Exhibit 10-TTTT
RECEIVABLES SALE AGREEMENT
among
PREMIER RECEIVABLES L.L.C.
as Seller,
CHRYSLER FINANCIAL CORPORATION,
as Servicer,
MONTE ROSA CAPITAL CORPORATION
as Purchaser,
and
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
as Administrative Agent
Dated as of December 12, 1996
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
ARTICLE II: THE SALE AND PURCHASE
SECTION 2.1. Sale and Purchase........................................14
SECTION 2.2. Purchase Price...........................................14
SECTION 2.3. Seller's Optional Termination............................14
SECTION 2.4. Seller's Obligation to Repurchase........................15
ARTICLE III: FEES AND EXPENSES
SECTION 3.1. Determination of Carrying Costs..........................15
SECTION 3.1.1. Purchase Discount........................................15
SECTION 3.1.2. Program Fee..............................................17
SECTION 3.1.3. Servicer Fee.............................................18
SECTION 3.2. Interest on Unpaid Amounts...............................18
ARTICLE IV: CONDITIONS PRECEDENT TO PURCHASE
SECTION 4.1. Conditions Precedent to Purchase.........................18
SECTION 4.1.1. Absence of Liens.........................................18
SECTION 4.1.2. Financing Statements.....................................18
SECTION 4.1.3. Schedule of Contracts....................................18
SECTION 4.1.4. Seller Resolutions.......................................18
SECTION 4.1.5. Servicer Resolutions.....................................19
SECTION 4.1.6. Legal Opinion of Counsel to the
Seller and the Servicer..................................19
SECTION 4.1.7. Good Standing Certificates...............................19
SECTION 4.1.8. Representations and Covenants............................19
SECTION 4.1.9. Fee Letter...............................................20
SECTION 4.1.10. Other Documents..........................................20
SECTION 4.1.11. Upfront Fee..............................................20
SECTION 4.1.12. Interest Rate Cap and Swap Agreement.....................20
ARTICLE V: SETTLEMENT PROCEDURES
SECTION 5.1. Collections..............................................20
SECTION 5.2. Application of Collections...............................21
SECTION 5.3. Advances.................................................21
SECTION 5.4. Application of Collections on
Settlement Dates.........................................22
SECTION 5.5. Servicer Report..........................................23
ARTICLE VI: SERVICING OF RECEIVABLES
SECTION 6.1. Appointment and Duties of Servicer.......................23
-i-
SECTION 6.2. Replacement of Servicer..................................23
SECTION 6.3. Custody of Receivables Files.............................25
SECTION 6.4. Duties of Servicer as Custodian..........................25
SECTION 6.5. Effective Period and Termination.........................26
ARTICLE VII: REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of
the Seller and the Servicer..............................26
ARTICLE VIII: COVENANTS
SECTION 8.1. Affirmative Covenants of the Seller
and the Servicer.........................................28
SECTION 8.2. Reporting Requirements of the Servicer...................28
SECTION 8.3. Negative Covenants of the Seller and
the Servicer.............................................29
SECTION 8.4. Protection of the Purchaser's Interest...................29
ARTICLE IX: ADMINISTRATIVE AGENT
SECTION 9.1. Appointment of Administrative Agent......................30
SECTION 9.2. Replacement of Administrative Agent......................30
ARTICLE X: MISCELLANEOUS
SECTION 10.1. Amendments, Etc.........................................30
SECTION 10.2. Notices, Etc............................................30
SECTION 10.3. No Waiver; Remedies.....................................31
SECTION 10.4. Binding Effect; Assignability...........................31
SECTION 10.5. GOVERNING LAW...........................................31
SECTION 10.6. Construction of the Agreement...........................31
SECTION 10.7. No Proceedings..........................................32
SECTION 10.8. Confidentiality.........................................32
SECTION 10.9. Execution in Counterparts...............................32
SECTION 10.10. Indemnification by Seller...............................32
EXHIBITS
EXHIBIT A - Form of Servicer Statement
EXHIBIT B - Form of Seller's Counsel Opinion
EXHIBIT C - Swap Agreement
-ii-
RECEIVABLES SALE AGREEMENT dated as of December 12, 1996
among PREMIER RECEIVABLES L.L.C., a Michigan limited liability company, as the
"Seller", CHRYSLER FINANCIAL CORPORATION, a Michigan corporation, as the
initial "Servicer", MONTE ROSA CAPITAL CORPORATION, as the "Purchaser" and
UNION BANK OF SWITZERLAND, NEW YORK BRANCH, as the "Administrative Agent" for
the Purchaser.
ARTICLE I: DEFINITIONS
"Administrative Agent" means Union Bank of Switzerland,
New York Branch and any replacement thereof under Section 9.1.
"Advance" means either a Precomputed Advance or Simple
Interest Advance or both, as applicable.
"Adverse Claim" means any mortgage, pledge, security
interest, hypothecation, assignment, deposit arrangement, encumbrance, lien
(consensual, statutory or other), charge, security arrangement, or any other
encumbrance or other right or claim in, of or on any Person's assets or
properties in favor of any other Person, of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, and any financial lease having substantially the same economic
effect as any of the foregoing).
"Aggregate Principal Balance" means, at any time, the
aggregate Principal Balance of all Purchased Receivables at such time.
"Agreement" means this Receivables Sale Agreement, as it may
be amended from time to time.
"Amount Financed" means (i) with respect to a Standard
Receivable, the amount advanced under the Standard Receivable toward the
purchase price of the Financed Vehicle and any related costs, exclusive of any
amount allocable to the premium of force-placed physical damage insurance
covering the Financed Vehicle, and (ii) with respect to a Balloon Payment
Receivable, an amount equal to the present value of the fixed level payment
monthly installments (not including the amount designated as the Balloon
Payment) under the Balloon Payment Receivable, assuming that each payment is
made on the due date in the month in which such payment is due, discounted at
the APR for such Balloon Payment Receivable.
"Annual Percentage Rate" or "APR" of a Receivable means the
annual rate of finance charges stated in the related Contract.
-1-
"Balloon Payment" means, for any Receivable, the dollar
amount of any payment which is not a level monthly payment (other than the
first or last payment made on the Receivable which is minimally different from
the other level payments).
"Balloon Payment Program" means a retail installment sale
program in which the final payment is a Balloon Payment and the Balloon
Payment may be made by the Obligor by (i) payment in full in cash of the
Balloon Payment, (ii) return of the Financed Vehicle to the Servicer in lieu
of paying the Balloon Payment in cash provided that certain conditions are
satisfied or (iii) refinancing the Balloon Payment in accordance with certain
conditions.
"Balloon Payment Receivable" means any Contract listed on
the Schedule of Contracts that provides for amortization of the loan over a
series of fixed level payment monthly installments in accordance with the
actuarial method, the simple interest method of the Rule of 78s, but also
requires a final payment that is a Balloon Payment that may be made by (i)
payment in full in cash of the Balloon Payment, (ii) return of the Financed
Vehicle to the Servicer provided that certain conditions are satisfied, or
(iii) refinancing the Balloon Payment in accordance with certain conditions.
"Business Day" means any day other than a day on which banks
are not authorized to be open or required to be closed in New York City.
"Carrying Costs" means, for each Settlement Period, an
amount equal to the sum of:
(i) (APD% + APF%) x DSP x AI
---
360
plus
(ii) SF% x DSP x APB
---
360
where APD% = the average for such
Settlement Period of the
weighted average daily per
annum Purchase Discount rate
(expressed as a percentage)
for each day during such
Settlement Period
-2-
APF% = average for such Settlement
Period of the weighted average
daily per annum percentage
rate of the Program Fee for
each day during such
Settlement Period
SF% = The per annum percentage rate
of the Servicer Fee
DSP = the number of days in such
Settlement Period
AI = the average daily Investment
during such Settlement Period
APB = the Aggregate Principal
Balance on the first day of
such Settlement Period.
"Carrying Costs True-up Amount" has the meaning assigned to
that term in Section 3.1.1(b).
"Certificate of Title" means any certificate, instrument or
other document issued by a state or other governmental authority in respect of
any motor vehicle for the purpose of evidencing the ownership of, or any
Adverse Claim in or against, such motor vehicle.
"CFC" means Chrysler Financial Corporation, a Michigan
corporation.
