EX-4.1
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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 MARINE OWNER TRUST 1997-A,
as Issuer
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SALE AND SERVICING AGREEMENT
Dated as of October 1, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..................................... 1
SECTION 1.1. Definitions............................................... 1
SECTION 1.2. Usage of Terms............................................ 31
SECTION 1.3. Methods of Allocating Payments on
Receivables; Allocations................................ 31
ARTICLE II
CONVEYANCE OF RECEIVABLES....................... 31
SECTION 2.1. Conveyance of Receivables................................. 31
SECTION 2.2. Closing................................................... 33
ARTICLE III
THE RECEIVABLES................................. 33
SECTION 3.1. Representations and Warranties of the
Sellers; Conditions Relating to the
Receivables............................................. 33
SECTION 3.2. Repurchase Upon Breach or Failure of a
Condition............................................... 37
SECTION 3.3. Custody of Receivable Files............................... 37
SECTION 3.4. Duties of Servicer as Custodian........................... 38
SECTION 3.5. Instructions; Authority to Act............................ 40
SECTION 3.6. Effective Period and Termination.......................... 41
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES........................ 41
SECTION 4.1. Duties of Servicer........................................ 41
SECTION 4.2. Collection of Receivable Payments......................... 44
SECTION 4.3. Realization Upon Receivables.............................. 45
SECTION 4.4. Maintenance of Security Interests in
Financed Boats. ....................................... 46
SECTION 4.5. Covenants of Servicer..................................... 47
SECTION 4.6. Purchase of Receivables Upon Breach....................... 47
SECTION 4.7. Servicing Fee............................................. 48
SECTION 4.8. Monthly Report............................................ 48
SECTION 4.9. Annual Statement as to Compliance......................... 49
SECTION 4.10. Annual Report of Accountants.............................. 49
SECTION 4.11. Access by Holders to Certain
Documentation and Information Regarding
Receivables............................................. 50
SECTION 4.12. Reports to Holders and the Rating
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Agencies................................................ 50
SECTION 4.13. Reports to the Securities and Exchange
Commission.............................................. 50
SECTION 4.14. Maintenance of Fidelity Bond.............................. 50
SECTION 4.15. Satisfaction of Receivable................................ 51
ARTICLE V
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO NOTEHOLDERS AND THE CERTIFICATEHOLDERS.............. 51
SECTION 5.1. Establishment of Accounts................................. 51
Section 5.2. Collections; Applications................................. 53
SECTION 5.3. Monthly Advances.......................................... 55
SECTION 5.4. Additional Deposits....................................... 56
SECTION 5.5. Distributions............................................. 56
SECTION 5.6. Reserve Account........................................... 58
SECTION 5.7. Net Deposits.............................................. 60
SECTION 5.8. Statements to Certificateholders and
Noteholders............................................. 60
ARTICLE VI
THE SELLERS................................... 62
SECTION 6.1. Representations of Sellers............................... 62
SECTION 6.2. Liability of Sellers; Indemnities........................ 63
SECTION 6.3. Merger or Consolidation of Sellers....................... 65
SECTION 6.4. Limitation on Liability of Sellers and
Others................................................. 65
SECTION 6.5. Sellers May Own Notes and Certificates................... 65
ARTICLE VII
THE SERVICER; REPRESENTATIONS AND INDEMNITIES........................ 66
SECTION 7.1. Representations of the Servicer........................... 66
SECTION 7.2. Liability of Servicer, Indemnities........................ 67
SECTION 7.3. Merger or Consolidation of Servicer....................... 68
SECTION 7.4. Limitation on Liability of Servicer and
Others.................................................. 68
SECTION 7.5. Servicer Not To Resign.................................... 69
SECTION 7.6. Assignment of Servicing................................... 69
SECTION 7.7. Insurance................................................. 70
SECTION 7.8. Indemnity by Issuer....................................... 70
SECTION 7.9. Servicer May Own Notes and Certificates................... 70
ARTICLE VIII
EVENTS OF SERVICING TERMINATION.......................... 71
SECTION 8.1. Events of Servicing Termination.......................... 71
SECTION 8.2. Appointment of Successor................................. 73
SECTION 8.3. Notification to Noteholders and
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Certificateholders...................................... 74
SECTION 8.4. Waiver of Past Defaults................................... 74
ARTICLE IX
TERMINATION...................................... 74
SECTION 9.1. Optional Purchase of All Receivables;
Trust Termination....................................... 74
ARTICLE X
MISCELLANEOUS PROVISIONS.................................. 77
SECTION 10.1. Amendment................................................. 77
SECTION 10.2. Protection of Title to Owner Trust
Estate.................................................. 78
SECTION 10.3. Governing Law............................................. 81
SECTION 10.4. Notices................................................... 81
SECTION 10.5. Severability of Provisions................................ 81
SECTION 10.6. Assignment................................................ 82
SECTION 10.7. Certificates and Notes Nonassessable and
Fully Paid.............................................. 82
SECTION 10.8. Third-Party Beneficiaries................................. 82
SECTION 10.9. Assignment to Indenture Trustee........................... 82
SECTION 10.10. Limitation of Liability of Owner Trustee
and Indenture Trustee................................... 82
SECTION 10.11. Power-of-Attorney......................................... 83
SCHEDULES
Schedule A-1 - List of Chase Receivables
Schedule A-2 - List of Chase USA Receivables
Schedule B - Allocation of Notes and Certificates
Schedule C - 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 Amended and Restated Servicing
Agreement
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Sale and Servicing Agreement, dated as of October 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 MARINE 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 on or
prior to such day allocable to principal using the actuarial method and (b) with
respect to a Simple Interest Receivable, the Principal Balance thereof as of
such day.
