law or regulation or any order or decree of
any court or the Articles of Incorporation or Bylaws of the Servicer,
or constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Servicer is a party or by which the
Servicer may be bound.
(v) Litigation. No litigation or administrative
proceeding of or before any court, tribunal or governmental body is
currently pending, or to the knowledge of the Servicer threatened,
against the Servicer or any of its properties or with respect to this
Agreement, the Notes or the Certificates which, if adversely
determined, would in the opinion of the Servicer have a material
adverse effect on the transactions contemplated by this Agreement.
SECTION 7.2. Liability of Servicer, Indemnities.
The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Servicer under the
Basic Documents and (except as set forth in the Servicing Agreement) shall have
no other obligations or liabilities hereunder. Notwithstanding Section 15.1 of
the Servicing Agreement, the Servicer acknowledges that the indemnities in
Section 10.1 of the Servicing Agreement shall survive the execution of this
Agreement.
(i) Subject to Section 7.4(a) hereof, the Servicer
shall defend and indemnify the Owner Trustee, the Indenture Trustee,
the Issuer, the Sellers, the Chase Administrator, the
Certificateholders and the Noteholders against any and all costs,
expenses, losses, damages, claims and liabilities arising out of or
resulting from any negligent action taken, or negligently failed to be
taken, by the Servicer with respect to any Financed Vehicle, to the
extent such loss is not reimbursed pursuant to any Insurance Policy or
any fidelity bond.
(ii) Subject to Section 7.4(a) hereof, the Servicer
shall indemnify, defend, and hold harmless the Owner Trustee, the
Indenture Trustee, the Issuer, the Sellers, the Chase Administrator,
the Certificateholders and the Noteholders from and against all costs,
expenses, losses, claims, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or liability arose out of, or
was imposed upon such Persons, through the willful misfeasance,
negligence, or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
Indemnification under this Section 7.2 shall include
reasonable fees and expenses of counsel in any litigation
66
appointed by the Servicer and reasonably satisfactory to the indemnitee,
provided that the Servicer shall only be required to pay the fees and expenses
of one counsel in any single litigation (or related proceedings) for all
indemnities; provided, however, if in the written opinion of counsel reasonably
satisfactory to the Servicer, the interests of an indemnitee and the Servicer
conflict such that the Servicer and such indemnitee may not both be represented
by such counsel, upon ten days prior written notice to the Servicer, such
indemnitee may hire one other counsel and the indemnification under this Section
7.2 shall also include the reasonable fees and expenses of such other counsel.
If the Servicer shall have made any indemnity payments, pursuant to this Section
7.2 and the recipient thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts to the Servicer without interest.
The indemnities under this Section 7.2 shall survive the resignation or removal
of an indemnitee, or the termination of the Trust Agreement and this Agreement.
SECTION 7.3. Merger or Consolidation of Servicer.
Any Person into which the Servicer may be merged or
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which the Servicer shall be a party, or any
Person succeeding to the business of the Servicer (which Person assumes the
obligations of the Servicer), shall be the successor of the Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to the Servicer shall
satisfy the criteria set forth in the definition of an Eligible Servicer. The
Servicer shall promptly notify each Rating Agency of any such merger to which it
is a party.
SECTION 7.4. Limitation on Liability of Servicer and
Others.
(a) Neither the Servicer, nor any of the shareholders,
Affiliates, directors, officers, employees or agents of the Servicer, shall be
under any liability to the Issuer or the Holders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such Person against any liability which
otherwise would be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason or reckless disregard of
obligations and duties hereunder.
(b) The Servicer and any director, officer, employee or agent
of the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.
67
(c) Except as arises from its duties as Servicer hereunder,
the Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which arises under this Agreement and which in its opinion may
involve it in any expenses or liability; provided; however, that the Servicer
may in its discretion undertake any such action which it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Issuer payable only from the amounts distributable to the Sellers pursuant to
Section 5.6(d) and Section 9.1(b).
SECTION 7.5. Servicer Not To Resign. The Servicer shall not
resign from its obligations and duties under this Agreement except upon
determination that the performance of its duties shall no longer be permissible
under applicable law, compliance with which could not be realized without
material adverse impact on the Servicer's financial condition. Notice of any
such determination permitting the resignation of the Servicer shall be
communicated to the Sellers, the Trustees and the Rating Agencies at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writing at the earliest practicable time) and any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Sellers and the Trustees.