"Collection" means any amount paid by an Obligor or any
other party with respect to a Purchased Receivable, including (i) Liquidation
Proceeds and any amounts paid by the Seller in connection with the repurchase
of Receivables pursuant to Sections 2.3 or 2.4 and (ii) any Precomputed
Advance or Simple Interest Advance made by the Servicer pursuant to Section
5.3.
"Commercial Paper Notes" means the commercial paper
notes issued by the Purchaser.
"Contract" means, with respect to any Receivable, any and
all instruments, agreements, invoices, or other writings pursuant to which
such Receivable arises or which evidence such Receivable.
"Credit and Collection Policy" means the credit and
collection policies and practices of the Servicer and any
-3-
successor Servicer relating to Receivables and Contracts, such policies being
subject to unilateral revision or modification at any time by the Servicer or
any successor Servicer.
"Credit Facilities" means each of the committed loan
facilities, lines of credit, letters of credit and other forms of credit
enhancement available to the Purchaser which are not Liquidity Facilities.
"Cut-Off Date" means December 10, 1996.
"Dealer" means an automobile or light-duty truck dealership
located within the United States at or through which a Financed Vehicle shall
have been purchased or is proposed to be purchased.
"Delinquency Ratio" means, as of the last calendar day of
any month, a fraction, expressed as a percentage, the numerator of which is
the sum of the Principal Balances of all Receivables which were Delinquent
Receivables as of the last calendar day of such month and the last calendar
day of each of the two immediately preceding months, to the extent such
preceding months exist, and the denominator of which is the sum of the
Aggregate Principal Balance on such last calendar day of such month and on the
last calendar day of each of the two immediately preceding months, to the
extent such preceding months exist.
"Delinquent Receivable" means any Receivable which has 10%
or more of a scheduled payment past due for more than 60 days.
"Eligible Receivable" means, as of the Cut-Off Date,
any Receivable:
(i) the Obligor of which (a) is a resident of the
United States and (b) is not an affiliate of the originating
Dealer or any of the parties hereto,
(ii) the Obligor of which (a) is not the Obligor of any
Receivable which is a Delinquent Receivable and (b) is not the
subject of any bankruptcy, insolvency or reorganization proceeding or
any other proceeding seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it
or any substantial part of its property,
(iii) which is "chattel paper" within the meaning of
Section 9-105 of the UCC of all applicable jurisdictions,
-4-
(iv) which is denominated and payable only in United
States dollars in the United States,
(v) which (a) has been originated in the United States by a
Dealer for the retail sale of a Financed Vehicle in the ordinary
course of such Dealer's business and (b) satisfies all applicable
requirements of the Credit and Collection Policy,
(vi) which arises under a Contract (a) which, together with
such Receivable, is (1) in full force and effect and constitutes the
legal, valid and binding obligation of the related Obligor,
enforceable against such obligor in accordance with its terms and (2)
subject to no dispute, offset, counterclaim or other defense, and (b)
with respect to which (1) no default, breach, violation, or event
permitting acceleration under the terms thereof has occurred and (2)
there has not arisen any condition that, with notice or lapse of time
or both, would constitute a default, breach, violation or event
permitting acceleration under the terms thereof,
(vii) which, together with the related Contract, (a) is
secured by a perfected, valid, subsisting and enforceable first
priority security interest in favor of CFC in the related Financed
Vehicle, (b) contains customary and enforceable provisions such that
the rights and remedies of the holder of such security interest are
adequate for realization against the collateral of the benefits of
the security, and (c) was originated and transferred to the Seller
without any conduct constituting fraud or misrepresentation on the
part of the applicable Dealer, CFC or the Seller,
(viii) which, together with the related Contract,
immediately following the execution of such Contract, was purchased
by (and the originating Dealer has validly assigned good and
marketable ownership thereof to) CFC, which, in turn, has validly
sold such Receivable to the Seller, in each case, free and clear of
all Adverse Claims, and such purchase and assignment of such
Receivable, such Contract and the Related Security to CFC is
expressly contemplated in such Contract,
(ix) which, together with the Contract related thereto, does
not contravene any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating
to usury, truth in lending, fair credit billing, fair credit
reporting, equal credit
-5-
opportunity, fair debt collection practices and privacy) and with
respect to which no part of the Contract related thereto is in
violation of any such law, rule or regulation,
(x) the Financed Vehicle securing which, (a) is free and
clear of any Adverse Claim other than the security interest therein
then being assigned by the Seller to the Purchaser, and no
enforcement action, whether by repossession or otherwise, has been
taken with respect to such Financed Vehicle and (b) is covered by the
Required Insurance in respect of such Financed Vehicle, and such
Required Insurance is in full force and effect, and has been assigned
to the Seller and is fully assignable to the Purchaser,
(xi) as to which the Administrative Agent or the Purchaser
has not notified the Seller that such Receivable or class of
Receivables is not acceptable as an Eligible Receivable, including,
without limitation, because such Receivable arises under a Contract
that is not acceptable,
(xii) with respect to the outstanding balance thereof, (a)
the related Contract requires that payment in full of such
outstanding balance is scheduled to be made (1) not earlier than 5
months after, and (2) not later than 60 months after, the date any
interest therein is purportedly transferred to the Purchaser
hereunder and (b) such Outstanding Balance is scheduled to be paid in
equal consecutive monthly installments, unless such Receivable arises
under a Balloon Payment Program, and
(xiii) which Receivable bears interest at the per annum rate
stated on the face of the related Contract, which per annum rate
remains fixed during the term of such Receivable and accrued interest
on such Receivable is payable monthly, in arrears.
"Fee Letter" means that certain letter agreement of even
date herewith (as the same may be amended, restated, supplemented or otherwise
modified from time to time) among the Seller, the Purchaser and the
Administrative Agent regarding various fees payable by the Seller hereunder.
"Finance Charges" means, with respect to any Receivable and
its related Contract, any finance, interest or similar charges owing by an
Obligor pursuant to such Contract, including, without limitation, any charge
payable in connection with any extension or adjustment under such Contract
(without regard to
-6-
whether any such extension or adjustment is permitted under the terms of this
Agreement).
"Financed Vehicle" means an automobile or light-duty truck,
together with all accessions thereto, securing an Obligor's indebtedness under
the applicable Contract.
"Full Payoff" has the meaning assigned to that term in
Section 5.2(a).
"Insolvency Event" means, with respect to a specified
Person, (a) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any substantial part
of its property in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its
property, or ordering the winding up or liquidation of such Person's affairs,
and such decree or order shall remain unstayed and in effect for a period of
60 consecutive days; or (b) the commencement by such Person of a voluntary
case under any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or the
consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due, or the taking of action by such Person in furtherance of any of the
foregoing.
"Insurance Policy" means (i) any comprehensive and
collision, fire, theft or other insurance policy maintained by an Obligor in
which Servicer is named as loss payee with respect to one or more Financed
Vehicles, and (ii) any credit, life or disability insurance maintained by an
Obligor in connection with any Contract.
"Interest Rate Cap" means that certain ISDA Master Agreement
dated as of December 12, 1996 between CFC and the Purchaser, together with any
schedules and/or confirmations thereto or thereof, in each case, as the same
may be amended, restated, substituted, replaced, supplemented or otherwise
modified from time to time.
-7-
"Interest Rate Cap Proceeds" means, at any time, any amounts
paid or payable under the Interest Rate Cap by CFC to the Purchaser or the
Administrative Agent for the benefit of the Purchaser, other than any such
amounts paid in respect of Swap Shortfalls.
"Investment" means the aggregate amount of cash paid by the
Purchaser to the Seller for the Purchase less the amount of all Collections
received and applied as reductions in Investment pursuant to Article V.
"Liquidated Receivable" means any Purchased Receivable
liquidated by the Servicer through the sale of a Financed Vehicle or
otherwise.
"Liquidity Facilities" means each of the committed loan
facilities, lines of credit and other financial accommodations available to
the Purchaser to support the liquidity of the Purchaser's Commercial Paper
Notes.
"Liquidation Proceeds" means, with respect to any Liquidated
Receivable, the monies collected in respect thereof, from whatsoever source,
net of the sum of any amounts expended by the Servicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivable.