"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 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.
"Agreement" means this Sale and Servicing Agreement, dated as
of October 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 Boat 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.
"Assignment" means an assignment of a Preferred Mortgage in
compliance with the requirements of the Ship Mortgage Statutes.
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"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 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
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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.
"Book-Entry Notes" means the Notes, ownership and
transfers of which shall be made through book entries by a
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Clearing Agency or Foreign Clearing Agency as described in Section 2.10 of the
Indenture.
"Business Day" means a day, other than a Saturday or a Sunday,
on which the Indenture Trustee and banks located in New York, New York,
Wilmington, Delaware and Minneapolis, Minnesota are open for the purpose of
conducting a commercial banking
business.
"Business Trust Statute" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code 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.
"Certificate Distribution Account" has the meaning
specified in Section 5.1 of the Trust Agreement.
"Certificate Interest" means the fractional undivided
beneficial equity interests in the Trust represented by the Certificates.
"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 Register" and "Certificate Registrar" means the
register maintained and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.
"Certificated Securities" means a "certificated security"
within the meaning of the Relevant UCC.
"Certificateholder" means (i) initially, each of Chase and
Chase USA and (ii) thereafter, the Person in whose name a Certificate is
registered in the Certificate Register.
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"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 October 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.
"CIT" means The CIT Group, 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 October 1, 1997, among the Issuer, CITSF
and the Indenture Trustee, as the same may be amended and supplemented from time
to time.
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"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 $41,800,000 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 $55,600,000 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 $50,600,000 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 $37,300,000 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 $29,300,000 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 $23,700,000 aggregate principal amount
of Class A-6 [___]% Asset Backed Notes, substantially in the form of Exhibit B
to the Indenture.
"Class A Notes" means the Class A-1 Notes, the Class A- 2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the
Class A-6 Notes.
"Class A Noteholders' Interest Carryover Shortfall" means, for
any Distribution Date, the excess of (i) the Class A Noteholders' Interest
Distributable Amount for the preceding Distribution Date over (ii) the amount
in respect of interest that was actually deposited in the Note Distribution
Account in respect of the Class A Notes on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to the Class A
Noteholders on the preceding Distribution Date, to the extent permitted by law,
at the respective Interest Rates
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borne by the Class A Notes for the related Interest Accrual Period.
"Class A Noteholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of (x) the Class A Noteholders' Monthly
Interest Distributable Amount for all classes of Class A Notes for such
Distribution Date and (y) the Class A Noteholders' Interest Carryover Shortfall
for such Distribution Date.
"Class A Noteholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, for each class of Class A Notes, interest
accrued during the related Interest Accrual Period at the Interest Rate
borne by such class of Class A Notes on the outstanding principal balance of
the Class A Notes of such class on such Distribution Date (or, in the case of
the first Distribution Date, on the Closing Date). Interest for purposes of
this definition shall be computed on the basis of a 360-day year of twelve
30-day months.
"Class B Note" means $10,650,000 aggregate principal amount of
Class B [___]% Asset Backed Notes, substantially in the form of Exhibit C to the
Indenture.
"Class B Interest Rate" means [___]% per annum.
"Class B Noteholders' Interest Carryover Shortfall" means, for
any Distribution Date, the excess of (i) the Class B Noteholders' Interest
Distributable Amount for the preceding Distribution Date over (ii) the amount
in respect of interest that was actually deposited in the Note Distribution
Account in respect of the Class B on such preceding Distribution Date, plus
interest on the amount of interest due but not paid to the Class B Noteholders
on the preceding Distribution Date, to the extent permitted by law, at the
Interest Rate borne by the Class B Notes for the related Interest Accrual
Period.
"Class B Noteholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of (x) the Class B Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and (y) the Class B
Noteholders' Interest Carryover Shortfall for such Distribution Date.
"Class B Noteholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, interest accrued during the Interest Accrual
Period at the related Interest Rate borne by the Class B Notes on the
outstanding principal balance of the Class B Notes on such Distribution Date
(or, in the case of the first Distribution Date, on the Closing Date). Interest
for purposes of this definition on the Class B Notes shall be computed on the
basis of a 360-day year of twelve 30-day months.
8
"Class C Note" means $17,312,029.25 aggregate principal amount
of Class C [___]% Asset Backed Notes, substantially in the form of Exhibit D to
the Indenture.
"Class C Interest Rate" means [___]% per annum.