No such resignation shall become effective until a successor Servicer shall have
assumed the responsibilities and obligations of the Servicer in accordance with
Section 8.2 hereof.
SECTION 7.6. Assignment of Servicing.
The Servicer may sell, transfer, assign or convey its rights
as Servicer to any of its Affiliates (in the case of CITSF) or to any Eligible
Servicer, upon written notice to the Sellers, the Trustees and the Rating
Agencies, without the consent of the Holders or the Trustees, provided that,
with respect to assignment to a Servicer which is not an Affiliate of CITSF, the
Rating Agency Condition is satisfied and the Servicer and the Trustees receive
the prior written consent of the Sellers (which consent shall not be
unreasonably withheld).
SECTION 7.7. Insurance.
The Servicer, or any affiliate of the Servicer, may, to the
extent permitted by law (i) enter into agreements with one or more insurers or
other Persons pursuant to which the Servicer or such affiliate will earn
commissions and fees in connection with any insurance policy purchased by an
Obligor including, without limitation, any physical damage insurance policy, or
any other insurance policy whatsoever, and (ii) in connection with the foregoing
or otherwise, to solicit, or permit and assist any insurer, any agent thereof or
any other Person (other than a lender which is not also an insurer) to solicit
(including,
68
without limitation, providing such insurer or agent a list of Obligors including
name, address or other information) any Obligor.
SECTION 7.8. Indemnity by Issuer. The Issuer shall indemnify,
defend, and hold harmless from and against, and pay to the Servicer all
reasonable costs, expenses, losses, claims, damages, and liabilities arising out
of or incurred in connection with the acceptance or performance of the duties
herein contained in accordance with the terms and conditions herein and in the
Administration Agreements, except to the extent that such costs, expense, loss,
claim, damage or liability: (a) shall be due to the willful misfeasance,
negligence or bad faith of the Servicer; (b) relates to any tax other than the
taxes with respect to which the Servicer shall be otherwise indemnified pursuant
to this Agreement; (c) shall arise from the Servicer's breach of any of its
representations, warranties or covenants set forth herein and in the
Administration Agreements; (d) shall be one as to which the Sellers are required
to indemnify the Servicer or (e) shall be amounts payable by (and not
reimbursable to) the Servicer pursuant to this Agreement and the Administration
Agreements. Any amounts due the Servicer pursuant to this Section 7.8 shall be
payable only to the Servicer pursuant to Section 5.6(d) or 9.1(b).
SECTION 7.9. Servicer May Own Notes and Certificates. The
Servicer or any of its Affiliates may in its individual or any other capacity
become the owner or pledgee of Notes or Certificates with the same rights as it
would have if it were not the Servicer or an Affiliate thereof, except as
otherwise provided in the definition of "Outstanding" specified in Section 1.1.
Notes or Certificates so owned by or pledged to the Servicer or any Affiliate
thereof shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority, or distinction as among all of the
Notes or Certificates, as applicable.
ARTICLE VIII
EVENTS OF SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination. Any one of the
following events which shall occur and be continuing shall constitute an event
of servicing termination hereunder (each, an "Event of Servicing Termination"):
(i) Any failure by the Servicer to deliver to the
Owner Trustee or the Indenture Trustee the Servicer's
Certificate for the related Collection Period, or any failure
by the Servicer to deliver to the Owner Trustee or the
Indenture Trustee, for deposit in any Trust Account, any
proceeds or payments required to be so delivered under the
terms of the Certificates or the Notes or this Agreement (or,
in the case of a payment or deposit to be made not later than
the Deposit Date,
69
the failure to make such payment or deposit on such Deposit
Date), which failure continues unremedied for a period of five
Business Days after (A) discovery by the Servicer or (B)
receipt of written notice (1) to the Servicer by the Indenture
Trustee or the Owner Trustee or (2) to the Indenture Trustee
or the Owner Trustee, as applicable, and the Servicer by the
Noteholders representing not less than 25% of the Outstanding
Amount of the Notes (or, if the Notes have been paid in full,
by Certificateholders representing not less than 25% of the
Certificate Balance then outstanding);
(ii) Failure on the part of the Servicer to duly
observe or perform in any material respect any other covenant
or agreement of the Servicer set forth in this Agreement,
which failure shall (a) materially adversely affect the rights
of the Issuer or the Holders, and (b) continue unremedied for
a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have
been given (1) to the Servicer by the Indenture Trustee or the
Owner Trustee, or (2) to the Indenture Trustee or the Owner
Trustee, as applicable, and the Servicer by the Noteholders
representing not less than 25% of the Outstanding Amount of
the Notes (or, if the Notes have been paid in full, by
Certificateholders representing not less than 25% of the
Certificate Balance then outstanding);
(iii) A court or other governmental authority having
jurisdiction in the premises shall have entered a decree or
order for relief in respect of the Servicer in an involuntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Servicer, as the
case may be, or for any substantial liquidation of its
affairs, and such order remains undischarged and unstayed for
at least 60 days; or
(iv) The Servicer shall have commenced a voluntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall have
consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented
to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or sequestrator (or
other similar official) of the Servicer or for any substantial
part of its property, or shall have made any general
assignment for the benefit of its creditors, or shall have
failed to, or admitted in writing its inability to, pay its
debts as they become due, or shall have taken any corporate
action in furtherance of the foregoing.