"Net Loss" for a month means the sum of the Aggregate
Principal Balance of all Purchased Receivables which are deemed to be
uncollectible for such month, minus any Liquidation Proceeds received during
such month, plus any losses resulting from disposition expenses paid during
such month.
"Net Loss Ratio" means, as of the last day of any month, a
fraction, expressed as a percentage, the numerator of which is the product of
(i) the sum of the Net Loss for such month and the two immediately preceding
months, to the extent such months exist and (ii) a factor of 12 divided by the
number of months included in the sum in clause (i), and the denominator of
which is the average of the Aggregate Principal Balance on the first day of
the month and the first day of the two immediately preceding months, to the
extent such months exist.
"Notional Amount" means, with respect to the Swap Agreement
on any date, the respective dollar amount relating to such date set forth as
the notional amount of the Swap Agreement on the confirmation attached
thereto.
-8-
"Obligor" means any Person which is obligated to make
payment on a Receivable.
"Outstanding Precomputed Advances" on the Precomputed
Receivables means the sum, as of the close of business on the last day of a
Settlement Period, of all Precomputed Advances as reduced as provided in
Section 5.3(a).
"Outstanding Simple Interest Advance" on the Simple Interest
Receivables means the sum, as of the close of business on the last day of a
Settlement Period, of all Simple Interest Advances as reduced as provided in
Section 5.3(b).
"Partial Payoff" has the meaning assigned to that term
in Section 5.2(a).
"Payahead" on a Receivable that is a Precomputed Receivable
means the amount, as of the close of business on the last day of a Settlement
Period, computed in accordance with Section 5.2(a) with respect to such
Receivable.
"Payahead Balance" on a Receivable that is a Precomputed
Receivable means the sum, as of the close of business on the last day of a
Settlement Period, of all Payaheads made by or on behalf of the Obligor with
respect to such Precomputed Receivable, as reduced by applications of previous
Payaheads with respect to such Precomputed Receivable pursuant to Sections
5.2(a) and 5.3(a).
"Person" means any corporation, natural person, firm, joint
venture, partnership, limited liability company, trust, unincorporated
organization, enterprise, government or any department or agency of any
government.
"Precomputed Advance" means the amount, as of the close of
business on the last day of a Settlement Period, which the Servicer is
required to advance on the related Precomputed Receivables pursuant to Section
5.3(a).
"Precomputed Receivable" means any Receivable under which
the portion of a payment allocable to earned interest (which may be referred
to in the related Contract 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
which is a monthly actuarial receivable.
"Principal Balance" means with respect to any Receivable the
outstanding principal balance thereof determined
-9-
in accordance with the Credit and Collection Policy and the Servicer's
customary calculation methods provided, that with respect to a Receivable
identified as a Balloon Payment Receivable, the Principal Balance shall not
include the Balloon Payment.
"Program Fee" has the meaning assigned to that term in
Section 3.1.2.
"Purchase" has the meaning assigned to that term in
Section 2.1.
"Purchase Amount" means the amount, as of the close of
business on the last day of a Settlement Period, required to prepay in full a
Receivable, as applicable, under the terms thereof including interest to the
end of the month of purchase.
"Purchase Date" means the date on which the conditions
precedent to the Purchase described in Section 4.1 have been satisfied or
waived.
"Purchase Discount" has the meaning assigned to that
term in Section 3.1.1.
"Purchased Receivable" means a Receivable arising under a
Contract listed on the Schedule of Contracts delivered to the Administrative
Agent prior to the Purchase Date being sold to Purchaser under this Agreement.
"Purchaser" means Monte Rosa Capital Corporation, a Delaware
corporation, and its successors and assigns.
"Receivable" means the indebtedness and other obligations of
an Obligor arising under a Contract, whether such indebtedness or other
obligations constitute accounts, chattel paper, instruments or general
intangibles, and including, without limitation, the obligation to pay any
Finance Charges with respect thereto.
"Receivables Files" means the documents specified in Section
6.3.
"Related Security" means, with respect to any Receivable:
(i) all of the Seller's interest in the Financed Vehicle,
the financing of the purchase of which gave rise to such Receivable,
including, without limitation, all of the Seller's right, title and
interest in and to the proceeds of
-10-
the Insurance Policies, and all warranties, indemnities, service
obligations and other contract rights issued or granted by, or
otherwise existing under applicable law against, the manufacturer or
Dealer in respect of such Financed Vehicle,
(ii) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure
payment of such Receivable, whether pursuant to the Contract related
to such Receivable, or otherwise, together with all financing
statements signed by an Obligor describing any collateral securing
such Receivable, and including, without limitation, all security
interests or liens, and property subject thereto, granted by any
Person (whether or to the primary Obligor on such Receivable) under
or in connection therewith,
(iii) all of the Seller's right, title and interest in, to
and under any instrument, document or agreement relating to the
transfer of such Receivable by the applicable Dealer to CFC and, in
turn, by CFC to the Seller, and all claims against such Dealer or CFC
arising from or in connection with the purported transfer of such
Receivable to CFC and, in turn, to the Seller,
(iv) all books, records and other information relating
to such Receivable, including, without limitation, all
Contracts,
(v) all service contracts and other contracts and
agreements relating to such Receivable, and
(vi) all proceeds of any of the foregoing.
"Required Insurance" means an Insurance Policy with respect
to a Financed Vehicle (i) that has been issued to the Obligor by an insurance
company acceptable to the Servicer, (ii) that provides comprehensive
collision, fire, theft and other physical damage coverage, (iii) that is in an
amount not less than the market value of the applicable Financed Vehicle, and
(iv) that has the Servicer noted as the loss payee thereon.
"Reserve" means an amount equal to 5% of the Investment
as of the Purchase Date.
"Sale Documents" means this Agreement, the Exhibits hereto
to which the Seller is a party, the Fee Letter, the Interest Rate Cap and all
other certificates, instruments, agreements and documents executed from time
to time by the Seller
-11-
in connection with the transactions contemplated in this Agreement.
"Schedule of Contracts" means the list of Contracts
delivered to the Administrative Agent, such list being in microfiche, paper or
electronic format.
"Seller" means Premier Receivables L.L.C., a Michigan
limited liability company, and its successors and permitted assigns.
"Servicer" means CFC or any replacement thereof under
Article VI.
"Servicer Default" has the meaning assigned to that
term in Section 6.2(a).
"Servicer Fee" has the meaning assigned to the term in
Section 3.1.3.
"Servicer Report" means the report in the form of Exhibit A
hereto to be provided by the Servicer in accordance with Section 5.5 of this
Agreement, which report shall include a calculation of the Delinquency Ratio
and the Net Loss Ratio for the applicable month.
"Settlement Date" means the twentieth (20th) day of each
month following a related Settlement Period (or if such day is not a Business
Day, the next succeeding Business Day).
"Settlement Period" means a calendar month, provided, that,
for purposes of the initial Settlement Period, such period shall commence as
of the Cut-Off Date and end on December 31, 1996.
"Simple Interest Advance" means the amount of interest, as
of the close of business on the last day of a Settlement Period, which the
Servicer is required to advance on the Simple Interest Receivables pursuant to
Section 5.3(b).
"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 (a)
the fixed rate of interest, (b) the unpaid principal balance, and (c) a
fraction, the numerator of which is the number of days elapsed since the
preceding payment of interest was made and the denominator of which is 365,
and the remainder of such payment is allocable to principal.
-12-
"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.
"Standard Receivable" means any Contract listed on the
Schedule of Contracts (which Schedule may be in the form of microfiche) that
is not a Balloon Payment Receivable.
"Swap Agreement" means that certain ISDA Master Agreement
dated as of December 12, 1996 between the Purchaser and the Swap Counterparty,
together with any schedules and/or confirmations thereto or thereof, a copy of
which is attached hereto as Exhibit C (as the same may be amended, restated,
substituted, replaced, supplemented or otherwise modified from time to time).
"Swap Counterparty" means UBS Securities (Swaps), Inc.
or any successor or assignee thereof or replacement therefor
under the Swap Agreement.
"Swap Shortfall" means, on any Settlement Date for any
Settlement Period, an amount equal to sum for each separate period during such
Settlement Period for which a separate Notional Amount is in effect under the
Swap Agreement of the product for each such period of (a) the positive amount,
if any, by which the Notional Amount of the Swap for such period exceeded the
average Investment during such period, (b) the positive amount (expressed as a
per annum percentage), if any, by which the Fixed Rate (as such term is used
in the Swap Agreement) exceeded the Floating Rate (as such term is used in the
Swap Agreement) during such period and (c) a fraction, the numerator of which
is the number of days in such period and the denominator of which is 360.