"Class C Noteholders' Interest Carryover Shortfall" means, for
any Distribution Date, the excess of (i) the Class C Noteholders' Interest
Distributable Amount for the preceding Distribution Date over (ii) the amount
in respect of interest that was actually deposited in the Note Distribution
Account in respect of the Class C Notes on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to the Class C
Noteholders on the preceding Distribution Date, to the extent permitted by law,
at the Interest Rate borne by the Class C Notes for the related Interest Accrual
Period.
"Class C Noteholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of (x) the Class C Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and (y) the Class C
Noteholders' Interest Carryover Shortfall for such Distribution Date.
"Class C Noteholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, interest accrued during the related Interest
Accrual Period at the Interest Rate borne by the Class C Notes on the
outstanding principal balance of the Class C Notes on such Distribution Date
(or, in the case of the first Distribution Date, on the Closing Date).
Interest for purposes of this definition on the Class C Notes shall be
computed on the basis of a 360-day year of twelve 30-day months.
"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 October __, 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
October 1997 until Chase Manhattan Marine Owner Trust 1997-A shall terminate
pursuant to Article IX of the Trust Agreement.
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"Collections" means all collections in respect of
Receivables, including Net Liquidation Proceeds.
"Control" means (a) with respect to a Security
Entitlement if:
(i) (A) the Indenture Trustee is the Securities
Intermediary for the Reserve Account, or
(B) the Indenture Trustee
(1) is registered on the records of the
Securities Intermediary as the person
having such a Security Entitlement against
the Securities Intermediary, or
(2) has obtained the agreement, in
writing, of the Securities Intermediary
for such Security Entitlement that it will
comply with orders of the Indenture Trustee
regarding the sale or redemption of the
Security Entitlement without further consent
of any other person, and
(ii) the Securities Intermediary for such Security
Entitlement
(a) is the registered owner of the related Financial
Asset,
(b) is the holder of the Security Certificate
for the related Financial Asset, or
(c) holds its interest in the related Financial
Asset directly through a clearing corporation
(as defined in Revised Article 8); and
(b) with respect to a United States Security Entitlement if:
(i) (A) the Indenture Trustee is a participant in the
book entry system maintained by the Federal
Reserve Bank that is acting as fiscal agent for
the issuer of such the Securities United States
Security Entitlement; and
(B) such Federal Reserve Bank has indicated by book
entry that such United States Security
Entitlement has been credited to the Indenture
Trustee's securities account in such book entry
system; or
(ii) (A) the Indenture Trustee
(1) is registered on the records of a
Securities Intermediary as the Person
having a Security Entitlement in respect
of such United States Security Entitlement
against such Securities Intermediary; or
(2) has obtained the agreement, in writing, of
the Securities Intermediary for such
Security Entitlement that it will comply
with orders of the Indenture Trustee
regarding the sale or redemption of the
Security Entitlement without further consent
of any other Person; and
(b) the Securites Intermediary for such Security
Entitlement is a participant in the book entry
system maintained by the Federal Reserve Bank
that is acting as fiscal agent for the issuer of
such United States Security Entitlement; and
(c) such Federal Reserve Bank has indicated by book
entry that such United States Security
Entitlement has been credited to the Securities
Intermediary's securities account in such book
entry system.
"Contract Rate" of a Receivable means the annual rate of
interest stated in such Receivable.
"Controlling Notes" means (i) all classes of Class A Notes
voting as a single class until the Class A Notes have been paid in full, (ii)
after the Class A Notes have been paid in full, the Class B Notes and (iii)
after the Class B Notes have been paid in full, the Class C Notes.
"Corporate Trust Office" shall mean the New York office of the
Indenture Trustee or the Wilmington, Delaware office of the Owner Trustee, as
applicable.
"Cutoff Date" means October 1, 1997.
"Cutoff Date Pool Balance" shall be $266,262,029.25 .
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"Dealer" means the dealer which sold a Financed Boat and which
originated or assisted in the origination of the Dealer Receivable relating to
such Financed Boat 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 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.
"Delaware Trustee" has the meaning specified in
Section 10.1 of the Trust Agreement.
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"Delinquency Percentage" means, for any Distribution Date, the
sum of the outstanding Principal Balances of all Receivables which were 60 days
or more delinquent (including Receivables, which are not Liquidated Receivables,
relating to Financed Boats 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) with respect to any Physical Property (that
is not either a United States Security Entitlement or a Security
Entitlement), 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.
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(b) with respect to any Uncertificated Security
(i) if the issuer of the Uncertificated Security is organized
under the laws of an Old Article 8 Jurisdiction, 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 (i) if the issuer of the
Uncertificated Security is organized under the laws of a jurisdiction
that has adopted Revised Article 8, (A) the issuer registers the
Indenture Trustee as the registered owner thereof or (y) the Indenture
Trustee otherwise satisfies the requirements of Section 8-106(c) of
Revised Article 8.
"Deposit Date" means the Business Day immediately
preceding each Distribution Date.
"Depositor" means each Seller in its capacity as
Depositor under the Trust Agreement.