70
Upon the occurrence of any Event of Servicing Termination as
described above, and in each and every case and for so long as such Event of
Servicing Termination shall not have been remedied, either the Indenture Trustee
or the Noteholders representing not less than a majority of the Outstanding
Amount of the Notes (or, if the Notes have been paid in full and the Indenture
has been discharged in accordance with its terms, by the Owner Trustee or the
Certificateholders representing not less than a majority of the Certificate
Balance then outstanding), by notice given in writing to the Servicer (and to
the Indenture Trustee or the Owner Trustee, as applicable, if given by Holders)
may terminate all of the rights and obligations of the Servicer under this
Agreement. In addition, the Sellers may terminate all rights and obligations of
the Servicer hereunder at any time after a calendar year, or in the case of
1997, the last four months of such year, during which Aggregate Losses on the
Receivables exceed 0.80% of the Average Annual Balance for such calendar year
or, in the case of 1997, partial calendar year; provided, however, that such
termination of the Servicer shall not be effective unless Chase, Chase USA or
another party satisfying the Rating Agency Condition assumes the Servicer's
servicing obligations and duties under this Agreement. If the Sellers do not
exercise their right to terminate the Servicer as a result of Aggregate Losses
exceeding such threshold by giving written notice of termination to the
Servicer, within six months after the end of any calendar year, they will be
deemed to have waived their right to terminate the Servicer based on this
paragraph with respect to such calendar year (but such waiver shall not affect
the Sellers' right to terminate the Servicer if the Aggregate Losses on the
Receivables exceed the amount specified above in a subsequent calendar year).
On or after the receipt by the Servicer of such written notice
and the appointment of Chase pursuant to Section 8.2, all responsibilities,
duties and liabilities of the Servicer under this Agreement, whether with
respect to the Certificates, the Notes or the Receivables or otherwise, shall
pass to and be vested in Chase pursuant to Section 8.2; and, without limitation,
the Indenture Trustee or the Owner Trustee shall be hereby authorized and
empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivable Files, or otherwise. In connection with such
termination, the predecessor Servicer shall, upon request of Chase, deliver to
Chase, at predecessor Servicer's expense, all data and records (including,
without limitation, computerized records) created or used for the servicing of
the Receivables and all Collections then held by the predecessor Servicer for
deposit or thereafter received by the predecessor Servicer with respect to a
Receivable. In addition to delivering such data, records and monies, the
predecessor Servicer shall, at predecessor Servicer's expense, use reasonable
71
efforts to effect the orderly and efficient transfer of the servicing of the
Receivables to Chase, including, without limitation, directing the Obligors to
remit all payments in respect of the Receivables to an account or address
designated by Chase. In connection with any termination pursuant to the
penultimate sentence of the immediately preceding paragraph, the
Servicer shall pay the expense of any servicing systems conversion
required as a result of such termination, including, but not limited to,
the expenses of formatting all information into a format acceptable to
the successor Servicer. The Servicer shall be entitled to receive any other
amounts which are payable to the Servicer under this Agreement (including
amounts payable to it with respect to the period ending on the date of the
termination of the Servicer hereunder), on the Distribution Date relating to
the Collection Period in which the Servicer was terminated (or if funds are
not sufficient therefor, on each subsequent Distribution Date until paid in
full). The Indenture Trustee and the Owner Trustee shall give written notice
of any termination of the Servicer to their related Holders, and the
Indenture Trustee shall give such notice to the Rating Agencies. Neither
Chase nor any successor Servicer shall be deemed to be in default hereunder
by reason of its failure to make, or any delay in making, any distribution
hereunder or any portion thereof which was caused by (i) the failure of the
predecessor Servicer to deliver, or any delay in delivering cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the predecessor Servicer.