"Swap Windfall" means, on any Settlement Date for any
Settlement Period, an amount equal to the sum for each separate period during
such Settlement Period for which a separate Notional Amount is in effect under
the Swap Agreement of the product for each such period of (a) the positive
amount, if any, by which the Notional Amount of the Swap for such period
exceeded the average Investment during such period, (b) the positive amount
(expressed as a per annum percentage), if any, by which the Floating Rate (as
such term is used in the Swap Agreement) exceeded the Fixed Rate (as such term
is used in the Swap Agreement) during such period and (c) a fraction, the
numerator of which is the number of days in such period and the denominator of
which is 360.
-13-
"Upfront Fee" has the meaning assigned to that term in
Section 4.1.11.
ARTICLE II: THE SALE AND PURCHASE
SECTION 2.1. Sale and Purchase. Upon the terms and subject
to the conditions set forth herein, effective as of the Purchase Date, (i) the
Seller hereby sells, transfers and assigns to the Purchaser all of the
Seller's right, title and interest to and in the Purchased Receivables,
together with the Related Security and Collections from and after the Cut-Off
Date relating to such Purchased Receivables and (ii) the Purchaser hereby
purchases and accepts the transfer and assignment of all of the Seller's
right, title and interests to and in the Purchased Receivables, together with
Related Security and Collections relating to such Purchased Receivables (the
foregoing sale, transfer and assignment being referred to as the "Purchase")
and (iii) the Purchaser hereby, without any further action hereunder, does
sell, transfer, assign, set over and otherwise convey to the Seller, effective
as of the Purchase Date, without recourse, representation or warranty of any
kind, all right, title and interest of the Purchaser in and to the Balloon
Payments, all monies due and to become due and all amounts received with
respect thereto and all proceeds thereof.
SECTION 2.2. Purchase Price. The purchase price payable by
the Purchaser for the Purchase shall equal the Aggregate Principal Balance as
of the Cut-Off Date. Such purchase price shall be comprised of a cash
component and a deferred payment component. The cash component of the Purchase
Price shall be paid by the Purchaser to the Seller on the Purchase Date and
shall equal the Aggregate Principal Balance of the Purchased Receivables as of
the Cut-Off Date minus the Reserve calculated as of such Purchase Date. Upon
and after the reduction of the Investment to zero and the payment in full of
all other amounts due to the Purchaser hereunder, all Collections or other
cash received by the Purchaser on account of Receivables and the interest of
the Purchaser therein and all Receivables held by or on behalf of the
Purchaser will be transmitted in the form received by the Purchaser to the
Seller. The transmission of such amount by the Purchaser shall be deemed to
satisfy the payment of the deferred payment component of the purchase price
under this Section 2.2.
SECTION 2.3. Seller's Optional Termination. The Seller shall
have the right, on five (5) Business Days' written notice to the
Administrative Agent, at any time following the reduction of the Aggregate
Principal Balance hereunder to a level
-14-
that is less than ten percent (10%) of the Aggregate Principal Balance on the
Purchase Date, to repurchase from the Purchaser all, and not part, of the then
outstanding Purchased Receivables, together with the Related Security and
Collections relating to such Purchased Receivables. The purchase price in
respect thereof shall be an amount equal to the Investment outstanding at such
time plus all other amounts payable (whether due or accrued) hereunder or
under any other Sale Document to the Purchaser or the Administrative Agent at
such time. Such repurchase shall be without representation, warranty or
recourse of any kind by, on the part of or against the Purchaser or the
Administrative Agent.
SECTION 2.4. Seller's Obligation to Repurchase. Upon the
discovery by the Seller, the Administrative Agent or the Purchaser (and the
giving of notice thereof to the Seller in the case of any such discovery by
the Administrative Agent or the Purchaser) that any Purchased Receivable was
not an Eligible Receivable on the Purchase Date or that any of the
representations and warranties with respect to such Receivable set forth in
Section 7.1 hereof was untrue with respect to such Receivable as of the
Purchase Date, then unless such breach or other condition shall have been
cured by the last day of any Settlement Period occurring after the discovery
of such breach or other condition, the Seller shall repurchase such Receivable
from the Purchaser on such last day for an amount equal to the Purchase Amount
thereof, which amount shall be remitted on such date by the Seller to the
Servicer to be applied as a Collection in accordance with Article V hereof.
ARTICLE III: FEES AND EXPENSES
SECTION 3.1. Determination of Carrying Costs. The following
rates shall be utilized in calculating the amount of Carrying Costs to be
distributed each Settlement Period out of Collections of Purchased
Receivables:
SECTION 3.1.1. Purchase Discount.
(a) A Purchase Discount equal to the weighted daily
average of the following:
(1) with respect to the aggregate portion of the Investment
on such day which is less than or equal to the Notional Amount of the
Swap Agreement on such day:
(i) the fixed per annum rate of interest payable
by the Purchaser to the Swap Counterparty pursuant to
-15-
the Swap Agreement on such date (as calculated on the
basis of a 360-day year); and
(ii) to the extent the Purchaser funds such
Investment (or any portion thereof) through any Liquidity or
Credit Facilities, (A) with respect to any portion of such
Investment funded by the Purchaser at rates determined by
reference to London interbank offering rate, a per annum
rate equal to thirty-seven and one-half basis points (.375%)
(as calculated on the basis of a 360-day year) or (B) in all
other cases, a per annum rate equal to two hundred and
thirty-three and one-half basis points (2.335%) (as
calculated on the basis of a 365 or 366-day year, as
applicable); and
(2) with respect to the aggregate portion of the Investment
on such day, if any, which is greater than the Notional Amount of the
Swap Agreement on such day:
(i) to the extent the Purchaser funds such
Investment (or any portion thereof) through the issuance of
Commercial Paper Notes, the weighted average of the interest
rates (in the case of interest bearing Commercial Paper
Notes) and discount rates (in the case of Commercial Paper
Notes issued at a discount, such discount rate to be
converted to a yield equivalent rate) on all Commercial
Paper issued by the Purchaser to fund such Investment, in
each case, as determined on the basis of a 360-day year; and
(ii) to the extent the Purchaser funds such
Investment (or any portion thereof) through any Liquidity or
Credit Facilities, the weighted average of the annual
interest rates under such facilities that are applicable to
any such borrowings under such agreements; provided, that,
for purposes of the foregoing, the interest rates applicable
under any Liquidity or Credit Facility shall not exceed (A)
in the case where such borrowings are funded with loans in
respect of which the interest thereon is determined by
reference to the London interbank offering rate (the "LIBO
Rate"), the reserve (for eurocurrency loans and borrowings)
adjusted LIBO Rate quoted by the Agent at such time, plus
.50% per annum and (B) in all other cases, the rate of
interest per annum published on such day (or, if not then
published, on the most recently preceding day) in The Wall
Street Journal as the "Prime Rate" plus 1.00% per annum;
-16-
it being understood that, in any case, (X) the Purchaser shall only fund its
Investment (or any portions thereof) under the Credit or Liquidity Facilities
after a determination by the Purchaser that financing its activities during
such period by issuing Commercial Paper Notes would not be practicable or
cost-efficient or would not be permitted by law or under any contract to
which it is a party and (Y) the Purchaser shall not fund its Investment (or
any portion thereof) under any Liquidity or Credit Facility at the rates
described in clause (1)(ii)(B) or (2)(ii)(B) above unless the Purchaser is
unable for any reason to make borrowings under any such Liquidity or Credit
Facility at a rate of interest determined by reference to the LIBO Rate.