"Determination Date" means the third Business Day prior
to a Distribution Date.
"Designated Receivables" means those Receivables having
original Principal Balances of $50,000 or more.
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"Distribution Date" means, in the case of the first Collection
Period, November 17, 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 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 marine 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.
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"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.
"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 Boat" means, with respect to a Receivable, a new or
used power boat (including any boat motors and accompanying boat trailers) or
sail boat, together with all accessions thereto, securing an Obligor's
indebtedness under such Receivable.
"Final Scheduled Distribution Date" means for (a) the Class
A-1 Notes, the January 2000 Distribution Date, (b) the Class A-2 Notes, the
March 2002 Distribution Date, (c) the Class A-3 Notes, the January 2005
Distribution Date, (d) the Class A-4 Notes, the April 2007 Distribution Date,
(e) the Class A-5 Notes, the October 2009 Distribution Date, (f) Class A-6
Notes, the April 2012 Distribution Date, (g) the Class B Note, the August 2013
Distribution Date and (h) the Class C Notes, October 2017 Distribution Date.
"Final Scheduled Maturity Date" means the last day of the
Collection Period immediately preceding the Note Final Scheduled Distribution
Date with respect to the Class C Notes.
"Financial Asset" means within the meaning of Section
8-102(a)(9) of Revised Article 8.
"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
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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 October 1, 1997,
between the Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time.
"Indenture Trustee" means, initially, Norwest Bank Minnesota,
National Association, as Indenture Trustee under the Indenture, or any successor
Indenture Trustee under the Indenture.
"Independent" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the 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
15
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.
"Insurance Policy" means, with respect to each Receivable, the
policy of physical damage and all other insurance covering the related Financed
Boat 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 Marine 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 Boat into cash
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proceeds (including, without limitation, expenses relating to recovery,
repossession, transporting, repair, care, custody, control and resale of such
Financed Boat), but shall not include expenses customarily deducted by third
parties from sale proceeds in connection with sales or other dispositions of
boats.
"Liquidated Receivable" means a defaulted Receivable as to
which (i) the Servicer has (A) recovered all amounts that it expects to
recover either by sale or disposition of the related Financed Boat or
otherwise or (B) all or any part of a scheduled payment is 120 days or more
past due, (including, without limitation, a Receivable whose related Obligor
is unable to be located), or (ii) all or any part of a scheduled payment is 120
days or more past due.
"Loss" has the meaning specified in the Servicing
Agreement.
"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 boats.
"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 Boat" means a Financed Boat 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 B Note or
a Class C Note.
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"Note Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1(a)(ii).
"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.
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of (x) the Class A Noteholders' Interest
Distributable Amount for such Distribution Date, (y) the Class B Noteholders'
Interest Distributable Amount for such Distribution Date and (z) the Class C
Noteholders' Interest Distributable Amount for such Distribution Date.
"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'
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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 preceding Distribution Date.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of (i) the 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
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 Boat 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.
"Old Article 8 Jurisdiction" means any jurisdiction that has
not adopted Revised Article 8.
"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 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 Interest Rate with respect to the Class C Notes and
the Servicing Fee Rate, minus (iii) all Collections of (or
19
allocable to) interest on each such Receivable received during such Collection
Period (including from any Applied Paid-Ahead Amounts or Repurchase Amounts) and
deposited (or required to be deposited) into the Collection Account.
"Originating Entity" means, with respect to any Receivable,
the Affiliate of CFAC, Chase, Chase USA or a predecessor of any of them which
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.
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"Outstanding Amount" means, when used with respect to Notes,
as of any date of determination, the aggregate principal amount of all Notes, or
a class of Notes, as applicable, Outstanding as of such date.
"Owner 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
21
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 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
22
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 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,
23
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.
"Physical Property" means banker's acceptances, commercial
paper, negotiable certificates of deposits and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of the
Relevant UCC and are susceptible to physical delivery and Certificated
Securities.
"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 Receivable.
"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.
"Preferred Mortgage" means a "preferred mortgage" as defined
in Section 31322 of the Ship Mortgage Statutes.
"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 Distributable 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
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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 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.
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"Qualified Trust Institution" means an institution organized
under the laws of the United States of America or any one of the States thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times (i) is authorized under such laws to act as a trustee or in any other
fiduciary capacity, (ii) has not less than one billion dollars in assets under
fiduciary management, and (iii) has a long term deposits rating of not less than
"BBB-" by Standard & Poor's, "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 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 Boat, 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 are
issued, in which case, Record Date, with respect to such Definitive Notes
shall mean the last day of the immediately preceding calendar month.
"Redemption Date" means in the case of a redemption of the
Class C Notes pursuant to Section 10.1 of the Indenture, the Distribution Date
specified by the Servicer pursuant to such Section 10.1.
"Redemption Price" means in the case of a redemption of
the Class C Notes pursuant to Section 10.1 of the Indenture, an
26
amount equal to the Outstanding Amount of such Notes plus accrued and unpaid
interest thereon at the related Interest Rate to but excluding the Redemption
Date.