SECTION 8.2. Appointment of Successor. Upon the Servicer's
receipt of notice of termination pursuant to Section 8.1 or resignation pursuant
to Section 7.5, Chase shall be the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement, and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the Servicer by the terms and provisions of this Agreement. As
compensation therefor, Chase shall be entitled to such compensation (whether
payable out of the Collection Account or otherwise) as the Servicer would have
been entitled to under this Agreement if no such notice of termination or
resignation had been given. Notwithstanding the above, if Chase shall be
unwilling so to act, or shall be legally unable so to act, the Sellers shall
appoint, or petition a court of competent jurisdiction to appoint any Eligible
Servicer, as successor Servicer under this Agreement, provided, that the
appointment of any such successor Servicer is required to satisfy the Rating
Agency Condition. In connection with such appointment, the Sellers may make such
arrangements for the compensation of such successor Servicer out of payments on
Receivables as they and such successor Servicer shall agree; provided, however,
that no such compensation shall be in excess of that permitted the Servicer
under this Agreement. The Sellers and such successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. Unless Chase shall be prohibited by law from so acting, Chase
shall not be relieved of its duties as successor Servicer under this Section 8.2
until the newly appointed successor Servicer shall have assumed the
responsibilities and obligations of the Servicer under this Agreement.
72
SECTION 8.3. Notification to Noteholders and
Certificateholders. Upon any Event of Servicing Termination, or appointment of a
successor Servicer pursuant to this Article VIII, the Owner Trustee shall give
prompt written notice thereof to Certificateholders and the Indenture Trustee
shall give prompt written notice thereof to the Noteholders, at their respective
addresses of record, and to the Rating Agencies.
SECTION 8.4. Waiver of Past Defaults. The Noteholders
representing at least a majority of the Outstanding Amount of the Notes (or, the
Certificateholders representing not less than a majority of the Certificate
Balance then outstanding, in the case of any Event of Servicing Termination that
does not adversely affect the Indenture Trustee or the Noteholders) may, on
behalf of all such Holders, waive any default by the Servicer in the performance
of its obligations hereunder and its consequences, except a default in the
failure to make any required deposits to or payments from any of the Trust
Accounts in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Servicing
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived; provided, however, that the Indenture Trustee or the
Owner Trustee shall only be required to give such notice if a Responsible
Officer thereof has actual knowledge of the related event.
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receivables; Trust
Termination. (a) Subsequent to the last day of any Collection Period as of which
the Pool Balance shall be equal to or less than 5% of the Cutoff Date Pool
Balance, the Servicer shall have the option to purchase the Owner Trust Estate
(including the rights of the Trust to any Liquidated Receivables and any
Deferred Paid-Ahead Amounts, but excluding the Collection Account, the Reserve
Account, the Certificate Distribution Account and the Note Distribution Account)
by depositing the Optional Purchase Amount on the Deposit Date subsequent
to any such last day. The effective date of such purchase shall be the last day
of the Collection Period preceding such Deposit Date. To exercise such option,
the Servicer shall notify the Indenture Trustee, the Owner Trustee, the Sellers,
the Note Registrar and the Certificate Registrar in writing, no later than the
25th day of the Collection Period preceding such Deposit Date, shall pay the
aggregate Optional Purchase Amount and shall succeed to all interests in, to and
under such portion of the Owner Trust Estate. The payment shall be made in the
73
manner specified in Section 5.4, and shall be distributed pursuant to Section
5.5; provided, that, in no event shall the amount so deposited, when added to
the amounts on deposit in the Collection Account on such date and available for
distribution to Securityholders on the related Distribution Date, be less than
the amount required to pay all accrued and unpaid interest on the Notes, the
Outstanding Amount of the Notes, accrued and unpaid interest on the Certificates
and the Certificate Balance, after giving effect to the Servicer Payment.