(b) Two Business Days prior to the end of each Settlement
Period, the Administrative Agent shall determine the Purchase Discount
pursuant to (a) above by using the actual Purchase Discount for each day
elapsed in such month and estimating the Purchase Discount for each remaining
day in such month. In addition, the Administrative Agent shall concurrently
notify the Servicer of the actual Purchase Discount for any days during the
immediately preceding Settlement Period with respect to which the Purchase
Discount was estimated, and the difference, if any, between the Carrying Costs
actually paid using the estimated Purchase Discount which would have been paid
had the actual Purchase Discount been available (such differential being the
"Carrying Costs True-up Amount"). If the amount of Carrying Costs paid for
such immediately preceding Settlement Period based upon an estimated Purchase
Discount was less than the amount of Carrying Costs for such Settlement Period
based upon the actual Purchase Discount, the amount of Collections remitted to
the Administrative Agent (for the benefit of the Purchaser) pursuant to clause
(i) of Section 5.4 shall be increased by an amount equal to the Carrying Costs
True-up Amount, or, if the amount of Carrying Costs paid for such immediately
preceding Settlement Period based upon an estimated Purchase Discount was
greater than the amount of Carrying Costs for such Settlement Period based
upon the actual Purchase Discount, the amount of Collections remitted to the
Administrative Agent (for the benefit of the Purchaser) pursuant to clause (i)
of Section 5.4 shall be decreased by an amount equal to the Carrying Costs
True-up Amount.
SECTION 3.1.2. Program Fee. A Program Fee equal to the per
annum rate set forth in the Fee Letter, which fee shall include all annual
expenses, including, but not limited to, legal fees, audit fees, filing and
administrative fees, liquidity and credit enhancement fees, and dealer
commissions.
-17-
SECTION 3.1.3. Servicer Fee. A Servicer Fee in respect of
each Settlement Period, equal to 1.0% per annum (assuming a 30/360 day basis)
of the Aggregate Principal Balance of the Purchased Receivables on the first
day of such Settlement Period, shall be remitted by the Purchaser to the
Servicer. If CFC is acting as the Servicer, then the Servicer shall retain an
amount equal to the Servicer Fee (in full satisfaction of the payment of such
fee to the Servicer) out of amounts required to be remitted by the Servicer in
accordance with Section 5.2.
SECTION 3.2. Interest on Unpaid Amounts. To the extent that
the Seller or Servicer fails to pay when due to the Purchaser or the
Administrative Agent any fee, expense or other amount payable hereunder or
under any Sale Document, interest shall be due and payable on such unpaid
amount, for each day until paid in full, at the rate of 1.00% in excess of the
rate of interest per annum published on such day (or, if not then published,
on the most recently preceding day) in The Wall Street Journal as the "Prime
Rate". Changes in the rate payable hereunder shall be effective on each date
on which a change in the "Prime Rate" is so published.
ARTICLE IV: CONDITIONS PRECEDENT TO PURCHASE
SECTION 4.1. Conditions Precedent to Purchase. The following
conditions must be satisfied before the Purchaser will make the Purchase:
SECTION 4.1.1. Absence of Liens. The Seller shall certify
that all Purchased Receivables, Related Security and all proceeds thereof are
free and clear of any Adverse Claims.
SECTION 4.1.2. Financing Statements. The Administrative
Agent will have received acknowledgment copies of UCC-1 financing statements,
and all other documents reasonably requested by the Administrative Agent or
the Purchaser, to evidence the perfection of the Purchaser's interest in the
Purchased Receivables and the Related Security and the Collections.
SECTION 4.1.3. Schedule of Contracts. The Administrative
Agent will have received the Schedule of Contracts.
SECTION 4.1.4. Seller Resolutions. The Administrative Agent
will have received a certificate of the Seller attesting to:
-18-
(a) the resolutions of the majority interest of the
Seller's members authorizing the execution, delivery and performance by the
Seller of the Sale Documents to be executed by the Seller;
(b) the names and signatures of the officers of the
Seller's members authorized to execute the Sale Documents to be executed by
the Seller; and
(c) the completeness and correctness of the attached
articles of organization and operating agreement of the Seller.
SECTION 4.1.5. Servicer Resolutions. The Administrative
Agent will have received a certificate of the Servicer's Secretary or
Assistant Secretary attesting to:
(a) the resolutions of the Servicer's Board of Directors
(or an executive committee thereof) authorizing the execution, delivery and
performance by the Servicer of the Sale Documents to be executed by the
Servicer;
(b) the names and signatures of the officers of the
Servicer authorized to execute the Sale Documents to be executed by the
Servicer; and
(c) the completeness and correctness of the attached
restated articles of incorporation and by-laws of the Servicer.
SECTION 4.1.6. Legal Opinion of Counsel to the Seller and
the Servicer. The Administrative Agent will have received an opinion from
counsel to the Seller and the Servicer, such counsel being "in-house" counsel
unless otherwise required by any agencies providing a credit rating to the
transaction contemplated hereby, substantially in the form attached hereto as
Exhibit B, together with such other matters as the Administrative Agent or the
Purchaser may reasonably request.
SECTION 4.1.7. Good Standing Certificates. The
Administrative Agent will have received certificates of recent date issued by
the Secretary of State of the State of Michigan, as to the legal existence and
good standing of the Seller and the Servicer.
SECTION 4.1.8. Representations and Covenants. On and as of
the Purchase Date (i) the representations and warranties of the Seller and the
Servicer in Article VII shall be true and correct with the same effect as if
made on such date and (ii) the Seller and the Servicer shall be in compliance
with the covenants set forth in Article VIII. The Seller and the Servicer, by
-19-
accepting the proceeds of such Purchase, shall be deemed to have certified as
to the truth and accuracy of each of the matters described in the foregoing
clauses (i) and (ii), both before and after giving effect to such Purchase.
SECTION 4.1.9. Fee Letter. The Administrative Agent shall
have received a fully executed copy of the Fee Letter.
SECTION 4.1.10. Other Documents. The Administrative Agent
and the Purchaser will have received all other documents that either of them
had reasonably requested from the Seller or the Servicer.
SECTION 4.1.11. Upfront Fee. The Seller shall have paid a
fee (the "Upfront Fee") to the Administrative Agent at Closing in the amount
set forth in the Fee Letter, which fee shall include all upfront expenses,
including but not limited to legal fees, filing and administrative fees,
rating agency fees, liquidity and credit enhancement fees incurred with
respect to the Purchase.
SECTION 4.1.12. Interest Rate Cap and Swap Agreement. The
Administrative Agent shall have received fully executed copies of the Interest
Rate Cap and the Swap Agreement.
ARTICLE V: SETTLEMENT PROCEDURES
SECTION 5.1. Collections. The Servicer shall segregate all
Collections of the Purchased Receivables from other funds of the Servicer and
the Seller within two Business Days of its or their receipt thereof and hold
such Collections in trust for the Purchaser in a separate bank account either
(x) established in the name of the Purchaser or (y) in respect of which the
Purchaser shall have received an agreement (to be in form and substance
satisfactory to the Purchaser and the Administrative Agent) regarding the
pledge and control thereof. Notwithstanding the foregoing, for so long as (i)
CFC remains the Servicer, (ii) no Servicer Default shall have occurred and be
continuing and (iii) CFC maintains a long-term unsecured senior debt rating of
at least "BBB-" by Standard & Poor's Ratings Services and "Baa3" by Moody's
Investors Service, Inc., the Servicer shall neither be required to deliver any
such agreement nor segregate Collections as aforesaid, but shall rather only
be required to remit such Collections with respect to each Settlement Period
to the Administrative Agent (for the benefit of the Purchaser) on the
Settlement Date relating to such Settlement Period.
-20-
SECTION 5.2. Application of Collections. All Collections for
the Settlement Period shall be applied by the Servicer as follows:
(a) With respect to each Receivable (other than a Balloon
Payment), payments by or on behalf of the Obligor shall be applied first, in
the case of Precomputed Receivables, to reduce Outstanding Precomputed
Advances as described in Section 5.3(a) and, in the case of Simple Interest
Receivables, to reduce Outstanding Simple Interest Advances to the extent
described in Section 5.3(b). Next, any excess shall be applied, in the case of
Precomputed Receivables, to the Scheduled Payment and, in the case of Simple
Interest Receivables, to interest and principal in accordance with the Simple
Interest Method. With respect to Precomputed Receivables, to the extent that
the sum of any remaining excess and the Payahead Balance can be applied to
prepay the Precomputed Receivable in full, such remaining excess shall
constitute a full payoff of such Precomputed Receivable (a "Full Payoff"). To
the extent that the sum of any remaining excess, the Payahead Balance and one
payment can be applied to prepay the Precomputed Receivable in full, such
remaining excess shall constitute a partial payoff of such Precomputed
Receivable (a "Partial Payoff"). Otherwise, any such remaining excess payments
shall constitute a Payahead and shall increase the Payahead Balance.