"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 thereon to such last day.
"Repurchased Receivable" means a Receivable repurchased by a
Seller pursuant to Section 3.2 or 10.2(n) 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 $11,981,791.32.
"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, Security Entitlements, 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
27
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.
"Revised Article 8" means Revised Article 8 (1994 Version)
(and corresponding amendments to Article 9) as promulgated by the National
Conference of Commissioners on Uniform State Laws.
"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
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.
"Secretary of Transportation" means the Secretary of the
United States Department of Transportation.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Intermediary" means a "securities intermediary"
within the meaning of Section 8-102(a)(14) of Revised Article 8.
"Security Certificate" means a "security certificate" within
the meaning of Section 8-102(a)(16) of Revised Article 8.
"Security Entitlement" means a "security entitlement" within
the meaning of Section 8-102(a)(17) of Revised Article 8.
"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).
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"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 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.
"Ship Mortgage Statutes" means Chapter 313 of Title 46 of the
United State Code, as amended from time to time.
"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 4.5% (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)
$5,325,240.58 and (ii) such Pool Balance. Notwithstanding the foregoing, if for
any Distribution Date (commencing with the Distribution Date in January 1998)
(x) the Average Net Loss Ratio exceeds 2.75% or (y) the Average Delinquency
Percentage exceeds 3.00%, then the
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Specified Reserve Account Balance shall be 8.00%; 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 October 1, 1997, among the Sellers and the Owner Trustee,
as the same may be amended and supplemented from time to time.
"Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including all
property and interests Granted to the Indenture Trustee), including all proceeds
thereof and the Reserve Account.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"Trustees" means, collectively, the Indenture Trustee
and the Owner Trustee.
"Uncertificated Security" means an "uncertificated security"
within the meaning of the Relevant UCC.
"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.
"U.S. Documentable Boat" means a vessel that meets the federal
five-ton standard and qualifies for documentation under federal law.
"Used Financed Boat" means a Financed Boat the model year of
which is earlier than the year of origination of the related Receivable.
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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.
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
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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 Boats granted by the Obligors pursuant to the
Receivables and in any repossessed Financed Boats;
(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 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.
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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 agreement related to the
Class A Notes, the underwriting agreement related to the Class B Notes and the
Class C Notes 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 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
33
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 or (B) was originated by an
Originating Entity directly, 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 Boat;
(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 Boat, 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;
(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;
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(viii) Insurance. The Obligor on each such
Receivable is required to maintain physical damage insurance
covering the related Financed Boat 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 Boat 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 Boat 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 Boat in favor of
the related Originating Entity. With respect to each Financed Boat that
is a U.S. Documentable Boat, a recorded and fully effective Preferred
Mortgage has been placed in favor of the related Originating Entity as
security for the Receivable with respect to such U.S.
Documentable Boat;
(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
35
filed for work, labor or materials affecting a Financed Boat 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;
(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 Boat that, on the Cutoff Date, had not been
repossessed without reinstatement of such Receivable; and
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(xxvi) Maturity of Receivables. Each such
Receivable had a remaining maturity of not less than one
month nor greater than 236 months; and
(xxvii) Remaining Principal Balance. Each such
Receivable had a remaining principal balance of not greater than
$600,000.
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 interest of the Issuer 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 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
37
"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 Boat.
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 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.
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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 Noteholders, the Owner Trustee or the Indenture Trustee.
Any original documents relating to the Receivables held by the
Servicer shall be maintained in fireproof files, except those documents held by
Andrews or by another third-party custodian which does not offer fireproof
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. The Servicer shall promptly notify the Rating Agencies
upon any change of custodian.
(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
39
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.
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.
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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 Controlling Notes, 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, 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
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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, 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
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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 Boats 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 and the Noteholders, or any of them,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables or with respect to the Financed Boats.
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.
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(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 marine
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 Financed Boat
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 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 Boat.
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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 Boat 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 Boat shall have suffered damage, the
Servicer shall not expend funds in connection with the repair or the
repossession of such Financed Boat 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 Boat, in its own name, if possible, or as
agent for 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
45
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
Boats. (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 Boat 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, Preferred Ship Mortgages or other instruments. In
addition, if the Servicer discovers any deficiency in the priority or
perfection of any such security interest in a Financed Boat 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 Boat's
certificate of title or the assignment of the UCC-1 financing statement or the
Preferred Mortgage, to grant to the Issuer a perfected security interest in
the related Financed Boat, the Sellers hereby agree to serve as the Issuer's
agent for the purpose of perfecting the security interest in such Financed Boat
and that the related Seller's listing as the secured party on the certificate of
title, UCC-1 financing statement or Preferred Mortgage, is in the capacity as
agent of the Issuer.
(c) If the Servicer is unable to foreclose upon a Financed
Boat because the title document or the Preferred Mortgage for such Financed
Boat 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 or shall, at its expense, file an
Assignment with respect to such Preferred Mortgage, as the case may be.