(b) Upon any sale of the assets of the Issuer pursuant to
Article V of the Indenture, the Servicer shall instruct the Indenture Trustee in
writing to deposit the proceeds from such sale after all payments and reserves
therefrom (including the expenses of such sale) have been made (the "Sale
Proceeds") in the Collection Account. On the Distribution Date on which the Sale
Proceeds are deposited in the Collection Account (or, if such proceeds are not
so deposited on a Distribution Date, on the Distribution Date immediately
following such deposit), the Servicer shall instruct the Indenture Trustee in
writing to make, and the Indenture Trustee shall make, the following deposits
and distributions (after the application on such Distribution Date of the
Available Amount pursuant to Section 5.5) from the Sale Proceeds and any funds
remaining on deposit in the Reserve Account (including the proceeds of any sale
of investments therein):
(i) to the Note Distribution Account, any portion
of the Noteholders' Interest Distributable Amount not
otherwise deposited into the Note Distribution Account on such
Distribution Date;
(ii) to the Note Distribution Account, the
Outstanding Amount of the Notes (after giving effect to the
reduction in the Outstanding Amount of the Notes resulting
from the deposits made in the Note Distribution Account on
such Distribution Date);
(iii) to the Certificate Distribution Account, any
portion of the Certificateholders' Interest Distributable
Amount not otherwise deposited into the Certificate
Distribution Account on such Distribution Date;
(iv) to the Certificate Distribution Account, the
Certificate Balance and any Certificateholders' Principal
Carryover Shortfall (after giving effect to the reduction in
the Certificate Balance resulting from the deposits made in
the Certificate Distribution Account on such Distribution
Date);
(v) to the Servicer, any amounts payable to the
Servicer pursuant to Section 7.4(c) or 7.8 and to the
CITSF Administrator; and
(vi) any amounts payable to the CITSF
Administrator pursant to Section 21 of the CITSF
Administration Agreement.
74
Any Sale Proceeds remaining after the deposits described above
shall be paid to the Sellers in accordance with their respective Depositor
Allocation Percentages.
(c) Notice of any termination of the Issuer shall be given by
the Servicer to the Sellers, the Owner Trustee, the Indenture Trustee and the
Rating Agencies as soon as practicable after the Servicer has received notice
thereof. The Owner Trustee and the Indenture Trustee shall give written notice
of termination to each Noteholder and Certificateholder of record, as
applicable.
(d) Following the satisfaction and discharge of the Indenture
and the payment in full of the principal of and interest on the Notes, the
Certificateholders shall succeed to the rights of the Noteholders hereunder and
the Owner Trustee shall succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
(e) After the payment to the Indenture Trustee, the Owner
Trustee, the Holders and the Servicer of all amounts required to be paid under
this Agreement, the Indenture and the Trust Agreement, any amounts on deposit in
the Reserve Account, the Paid-Ahead Account (except as provided in Section
9.1(a)) or the Collection Account shall be paid to the Sellers in accordance
with their respective Depositor Allocation Percentages, and any other assets
remaining in the Owner Trust Estate shall be distributed to the Sellers in
accordance with their respective Depositor Allocation Percentages.
(f) Promptly after any repurchase of a Receivable by a Seller
pursuant to Section 3.2 hereof, purchase of a Receivable by the Servicer
pursuant to Section 4.6 hereof or purchase of a portion of the Owner Trust
Estate by the Servicer pursuant to Section 9.1(a) hereof, the Owner Trustee, the
Issuer and the Indenture Trustee shall execute such documents as are presented
to it by such Seller or the Servicer and are reasonably necessary to convey such
Repurchased Receivable to such Seller or the Servicer (and, the case of Section
9.1 to convey to the Servicer such portion of the Owner Trust Estate), and
transfer all right, title and interest in and to such Repurchased Receivable
and the Receivables Files related thereto (and in the case of Section 9.1, the
remaining Owner Trust Estate including any Paid-Ahead Amounts and any other
payments in respect of such Receivable or the related Financed Vehicle received
after the effective date of such purchase or repurchase) the payment of the
Repurchase Amount or the Optional Purchase Amount.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment. This Agreement may be amended by
the Sellers, the Servicer and the Issuer, with the prior consent of the
Indenture Trustee and the Owner Trustee and prior notice to the Rating Agencies
but without prior notice to
75
or the consent of any of the Holders, (i) to cure any ambiguity, to correct or
supplement any provisions in this Agreement which may be inconsistent with any
other provisions herein, to evidence a succession to the Servicer or a Seller
pursuant to this Agreement or to add any other provisions with respect to
matters or questions arising under this Agreement that shall not be inconsistent
with the provisions of this Agreement; provided, however, that such action shall
not, as evidenced by an Officer's Certificate and/or an Opinion of Counsel
reasonably acceptable and delivered to the Owner Trustee and the Indenture
Trustee, materially adversely affect the interests of the Issuer or any of the
Holders provided, further, that the Servicer shall deliver written notice of
such changes to each Rating Agency prior to the execution of any such amendment,
or (ii) to effect a transfer or assignment in compliance with Section 10.6(a) of
this Agreement. Notwithstanding the foregoing, no amendment modifying the
provisions of Section 5.5 shall become effective without satisfaction of the
Rating Agency Condition.