(b) All Liquidation Proceeds with respect to any Balloon
Payment Receivable shall be applied first to the related Receivable and only
after the payment in full of the Principal Balance thereof plus accrued but
unpaid interest thereon shall any such Liquidation Proceeds be applied to, or
constitute, the related Balloon Payment.
SECTION 5.3. Advances.
(a) As of the close of business on the last day of each
Settlement Period, if the payments by or on behalf of the Obligor on a
Precomputed Receivable (other than a Balloon Payment) shall be less than the
stated scheduled payment for such month, the Payahead Balance shall be applied
by the Servicer to the extent of the shortfall and such Payahead Balance shall
be reduced accordingly. Next, the Servicer shall advance any remaining
shortfall (such amount, a "Precomputed Advance"), to the extent that the
Servicer, at its sole discretion, shall determine that the Precomputed Advance
shall be recoverable from the Obligor, the Purchase Amount, Liquidation
Proceeds or proceeds of any other Precomputed Receivables. With respect to
each Precomputed Receivable, the Precomputed Advance shall increase
Outstanding Precomputed Advances. Outstanding
-21-
Precomputed Advances shall be reduced by subsequent payments by or on behalf
of the Obligor, collections of Liquidation Proceeds in respect of such
Precomputed Receivables or payments of the Purchase Amount with respect to
such Precomputed Receivables.
If the Servicer shall determine that an Outstanding
Precomputed Advance with respect to any Precomputed Receivable shall not be
recoverable as aforesaid, the Servicer shall be reimbursed from any
collections made on other Purchased Receivables which are Precomputed
Receivables and Outstanding Precomputed Advances with respect to such
Precomputed Receivables shall be reduced accordingly.
(b) As of the close of business on the last day of each
Settlement Period, the Servicer shall advance an amount equal to the amount of
interest due on the Simple Interest Receivables at their respective APR's for
the related Settlement Period (assuming the Simple Interest Receivables pay on
their respective due dates) minus the amount of interest actually received on
the Simple Interest Receivables during the related Settlement Period (such
amount, a "Simple Interest Advance"). With respect to each Simple Interest
Receivable, the Simple Interest Advances shall increase Outstanding Simple
Interest Advances. If such calculation results in a negative number, an amount
equal to the absolute value of such negative number shall be paid to the
Servicer and the amount of Outstanding Simple Interest Advances shall be
reduced by such amount. In addition, in the event that a Simple Interest
Receivable becomes a Liquidated Receivable, Liquidation Proceeds with respect
to such Simple Interest Receivables attributable to accrued and unpaid
interest thereon (but not including interest for the then current Settlement
Period) shall be paid to the Servicer to reduce Outstanding Simple Interest
Advances, but only to the extent of any Outstanding Simple Interest Advances.
The Servicer shall not make any advance in respect of principal of Simple
Interest Receivables.
SECTION 5.4. Application of Collections on Settlement Dates.
The Servicer will, by 3:00 P.M. (New York time) on each Settlement Date, from
Collections received during or with respect to the preceding Settlement
Period, pay to the Administrative Agent (for the benefit of the Purchaser) and
the Administrative Agent shall distribute such Collections, together with the
amount of any Interest Rate Cap Proceeds and Swap Windfalls received by the
Administrative Agent or the Purchaser with respect to such Settlement Period,
(i) first, an amount equal to the Carrying Costs for the Settlement Period (as
such amount shall be increased or decreased by the Carrying Costs True-up
Amount, if any, for the immediately preceding Settlement Period as
-22-
determined pursuant to Section 3.1.1(b)) and (ii) second, all remaining
Collections as a reduction to Investment.
SECTION 5.5. Servicer Report. The Servicer will provide the
Purchaser, either in writing or electronically, with a Servicer Report with
respect to each Settlement Period no later than 15 days following the end of
such Settlement Period (or, if such 15th day is not a Business Day, the next
succeeding Business Day).
ARTICLE VI: SERVICING OF RECEIVABLES
SECTION 6.1. Appointment and Duties of Servicer. The
Purchaser and the Seller each hereby appoint CFC as the Servicer and CFC
accepts such appointment. The Servicer, for the benefit of the Purchaser (or
the extent provided herein), shall manage, service, administer, make
collections and discharge liens on the Purchased Receivables with reasonable
care, using that degree of skill and attention that the Servicer exercises
with respect to all comparable automotive receivables that it services for
itself or others. If the Servicer shall commence a legal proceeding to enforce
a Purchased Receivable, the Purchaser shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Purchased
Receivables to the Servicer. If in any enforcement suit or legal proceeding it
shall be held that the Servicer may not enforce a Purchased Receivable on the
ground that it shall not be a real party in interest or a holder entitled to
enforce such Purchased Receivable, the Purchaser shall, at the Servicer's
expense and direction, take steps to enforce such Receivables, including
bringing suit in its name or the name of the Purchaser. The Purchaser shall
upon the written request of the Servicer furnish the Servicer with any powers
of attorney and other documents reasonably necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties hereunder.
SECTION 6.2. Replacement of Servicer.
(a) If any of the following events (a "Servicer Default")
shall occur and be continuing:
(i) any failure by the Servicer to make any payment or
deposit required to be made hereunder and the continuance of such
failure for a period of five Business Days;
(ii) any representation or warranty made by the Servicer in
Section 7.1 or any information set forth in a Servicer Report or
other certificate delivered to the Administrative Agent or the
Purchaser, shall prove to have
-23-
been incorrect in any material respect when made, which continues to
be incorrect in any material respect for a period of sixty days after
the earlier of the date on which an officer of the Servicer has
actual knowledge thereof and the date on which written notice thereof
has been given to the Servicer requiring the same to be remedied, by
the Purchaser or the Administrative Agent;
(iii) failure on the part of the Servicer to observe or
perform in any material respect any other term, covenant or agreement
in this Agreement or any other Sale Document which continues
unremedied for sixty days after the earlier of the date on which an
officer of the Servicer has actual knowledge of such failure and the
date on which written notice of such failure has been given to the
Servicer requiring the same to be remedied, by the Purchaser or the
Administrative Agent; or
(iv) an Insolvency Event with respect to the Seller or the
Servicer;
then, so long as such Servicer Default shall not have been remedied ,the
Purchaser shall have the right to remove CFC (or any successor Servicer) as
Servicer by giving written notice thereof to the Servicer. On and after
receipt of such written notice, all authority and power of the Servicer under
this Agreement shall, without further action, pass to and be vested in such
successor Servicer as may be appointed by the Purchaser provided, however,
that Servicer cannot be removed until a successor Servicer is selected and
appointed and such successor Servicer meets industry-wide standards for being
a Servicer of retail automotive receivables.
(b) If CFC is removed as Servicer, CFC shall transfer to any
successor Servicer designated by the Purchaser all records, correspondence and
documents (including computer software) requested by the Purchaser or such
successor Servicer and permit such Persons to have access to, and to copy, all
software used by the Servicer in the collection, administration or monitoring
of the Purchased Receivables. In the case of software that is then licensed
by, or otherwise made available to, the Servicer from or by any third party,
the Servicer shall use its best efforts to obtain such consents and otherwise
take all actions necessary in order to enable any Servicer hereunder to
succeed to all rights of CFC to the quiet use and enjoyment of such software
for the purpose of discharging the obligations of the Servicer under or in
connection with the Sale Documents.
-24-
(c) Following the removal of CFC as Servicer, (i) the
Purchaser and the Administrative Agent may (a) notify Obligors of the
ownership interest of the Purchaser hereunder in the Purchased Receivables and
the Related Security, (b) notify each issuer of an Insurance Policy of the
ownership interest of the Purchaser hereunder in the Purchased Receivables and
in the Related Security (including the applicable Financed Vehicle and the
Insurance Policy thereon), and (c) direct the Seller to, whereupon the Seller
immediately shall, note the interest of the Purchaser hereunder on each
Certificate of Title relating to each Financed Vehicle and (ii) the Purchaser
shall have, in addition to all other rights and remedies under this Agreement
or otherwise, all other rights and remedies provided under the Uniform
Commercial Code of the applicable jurisdiction and other applicable laws,
which rights shall be cumulative.