(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 Boat
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 Boat
in order to cause a change in the registration of legal owner of the Financed
Boat to the Issuer at such time as such certificate of title is endorsed and
delivered to the applicable state department of motor vehicles) with
appropriate fees. Each Seller
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will provide the Issuer with any necessary power of attorney for such purpose.
(e) If the Servicer is unable to retitle the Financed Boat, in
the event that the Servicer seeks to foreclose on a Financed Boat, 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 Boat,
including, as appropriate, the filing of any UCC-1 or UCC-2 financing statements
necessary to perfect the security interest in any Financed Boat.
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 Boat 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 Boat, 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 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
47
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 Chase Administrator, the CITSF
Administrator (but only so long as the Servicer is the CITSF Administrator), the
Owner Trustee, the Indenture Trustee and 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 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
48
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.
(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
49
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 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
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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 marine 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 Boat 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 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
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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
[Certificateholders] in accordance with their respective Certificate Interests.
(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.
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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. 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 $594,187.70,
the aggregate amount of Deferred Paid-Ahead Amounts with respect to the
Receivables as of the Cutoff Date, into the Paid-Ahead Account not later than
two Business Days after the Closing Date.
(b) Monthly Deposits to Collection Account and to
Paid-Ahead Account. 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 or
withdrawal of its then-current rating of the Notes,
the Servicer may make the deposits to the Collection Account and the Paid-Ahead
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 amounts equal to the
net amounts of such deposits and payments which would have been made to the
Collection Account and the Paid-Ahead Account during such Collection Period
but for the
53
provisions of this Section 5.2(b). 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 Certificateholders 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:
(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
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(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 instruct the
Indenture Trustee in writing to withdraw from the Paid-Ahead Account or
otherwise and forward to the Seller or Servicer purchasing such Receivable any
Deferred Paid-Ahead Amounts with respect to such Repurchased Receivable.
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 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
55
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, 9.1(a) and 10.2(n), 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 Servicer Payment; (vii) 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; (viii) any amounts to be deposited into the
Reserve Account pursuant to Section 5.5(b) and 5.6 hereof, (x) the aggregate
amount of unreimbursed Monthly Advances to be reimbursed to the Servicer and
(xi) the amount, if any, to be withdrawn from the Reserve Account and paid to
the Certificateholders on such Distribution Date.
(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 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
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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 Class A
Noteholders' Interest Distributable Amount;
(iii) except as set forth in Section 5.5(d) to the
Note Distribution Account, the Class B Noteholders' Interest
Distributable Amount;
(iv) except as set forth in Section 5.5(d) to the
Note Distribution Account, the Class C Noteholders' Interest
Distributable Amount;
(v) except as set forth in Section 5.5(d), to the
Note Distribution Account, the Noteholders' Principal
Distributable Amount;
(vi) except as set forth in Section 5.5(d), to the
Reserve Account, any remaining portion of the Available
Amount.
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 Class A Notes shall be deposited in the Note
Distribution Account, (2) after the distribution described in clause (iii) of
Section 5.5(c), an amount equal to the
57
Outstanding Amount of the Class B Notes shall be deposited into the Note
Distribution Account, (3) after the distribution described in clause (iv) of
Section 5.5(c), an amount equal to the Outstanding Amount of the Class C Notes
shall be deposited into the Note Distribution Account and (4) any remaining
amounts shall be applied pursuant to clause (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 deposit the
Reserve Account Initial Deposit into the Reserve Account.
(b) Should any sole depositary of the Reserve Account cease to
be either a Qualified Institution or a Qualified Trust Institution, the 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 (and that is not either a United States
Security Entitlement or a Security Entitlement) shall be
delivered to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be
held by the Indenture Trustee, pending maturity or
disposition;
(ii) any Reserve Account Property that is a United
States Security Entitlement or a Security Entitlement by the
Indenture Trustee shall mention Control over such Reserve
Account Property, pending maturity or disposition; and
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(iii) any Reserve Account Property that is an
Uncertificated Security (and that is not a United States
Security Entitlement) shall be delivered to the Indenture
Trustee in accordance with paragraph (b) 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
October __, 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 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) 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 Certificateholders, in accordance
with their respective Certificate Interests. Upon any distribution to the
Servicer or the Certificateholders of amounts from the Reserve Account, the
Noteholders shall have no rights in, or claims, to, such amounts. Amounts
properly distributed to the Servicer, the CITSF Administrator or the
Certificateholders 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 Certificateholders shall in any event thereafter be
required to refund any such distributed amounts.
(e) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Reserve Account and in
all proceeds thereof and all such funds, investments, proceeds and income shall
be part of the
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Owner Trust Estate. Except as otherwise provided herein, the Reserve Account
shall be under the sole dominion and control of the Indenture Trustee for the
benefit of the Noteholders and 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 and Certificateholders
(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 Certificateholders 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 the Monthly
Report attached hereto as 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 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:
(i) the amount of the distribution allocable
to interest with respect to each class of Notes and the
derivation of such amounts;
(ii) the amount of the distribution allocable
to principal on or with respect to each class of Notes;
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(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 after giving effect to all
payments reported under clause (ii) 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 Class A Noteholders' Interest
Carryover Shortfall, the Class B Noteholders' Interest
Carryover Shortfall, the Class C Noteholders' Interest
Carryover Shortfall and the Noteholders' Principal Carryover
Shortfall, if any, 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) and (ii) with respect
to each class of Notes shall be expressed as a dollar amount per $1,000 of the
initial principal balance of such class of Notes.