This Agreement may also be amended from time to time by the
Sellers, the Servicer, the Issuer, the Owner Trustee and the Indenture Trustee,
with the consent of the Certificateholders representing at least a majority of
the Certificate Balance then outstanding and the consent of the Noteholders
representing at least a majority of the Outstanding Amount of the Notes, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement, or of modifying in any manner the rights of
the Noteholders or the Certificateholders (including effecting a transfer or
assignment in compliance with Section 10.6(a) of this Agreement); provided,
however, that no such amendment, except with the consent of Noteholders
representing 100% of the Outstanding Amount or Certificateholders representing
100% of the Certificate Balance then outstanding, as applicable, shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on the Receivables, or distributions that
shall be required to be made for the benefit of any Certificateholder or
Noteholder, or (b) reduce the aforesaid percentage of the Certificate Balance of
the Certificates or the Outstanding Amount of the Notes required to consent to
any such amendment.
Promptly after the execution of any amendment or consent
referred to in this Section 10.1, the Owner Trustee shall furnish a copy of such
amendment or consent to the Indenture Trustee and each Certificateholder and to
the Rating Agencies.
It shall not be necessary for the consent of the Indenture
Trustee, the Certificateholders or the Noteholders pursuant to this Section 10.1
to approve the particular form of any proposed amendment or consent, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders or Noteholders shall
76
be subject to such reasonable requirements as the Indenture Trustee or the Owner
Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Indenture Trustee and the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Indenture Trustee and the Owner
Trustee shall not be obligated to enter into any such amendment which affects
the Indenture Trustee's and the Owner Trustee's own rights, duties or immunities
under this Agreement.
Satisfaction of the Rating Agency Condition is required prior
to the execution of any amendment to this Agreement, other than an amendment
permitted pursuant to clause (i) of the first paragraph of this Section 10.1.
The Issuer hereby agrees not to enter into an
indenture or supplemental indenture for the purpose of amending the
Indenture without the prior written consent of the CITSF Administrator.
The Sellers hereby agree not to amend the Trust Agreement without the
prior written consent of the CITSF Administrator.
SECTION 10.2. Protection of Title to Owner Trust Estate.
(a) After the Closing Date, the Servicer, pursuant to the
power-of-attorney granted by the Sellers pursuant to Section 10.11, shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the interests of the
Issuer and the Indenture Trustee in the related Receivables and in the proceeds
thereof. The Servicer shall deliver (or cause to be delivered) to the Owner
Trustee and the Indenture Trustee, with copies to the Sellers, file-stamped
copies of, or filing receipts for, any document filed as provided above, as soon
as available following such filing.
(b) Neither of the Sellers shall change its name, identity, or
corporate structure in any manner that would, could, or might make any financing
statement or continuation statement filed by it or by the Servicer in accordance
with paragraph (a) above seriously misleading within the meaning of Section
9-402(7) (or any comparable section) of the Relevant UCC, unless it shall have
given the Owner Trustee, the Indenture Trustee and the Servicer at least 30 days
prior written notice thereof.
(c) Each Seller shall give the Owner Trustee, the Indenture
Trustee and the Servicer at least 60 days prior written notice of any relocation
of its principal executive office if, as a result of such relocation, the
applicable provisions of the Relevant UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement. The Servicer shall at all times maintain each office
from which it shall service Receivables, and its principal executive office,
within the United States of America.