SECTION 6.3. Custody of Receivables Files. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Purchaser and the Seller hereby irrevocably appoint the Servicer, and the
Servicer hereby accepts such appointment, to act for the benefit of the
Purchaser and the Seller as custodian of the following documents or
instruments which are hereby or will hereby be constructively delivered to the
Purchaser, as pledgee of the Seller, as of the Closing Date with respect to
each Purchased Receivable (the "Receivables Files"):
(a) the fully executed original of the Contract related to
such Purchased Receivable;
(b) the original credit application fully executed by the
Obligor;
(c) the original Certificate of Title or such documents that
the Servicer or the Seller shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the Seller
in the Financed Vehicle; and
(d) any and all other documents that the Servicer or the
Seller shall keep on file, in accordance with its customary
procedures, relating to a Purchased Receivable, an Obligor or a
Financed Vehicle.
SECTION 6.4. Duties of Servicer as Custodian. The Servicer
shall hold the Receivables Files as custodian for the benefit of the Seller
and the Purchaser and maintain such accurate and complete accounts, records
and computer systems pertaining to each Receivables File as shall enable the
Seller to
-25-
comply with this Agreement. In performing its duties as custodian the Servicer
shall act with reasonable care, using that degree of skill and attention that
the Servicer exercises with respect to Receivables Files relating to all
comparable automotive receivables that the Servicer services for itself or
others.
SECTION 6.5. Effective Period and Termination. The
Servicer's appointment as custodian shall become effective as of the Cut-Off
Date and shall continue in full force and effect until terminated pursuant to
this Section. If CFC shall cease to be Servicer in accordance with the
provisions of this Agreement, the appointment of such Servicer as custodian
shall be terminated by the Purchaser. The Purchaser may terminate the
Servicer's appointment as custodian at any time following the occurrence of a
Servicer Default under Section 6.2(a) upon thirty days written notification to
the Servicer. As soon as practicable after any termination of such
appointment, the Servicer shall deliver the Receivables Files to the
Administrative Agent or to any other Person designated by the Administrative
Agent at a place or places as the Administrative Agent or such other Person
may reasonably designate.
ARTICLE VII: REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Seller
and the Servicer. Each of the Seller and the Servicer makes, with respect to
itself, the following representations and warranties to the Purchaser:
(a) It is a limited liability company or corporation, as
applicable, duly organized or incorporated, validly existing and in good
standing under the laws of the jurisdiction of its organization or
incorporation and is duly qualified in good standing as a foreign corporation
or limited liability company in each jurisdiction where the failure to be so
qualified could materially adversely affect its ability to perform its
obligations hereunder.
(b) The execution, delivery and performance by the Seller
and the Servicer of the Sale Documents to which it is a party, and the
Seller's use of the proceeds of the Purchase, are, in each case, within the
Seller's and the Servicer's respective corporate powers, have been duly
authorized by all necessary corporate action, do not contravene (i) the
Seller's or the Servicer's respective articles of organization or charter, as
applicable, or operating agreement or by-laws, as applicable, or (ii) any law,
rule or regulation or any contractual restriction binding on or affecting the
Seller or the Servicer, and do not
-26-
result in or require the creation of any Adverse Claim (other than pursuant to
this Agreement) upon or with respect to any of its properties; and no
transaction contemplated hereby requires compliance with any bulk sales act or
similar law.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Seller or the
Servicer of the Sale Documents, or for the perfection of or the exercise by
the of its rights and remedies under the Sale Documents, except for the filing
of the financing statements referred to in Section 4.1.2.
(d) Each Sale Document constitutes the legal, valid and
binding obligation of the Seller and the Servicer, respectively, enforceable
in accordance with its terms.
(e) There is no pending or threatened action or proceeding
affecting the Seller or the Servicer or any of its subsidiaries before any
court, governmental agency or arbitrator which may materially adversely affect
(i) its financial condition or operations or (ii) its ability to perform its
obligations under the Sale Documents, or which could affect the legality,
validity or enforceability of any Sale Document or of the interests of the
Purchaser in the Purchased Receivables.
(f) The Seller is the legal and beneficial owner of the
Receivables, the Related Security and Collections, free and clear of any
Adverse Claim, except as created by this Agreement; upon consummation of the
Purchase, the Purchaser will acquire a valid and perfected first priority
ownership interest in the Purchased Receivable and in the Related Security and
the Collections with respect thereto, free and clear of any Adverse Claim
except as created by this Agreement.
(g) The information provided by the Seller to the Servicer
for use in each Servicer Report prepared under Section 5.5 and all information
and Sale Documents furnished or to be furnished at any time by the Seller to
the Administrative Agent in connection with this Agreement is or will be
accurate in all material respects as of its date, and no such document will
contain any untrue statement of a material fact or will omit to state a
material fact which is necessary to make the facts stated therein not
misleading.
(h) The Seller is treating the conveyance of the interest in
the Purchased Receivables and the Collections under this Agreement to the
Purchaser as a sale for purposes of generally accepted accounting principles.
-27-
ARTICLE VIII: COVENANTS
SECTION 8.1. Affirmative Covenants of the Seller and the
Servicer. Until the Investment is reduced to zero and all other amounts due to
the Purchaser hereunder have been paid in full, each of the Seller and the
Servicer (with respect to itself) will, unless the Administrative Agent and
the Purchaser have each otherwise consented in writing:
(a) Maintain its existence in the jurisdiction of its
organization or incorporation and qualify and remain qualified in good
standing as a foreign corporation or limited liability company in each
jurisdiction where the failure to be so qualified could materially adversely
affect its ability to perform its obligations hereunder.
(b) Maintain and implement administrative and operating
procedures, and keep and maintain all records and other information,
reasonably necessary or advisable for the collection of the Purchased
Receivables (including, without limitation, records adequate to permit the
daily identification of Purchased Receivables and all Collections and
adjustments to Purchased Receivables).
(c) At its expense timely and fully perform and comply with
all material provisions and covenants required to be observed by CFC or the
Seller under the Contracts related to the Purchased Receivables.
(d) Comply in all material respects with the Credit and
Collection Policy in regard to each Purchased Receivable and any Contract
related to such Receivable.
(e) Treat the conveyance of the interest in the Purchased
Receivables and the Collections under this Agreement as a sale for purposes of
generally accepted accounting principles.
SECTION 8.2 Reporting Requirements of the Servicer. Until
the Investment is reduced to zero and all amounts due to the Purchaser
hereunder have been paid in full, the Servicer will, unless the Purchaser
shall otherwise consent in writing, furnish to the Purchaser:
(a) the Servicer Report as required under Section 5.5;
(b) as soon as possible, and in any event within thirty days
shall describe such event or condition and, if applicable, the steps being
taken with respect thereto by the
-28-
Person(s) affected thereby, of: (i) the occurrence of any Servicer Default or
event which with the passage of time or the giving of notice or both would
constitute a Servicer Default or (ii) the institution of any litigation,
arbitration proceeding or governmental proceeding which could be reasonably
likely to have a material adverse effect on the performance by the Servicer of
its obligations under this Agreement or the other Sale Documents or the
collectibility of the Purchased Receivables; and
(c) such other information, documents, records or reports
respecting the Purchased Receivables or the condition or operations, financial
or otherwise, of the Servicer or the Seller as the Purchaser may from time to
time reasonably request.
SECTION 8.3. Negative Covenants of the Seller and the
Servicer. Until the Investment is reduced to zero and all other amounts due to
the Purchaser hereunder have been paid in full, neither the Seller nor the
Servicer will, unless the Purchaser has otherwise consented in writing:
(a) Except as provided herein, sell, assign (by operation of
law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to any Purchased Receivables, the Related
Security or any Collections or assign any right to receive income in respect
thereof; or
(b) Amend or otherwise modify the terms of any Purchased
Receivable, or amend or otherwise modify any term or condition of any Contract
related thereto, in each case, in any manner which is inconsistent with the
Credit and Collection Policy.