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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
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breach of any of the terms and provisions of, nor 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 or the Notes, or (d) relating to such Seller
and which might adversely affect the federal or state income
tax attributes of the Notes.
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,
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or license taxes (but not including any taxes asserted with respect to ownership
of the Receivables or federal or other income taxes, including franchise taxes
measured by net income), arising out of the transactions contemplated by this
Agreement and the other Basic Documents, and costs and expenses in defending
against the same.
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
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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 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 prior written notice (or as promptly
thereafter as is practicable) 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.
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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
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or on the Notes, the Certificates or the transactions
contemplated by this Agreement.
(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 Boat, 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
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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 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 give prior written notice of any such merger or consolidation to
which it is a party to the Issuer, the Owner Trustee, the Indenture Trustee, the
Sellers and the Rating Agencies.
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
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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.
(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 Certificateholders
pursuant to Section 5.6(d) and Section 9.1(e).
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 prior written notice to the Sellers, the Trustees and the Rating
Agencies (or as soon thereafter as is practicable), 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).
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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, 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.
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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 Notes or this Agreement (or, in the case of a
payment or deposit to be made not later than the Deposit Date,
the failure to make such payment or deposit on such Deposit
Date), which failure continues unremedied for a period of five
Business Days after (A) discovery by 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 Controlling Notes;
(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 Controlling Notes;
(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
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(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.
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 Controlling Notes, by notice given in writing to the Servicer
(and to the Indenture Trustee, if given by Noteholders) 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 three months
of such year, during which Aggregate Losses on the Receivables exceed 1.20% 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
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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
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
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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.
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 Controlling
Notes 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
74
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 on the related
Deposit Date and shall succeed to all interests in, to and under such portion of
the Owner Trust Estate. The payment shall be made in the manner specified in
Section 5.4, and shall be distributed pursuant to Section 5.5; provided, that,
in no event shall the Optional Purchase Amount so deposited, when added to the
amounts on deposit (or required to be deposited) in the Collection Account on
such date and available for distribution to Noteholders on the related
Distribution Date, be less than the amount required to pay all accrued and
unpaid interest on the Notes and the Outstanding Amount of the Notes, 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, (A) any
portion of the Class A Noteholders' Interest Distributable
Amount not otherwise deposited into the Note Distribution
Account on such Distribution Date and (B) the Outstanding
Amount of the Class A Notes (after giving effect to the
reduction in the Outstanding Amount of the Class A Notes
resulting from the deposits made in the Note Distribution
Account on such Distribution Date) (for distribution to the
Class A Noteholders pro rata based on their respective unpaid
principal amounts);
(ii) to the Note Distribution Account, (A) any
portion of the Class B Noteholders' Interest Distributable
Amount not otherwise deposited into the Note Distribution
Account on such Distribution Date and (B) the Outstanding
Amount of the Class B Notes (after giving effect to the
reduction of the Outstanding Amount of the Class B Notes
resulting from the deposits made in the Note Distribution
Account on such Distribution Date);
(iii) to the Note Distribution Account, (A) any
portion of the Class C Noteholders' Interest Distributable
Amount not otherwise deposited into the Note Distribution
Account on such Distribution Date and (B) the Outstanding
Amount of the Class C Notes resulting from the deposits made
in the Note Distribution Account on such Distribution Date);
(iv) to the Servicer, any amounts payable to the
Servicer pursuant to Section 7.4(c) or 7.8; and
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(v) to the CITSF Administrator any amounts payable
to the CITSF Administrator pursuant to Section 21 of the
CITSF Administration Agreement.
Any Sale Proceeds remaining after the deposits described above
shall be paid to the Certificateholders in accordance with their respective
Certificate Interests.
(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 Noteholders 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 (b)) or the Collection Account shall be paid to the
Certificateholders in accordance with their respective Certificate Interests
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, in 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, such
portion of the Owner Trust Estate) (including any Paid-Ahead Amounts and any
other payments in respect of such Receivable or the related Financed Boat
received after effective date of such purchase or repurchase.
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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 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 Noteholders representing at least a majority of the
Outstanding Amount of the Notes and the Certificate Interest of the
Certificates, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Noteholders or the Certificateholders (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 Interest 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
77
pursuant to this Section 10.1 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders or Noteholders
shall be subject to such reasonable requirements as the Indenture Trustee or the
Owner Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Indenture Trustee and the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Indenture Trustee and the Owner
Trustee shall not be obligated to enter into any such amendment which affects
the Indenture Trustee's and the Owner Trustee's own rights, duties or immunities
under this Agreement.
Satisfaction of the Rating Agency Condition is required prior
to the execution of any amendment to this Agreement, other than an amendment
permitted pursuant to clause (i) of the first paragraph of this Section 10.1.