(d) The Servicer shall maintain accounts and records
as to each Receivable accurately and in sufficient detail to
77
permit (i) the reader thereof to know at any time the status of such Receivable,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with respect
to) each Receivable and the amounts from time to time deposited in the
Collection Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including archives) that shall
refer to a Receivable indicate clearly, by numerical code or otherwise, that
such Receivable is owned by the Issuer and has been pledged to the Indenture
Trustee. Indication of the Issuer's and Indenture Trustee's interest in a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, the Receivable shall have been paid in full, repurchased or
assigned pursuant hereto.
(f) If at any time either of the Sellers or the Servicer shall
propose to sell, grant a security interest in, or otherwise transfer any
interest in a new or used recreational vehicle receivable to any prospective
purchaser, creditor, or other transferee, such Seller or the Servicer, as the
case may be, shall give to such prospective purchaser, creditor, or other
transferee computer tapes, records, or print-outs (including any restored from
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit either Seller, the Indenture
Trustee and the Owner Trustee and their respective agents upon reasonable notice
at any time during normal business hours which does not unreasonably interfere
with the Servicer's normal operations or customer or employee relations to
inspect, audit, and make copies of and abstracts from the Servicer's records
regarding the Receivables.
(h) Upon request, the Servicer shall furnish to the Owner
Trustee or the Indenture Trustee, within five Business Days, a list of all
Receivables by contract number and name of Obligor then held by the Issuer,
together with a reconciliation of such list to the Schedules of Receivables and
to each of the Servicer Certificates indicating removal of Receivables from the
Owner Trust Estate.
(i) The Sellers shall deliver to the Owner Trustee and the
Indenture Trustee upon the execution and delivery of this Agreement, an Opinion
of Counsel stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Issuer and the
Indenture Trustee in the Receivables, and reciting the details of such filings.
78
(j) The Servicer shall deliver to the Owner Trustee and
Indenture Trustee on or before March 31 of each year, commencing with March 31,
1998, an Opinion of Counsel, dated as of such date, either (a) stating that, in
the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Issuer and the Indenture Trustee in the Receivables,
and reciting the details of such filings or referring to prior opinions of
Counsel in which such details are given, or (b) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interest. Notwithstanding the provisions of Section 10.4, such Opinion of
Counsel may be sent by regular non-certified mail, and such mailed opinion shall
be deemed delivered when so mailed.
(k) The Sellers shall, to the extent required by applicable
law, cause the Certificates and the Notes to be registered with the Securities
and Exchange Commission pursuant to Section 12(b) or Section 12(g) of the
Exchange Act within the time periods specified in such sections.
(l) For the purpose of facilitating the execution of this
Agreement and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 10.3. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
reference to its conflict of laws provisions, and the obligations, rights,
remedies of the parties hereunder shall be determined in accordance with such
laws.
SECTION 10.4. Notices. All demands, notices, and
communications under this Agreement shall be in writing, personally delivered or
mailed by certified mail, return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of (i) Chase USA, to Chase
Manhattan Bank USA, National Association, 802 Delaware Avenue, Wilmington,
Delaware 19801, Attention:_____________________ and (ii) in the case of Chase,
The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention:
_____________, or at such other address as shall be designated by either of the
Sellers in a written notice to the Indenture Trustee, (b) in the case of the
Servicer, The CIT Group/Sales Financing, Inc., 650 CIT Drive, Livingston, New
Jersey 07039, Attn: President, with a copy to: The CIT Group/Sales Financing,
Inc., 715 South Metropolitan Avenue, Suite 150, Oklahoma City, Oklahoma
73108-2090, Attn: Senior Vice President, or at such other address as shall be
designated by the Servicer in a written notice to the Indenture Trustee, (c) in
the case of the Indenture Trustee, at Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0070, Attention: Corporate Trust Office, and, (d)
in the case of the Issuer and the Owner Trustee, at c/o Wilmington Trust
Company,
79
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration. Any notice required or permitted to
be mailed to a Holder shall be given by first class mail, postage prepaid, at
the address of record of such Holder. Any notice to a Holder so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not the Holder shall receive such notice.
SECTION 10.5. Severability of Provisions. If any one
or more of the covenants, agreements, provisions, or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions, or terms shall be deemed severable from the remaining
covenants, agreements, provisions, or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or of the Notes or the rights of the Holders
thereof.
SECTION 10.6. Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 6.3, 7.3, 7.5, 7.6 and
8.2 and subject to the terms of the Servicing Agreement, neither of the Sellers
nor the Servicer may assign all, or a portion of, its rights, obligations and
duties under this Agreement unless such transfer or assignment satisfies the
Rating Agency Condition. In the event of a transfer or assignment pursuant to
this Section 10.6, the Rating Agencies shall be provided with notice of such
transfer or assignment.