SECTION 8.4. Protection of the Purchaser's Interest
(a) Until the Investment is reduced to zero and all other
amounts due to the Purchaser hereunder have been paid in full, each of the
Seller and the Servicer agrees that from time to time, at its expenses, it
will promptly execute and deliver all instruments and documents and take all
action that the Administrative Agent or the Purchaser may from time to time
reasonably request in order to perfect, evidence and protect the validity,
enforceability, perfection and priority of the Purchaser's interests in the
Purchased Receivables, the Related Security and the Collections and to enable
the Administrative Agent and/or Purchaser to exercise or enforce any of its
rights hereunder. Without limiting the generality of the foregoing, the Seller
and the Servicer will: (i) on or prior to the date hereof, mark its master
data processing records with a legend
-29-
describing the Purchaser's interests therein; and (ii) upon the request of the
Administrative Agent or the Purchaser, execute and file such financing or
continuation statements or amendments thereto or assignments thereof as may be
requested by the Administrative Agent or the Purchaser; provided, however,
that the Seller is not required to deliver the Contracts to anyone other than
the Servicer;
(b) To the fullest extent permitted by applicable law, the
Administrative Agent shall be permitted to sign and file continuation
statements and amendments thereto and assignments thereof without the Seller's
signature. Carbon, photographic or other reproduction of this Agreement or any
financing statement shall be sufficient as a financing statement.
ARTICLE IX: ADMINISTRATIVE AGENT
SECTION 9.1. Appointment of Administrative Agent. The
Purchaser has appointed Union Bank of Switzerland, New York Branch as its
Administrative Agent. The Administrative Agent is responsible for
administering and enforcing this Agreement and fulfilling all other duties
expressly assigned to it in this Agreement. The Purchaser has granted the
Administrative Agent the authority to take all actions necessary to assure the
Seller's and the Servicer's compliance with the terms of this Agreement and
the other Sales Documents and to take all actions required or permitted to be
performed by the Purchaser under this Agreement or the other Sales Documents.
SECTION 9.2. Replacement of Administrative Agent. The
Purchaser may, at any time in its discretion, remove an Administrative Agent
and appoint a new Administrative Agent, which shall have the duties described
in Section 9.1.
ARTICLE X: MISCELLANEOUS
SECTION 10.1. Amendments, Etc. No amendment or waiver of, or
consent to the Seller's or the Servicer's departure from, any provision of
this Agreement shall be effective unless it is in writing and signed by the
parties hereto and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which is was
given.
SECTION 10.2. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated herein,
be in writing (including photocopy, facsimile,
-30-
electronic mail or other digital communication) and sent, as to each party
hereto, at its address set forth under its name on the signature pages hereto,
or at such other address as shall be designated by such party in a written
notice to the other parties hereto. All such notices and communications shall
be effective when sent.
SECTION 10.3. No Waiver; Remedies. No failure on the part of
the Purchaser to exercise, and no delay in exercising, any right hereunder or
under any Sale Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 10.4. Binding Effect; Assignability.
(a) This Agreement shall be binding upon and inure to the
benefit of the Seller, the Servicer, the Purchaser, the Administrative Agent
and their respective successors and assigns, except that the Seller shall not
have the right to assign any interest herein without the prior written consent
of the Administrative Agent. So long as prior written notice thereof shall
have been delivered to the Seller, the Purchaser may assign any of its rights
or obligations hereunder to any Person.
(b) This Agreement shall create and constitute the
continuing obligation of the parties hereto in accordance with its terms, and
shall remain in full force and effect until such time as the Investment is
reduced to zero and all other amounts due to the Purchaser hereunder have been
paid in full; provided, however, that the rights and remedies to the Purchaser
under Section 10.10 and the provisions of Section 10.7 shall, in each case,
survive any termination of this Agreement.
SECTION 10.5. GOVERNING LAW. THIS AGREEMENT AND THE SALE
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
SECTION 10.6. Construction of the Agreement. The parties
hereto intend that the conveyance of the interest in the Purchased Receivables
by the Seller to the Purchaser shall be treated as sales for purposes of
generally accepted accounting principles. If, despite such intention, a
determination is made that such transactions shall not be treated as sales,
then this Agreement shall be interpreted to constitute a security agreement
and the transactions effected hereby shall be deemed to constitute a secured
financing by the Purchaser to the Seller under applicable law. For such
purpose, the Seller hereby grants
-31-
the Purchaser a continuing security interest in the Purchased Receivables and
the Related Security and Collections related thereto to secure the obligation
of the Seller to the Purchaser hereunder.
SECTION 10.7. No Proceedings. The Seller, the Administrative
Agent and the Servicer each hereby agrees that it will not institute, or join
any other Person in instituting, against the Purchaser any bankruptcy,
reorganization, insolvency or similar proceeding until the date which is one
year and one day after the last day upon which any Commercial Paper Notes or
other financial securities issued by the Purchaser shall have been
outstanding.
SECTION 10.8. Confidentiality. The Purchaser and the
Administrative Agent each hereby agrees to maintain the confidentiality of any
information regarding the Seller and the Servicer obtained in accordance with
the terms of this Agreement which is not publicly available, but the Purchaser
and the Administrative Agent may, with advance notice to the Seller and the
Servicer, reveal such information (a) to its and its managers',
administrators' and trustees' employees, officers, and directors who have a
need to know and to each of the foregoing's accountants, attorneys and
advisors to the extent they are made aware of the confidential nature thereof
and the terms of this Section 10.8, (b) to applicable rating agencies,
liquidity providers and credit providers, (c) as necessary or appropriate in
connection with the administration or enforcement of this Agreement or its
funding of the Purchase under this Agreement, (d) as required by law,
government regulation, court proceeding or subpoena, or (d) to bank regulatory
agencies or examiners.
SECTION 10.9. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the
same agreement.
SECTION 10.10. Indemnification by Seller. Without limiting
any other rights which the Purchaser, the Administrative Agent and any of the
respective officers, directors, employees, agents and affiliates of any of the
foregoing may have hereunder or under applicable law, the Seller hereby
indemnifies such parties and holds them harmless from and against any and all
damages, losses, claims, liabilities and related costs and expenses (including
attorneys' fees and disbursements) incurred by any of them arising out of or
resulting from this Agreement or the purchase by the Purchaser of any interest
in the Purchased
-32-
Receivables or the Related Security and Collections related thereto,
including, without limitation:
(a) the return or transfer by the Servicer of any portion
of Collections to the Seller or any other Person for any reason whatsoever; or
(b) any warranty or products liability claim allegedly
arising out of or in connection with merchandise or services which are the
subject of, or were financed with the proceeds of, any Contract under which
any of the Purchased Receivables arise, including, without limitation, any use
or misuse by any Person of any Financed Vehicle (including, without
limitation, any use involving the handling or disposition of any hazardous
substance or waste material).
-33-
IN WITNESS WHEREOF, the parties have caused this Agreement
to be signed by their duly authorized officers as of the date set forth on the
cover page of this Agreement.
PREMIER RECEIVABLES L.L.C.
as Seller
By: s/s David H. Olsen
--------------------------------
Title: Assistant Treasurer
of Premier Auto Receivables Company,
a Member of the Seller
Address: 27777 Franklin Road
Southfield, Michigan 48034
Attention: Assistant Secretary
Facsimile: 810-948-3138
CHRYSLER FINANCIAL CORPORATION
as Servicer
By: s/s David H. Olsen
-----------------------------------
Title: Assistant Treasurer
Address: 27777 Franklin Road
Southfield, Michigan 48034
Attention: Assistant Secretary
Facsimile: 810-948-3138
MONTE ROSA CAPITAL CORPORATION, as
Purchaser
By: UNION BANK OF SWITZERLAND, NEW YORK
BRANCH, its attorney-in-fact
By: s/s Daniel Gringuaz
----------------------------
Title: Assistant Vice President
By: s/s Rolf Ruegg
----------------------------
Title: Assistant Vice President
S-1
Address:
c/o Union Bank of Switzerland,
New York Branch
299 Park Avenue, 38th Floor
New York, New York 10171
Attn: Asset Securitization Group -
James F. Moore
Telephone No.: 212/821-3294
Telecopier No.: 212/821-3890
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH, as Administrative
Agent
By: s/s Daniel Gringuaz
--------------------
Title: Assistant Vice President
By: s/s Rolf Ruegg
----------------
Title: Assistant Vice President
Address:
299 Park Avenue, 38th Floor
New York, New York 10171
Attn: Asset Securitization Group -
James F. Moore
Telephone No.: 212/821-3294
Telecopier No.: 212/821-3890
S-2