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.
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(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 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 marine product 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
79
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.
(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 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.
(m) Before amending the Servicing Agreement or consenting to
the assignment of the obligations of any of the parties thereto, the Sellers
shall provide the Rating Agencies with written notice thereof.
(n) The Sellers shall cause an Assignment to be filed with
the Secretary of Transportation with respect to each Financed Boat that is a
U.S. Documentable Boat and is related to a Designated Receivable, in each case
no later than 120 days after the Closing Date, evidencing the ultimate
assignment of the related Preferred Mortgage from the related Originating
Entity to the
80
Trust. On such 120th day, the Sellers shall deliver to the Indenture Trustee
an Opinion of Counsel reasonably acceptable to the Indenture Trustee (with
copies to the Rating Agencies) to the effect that, assuming the proper
recordation filing of such Assignments, such Assignments are effective in
transferring to the Trust a perfected security interest in the related
Financed Boats.
If following such 120-day period the Trust does not
have a perfected security interest in any Financed Boat that is both a
U.S. Documentable Boat and related to a Designated Receivable, such
failure materially and adversely affects the interest of the Issuer in
such Receivable and such failure continues for 30 days after the related
Seller discovers or receives written notice of such failure, such Seller
shall repurchase such Receivable as of the last day of the Collection
Period in which such 30-day period shall have lapsed. 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 to any
breach of this Section 10.2(m) shall be to require such Seller to
repurchase the related Receivables. For administrative convenience, if
Chase is obligated pursuant to this Section 10.2(m) to repurchase a
Chase Receivable from the Issuer, Chase USA, at its option, may satisfy
Chase's obligations by repurchasing such Receivable upon the same terms
as if Chase had repurchased such Receivable.
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: Controller and (ii) in the case of Chase, The Chase
Manhattan Bank, c/o Chase Financial Corporation, 250 West Huron, Cleveland, Ohio
44113, Attention: Chief Financial Officer (cc: General Counsel), 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, 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.
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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 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
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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 Boat or to comply with the Servicer's obligations under Section 4.4
hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers as of the day and year first above
written.
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION,
as Seller
By:
----------------------------
Name: Keith Schuck
Title: Vice President
THE CHASE MANHATTAN BANK,
as Seller
By:
----------------------------
Name: Robert Krug
Title: Vice President
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer
By:
----------------------------
Name:
Title:
CHASE MANHATTAN MARINE 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: Marianna Stershic
Title: Assistant Vice President
SCHEDULE A-1
LIST OF CHASE USA RECEIVABLES
Delivered to the Owner Trustee and the Indenture Trustee
on the Closing Date.
SCHEDULE A-2
LIST OF CHASE RECEIVABLES
Delivered to the Owner Trustee and the Indenture Trustee
on the Closing Date.
SCHEDULE B
ALLOCATION OF NOTES
Chase Chase USA
Class A-1 $20,649,200.00 $21,150,800.00
Class A-2 $27,466,400.00 $28,133,600.00
Class A-3 $24,996,400.00 $25,603,600.00
Class A-4 $18,426,200.00 $18,873,800.00
Class A-5 $14,474,200.00 $14,825,800.00
Class A-6 $11,707,800.00 $11,992,200.00
Class B $ 5,261,100.00 $ 5,388,900.00
Class C $ 8,552,142.45 $ 8,759,886.80
ALLOCATION OF CERTIFICATES
Chase Chase USA
Certificates 49.40% 50.60%
SCHEDULE C
ALLOCATION OF FEES AND EXPENSES TO SERVICER
EXHIBIT A
THE CIT GROUP/SALES FINANCING, INC.
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he/she is the [title] of The
CIT Group/Sales Financing, Inc., a corporation organized under the laws of
Delaware ("CITSF"), and that as such he/she is duly authorized to execute and
deliver this certificate on behalf of CITSF pursuant to Section 4.8 of the Sale
and Servicing Agreement, dated as of October 1, 1997 (as amended, supplemented
or otherwise modified and in effect from time to time, the "Agreement"), among
CITSF as Servicer, Chase Manhattan Bank USA National Association, as a Seller,
The Chase Manhattan Bank, as a Seller, and the Chase Manhattan Marine Owner
Trust 1997-A, as Issuer (all capitalized terms used but not defined herein shall
have the meanings set forth in the Agreement), and further certifies that:
1. The Monthly Report for the period from __________
to __________ attached to this certificate is complete and
accurate in accordance with the requirements of Section 4.8 of
the Agreement; and
2. As of the date hereof, 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. [If an Event of Servicing Termination has
occurred, such Event of Servicing Termination shall be specified and its current
status reported.]
IN WITNESS WHEREOF, we have affixed hereunto our signatures
this ___ day of ________________, 199_.
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer
By:
---------------------------------
Name:
Title:
EXHIBIT B
[FORM OF MONTHLY REPORT]
EXHIBIT C
FORM OF AMENDED AND RESTATED
SERVICING AGREEMENT