SECTION 10.7. Certificates and Notes Nonassessable and Fully
Paid. The interests represented by the Certificates and Notes shall be
nonassessable for any losses or expenses of the Issuer or for any reason
whatsoever, and, upon authentication thereof by the Indenture Trustee and the
Owner Trustee pursuant to the Trust Agreement and the Indenture, respectively,
each Certificate and Note shall be deemed fully paid.
SECTION 10.8. Third-Party Beneficiaries. This Agreement
inures to the benefit of and is binding upon the parties hereto, and their
respective successors and permitted assigns. The Administrators, the Owner
Trustee, individually and on behalf of the Certificateholders, and the Indenture
Trustee, individually and on behalf of the Noteholders are third-party
beneficiaries to this Agreement and are entitled to the rights and benefits
hereunder and may enforce the provisions hereof as it were a party hereto.
Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.
SECTION 10.9. Assignment to Indenture Trustee. Each Seller
hereby acknowledges and consents to any mortgage, pledge, assignment and grant
of a security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and interest of
the Issuer in, to and under the Receivables and the other property
80
constituting the Owner Trust Estate and/or the assignment of any or all of the
Issuer's rights and obligations hereunder to the Indenture Trustee.
SECTION 10.10. Limitation of Liability of Owner Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been countersigned by Wilmington Trust Company not
in its individual capacity but solely in its capacity as Owner Trustee of the
Issuer, and in no event shall Wilmington Trust Company in its individual
capacity or, except as expressly provided in the Trust Agreement, as beneficial
owner of the Issuer, have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all purposes
of this Agreement, in the performance of its duties or obligations hereunder or
in the performance of any duties or obligations of the Issuer hereunder, the
Owner Trustee shall be subject to, and entitled to the benefits of, the terms
and provisions of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been acknowledged and accepted by Norwest Bank Minnesota, National
Association not in its individual capacity but solely as Indenture Trustee, and
in no event shall Norwest Bank Minnesota, National Association have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
SECTION 10.11. Power-of-Attorney. Each of the Sellers do
hereby make, constitute and appoint the CITSF, as Servicer hereunder, and any
successor Servicer hereunder, as its attorney-in-fact to execute on behalf of
such Seller any of the financing statements and continuation statements required
to be executed by the Servicer pursuant to Section 10.2 or other documents or
financing statements required to be executed or filed in order to realize on a
Financed Vehicle or to comply with the Servicer's obligations under Section 4.4
hereof.
81
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers as of the day and year first above
written.
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION,
as Seller
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Seller
By:
-------------------------------------
Name:
Title:
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer
By:
-------------------------------------
Name:
Title:
CHASE MANHATTAN RV OWNER TRUST,
1997-A,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee on behalf
of the Issuer
By:
-------------------------------------
Name:
Title:
Acknowledged and Accepted:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
not in its individual capacity,
but solely in its capacity
as Indenture Trustee
By:
-------------------------------------
Name:
Title:
83
SCHEDULE A-1
LIST OF CHASE USA RECEIVABLES
Delivered to the Owner Trustee and the Indenture Trustee
on the Closing Date.
84
SCHEDULE A-2
LIST OF CHASE RECEIVABLES
Delivered to the Owner Trustee and the Indenture Trustee
on the Closing Date.
85
SCHEDULE B
LOCATION OF RECEIVABLE FILES
[TO BE PROVIDED]
86
SCHEDULE C
ALLOCATION OF NOTES AND CERTIFICATES
Chase Chase USA
----- ---------
Class A-1
Class A-2
Class A-3
Class A-4
Class A-5
Class A-6
Class A-7
Class A-8
Class A-9
Class A-10
87
SCHEDULE D
ALLOCATION OF FEES AND EXPENSES TO SERVICER
88
EXHIBIT A
[FORM OF SERVICER'S CERTIFICATE]
EXHIBIT B
[FORM OF MONTHLY REPORT]
EXHIBIT C
[FORM OF STATEMENT TO
CERTIFICATEHOLDERS AND NOTEHOLDERS]
EXHIBIT D
FORM OF AMENDED AND RESTATED
SERVICING AGREEMENT
C-2