Exhibit 10-VVVV
RECEIVABLES SALE AGREEMENT
among
CHRYSLER CREDIT CANADA LTD.
as Seller and Servicer,
CHRYSLER FINANCIAL CORPORATION
as Performance Guarantor,
CANADIAN MASTER TRUST
as Purchaser
and
NESBITT BURNS INC.
as Administrative Agent
Dated as of December 18, 1996
TABLE OF CONTENTS
PAGE NO.
ARTICLE I: DEFINITIONS...................................................1
ARTICLE II: SALE AND PURCHASE............................................10
ARTICLE III: FEES AND EXPENSES............................................11
ARTICLE IV: CONDITIONS PRECEDENT TO PURCHASE.............................13
ARTICLE V: SETTLEMENT PROCEDURES........................................15
ARTICLE VI: SERVICING OF RECEIVABLES.....................................17
ARTICLE VII: REPRESENTATIONS AND WARRANTIES...............................20
ARTICLE VIII: COVENANTS....................................................21
ARTICLE IX: ADMINISTRATIVE AGENT.........................................24
ARTICLE X: COVENANTS OF CFC.............................................24
ARTICLE XI: MISCELLANEOUS................................................25
EXHIBIT A Form of Servicer Report
RECEIVABLES SALE AGREEMENT dated as of December 18, 1996, among
CHRYSLER CREDIT CANADA LTD., a Canadian corporation, as the "Seller" and
initial Servicer, CHRYSLER FINANCIAL CORPORATION, a Michigan corporation, as
the "Performance Guarantor", CANADIAN MASTER TRUST, as the "Purchaser" and
NESBITT BURNS INC., as the "Administrative Agent" for the Purchaser.
ARTICLE I: DEFINITIONS
"Administrative Agent" means Nesbitt Burns Inc. and any replacement
thereof under Section 9.1.1.
"Advance" means either a Precomputed Advance or Simple Interest
Advance or both, as applicable determined in accordance with Section 5.3.
"Adverse Claim" means any mortgage, pledge, security interest,
hypothecation, hypothec, 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 favour of any other Person, of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic
effect as any of the foregoing).
"Agreement" means this Receivables Sale Agreement including the
Exhibit hereto and the Schedule of Contracts, as it may be amended from time
to time.
"Aggregate Principal Balance" means, at any time, the aggregate
Principal Balance of all Purchased Receivables at such time.
"Amount Financed" means the amount advanced under a 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.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate or, in the case of Contracts originated in the Province of
Quebec, the annual rate, stated on the face of the related Contract.
"Bankers' Acceptance Rate" means, on any day, the annual rate of
interest which is the rate quoted by Bank of Montreal for bankers' acceptances
accepted by it having a maturity equivalent to the applicable Settlement
Period, provided that if no such quoted rate is available on any day,
"Bankers' Acceptance Rate" on that day shall be such other rate as the
Administrative Agent and the Seller may agree.
"Business Day" means any day other than a Saturday, Sunday, statutory
holiday or other holiday on which banks are closed in Toronto or New York.
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"Carrying Costs" means, for each Settlement Period, an amount equal
to the sum of:
(i) (PD + PF) x DSP x AI
---------
365
plus
(ii) SF x DSP x APB
--------------
365
where PD = Purchase Discount
PF = Program Fee
SF = Servicer Fee
DSP = the number of days in
such Settlement Period
AI = the average daily
Investment for such
Settlement Period
APB = the average daily
Aggregate Principal
Balance for such
Settlement Period.
"Carrying Costs True-up Amount" has the meaning assigned to that term
in Section 3.1.1.
"CFC" means, Chrysler Financial Corporation, a Michigan corporation,
and its successors and assigns.
"Collection" means any amount paid by an Obligor or any other Person
with respect to a Purchased Receivable, including (i) Liquidation Proceeds,
(ii) amounts paid to the Purchaser pursuant to Section 2.4 and (iii) the
amount paid to the Purchaser on the sale of Purchased Receivables pursuant to
Section 2.3.
"Collection Period" means a calendar month, or, in the case of the
initial Collection Period, the period beginning on the Cut-Off Date and ending
on December 31, 1996.
"Contract" means, with respect to any Receivable, any and all
instruments, conditional sale contracts, agreements, invoices, or other
writings pursuant to which such Receivable arises or which evidence such
Receivable.
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"Credit and Collection Policy" means the credit and collection
policies and practices of the Servicer and any successor Servicer relating to
Receivables and Contracts, such policies being subject to unilateral revision
or modification at any time by the Servicer or successor Servicer provided
that and such revision or modification shall apply equally to the Purchased
Receivables and Receivables owned by the Seller.
"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 (except under this Agreement) which are not
Liquidity Facilities.
"Cut-Off Date" means December 12, 1996.
"Dealer" means an automobile or light-duty truck dealership located
within Canada 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 Purchased 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 for each such Receivable, 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.
"Defaulted Receivable" means a Receivable (i) under which an amount
greater than or equal to the amount required to be paid under the related
Contract for the calendar month ending on the last day of the most recently
completed Settlement Period has been outstanding for a period greater than or
equal to three calendar months, or (ii) in respect of the Obligor (other than
a guarantor) of which an Insolvency Event has occurred and is continuing.
"Eligible Receivable" means, as of the Cut-Off Date, any Receivable:
(i) the Obligor of which (a) is a resident of Canada 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
Delinquent Receivable and (b) is not the subject of any
bankruptcy, insolvency or reorganization proceeding or any
other proceeding seeking the appointment of a receiver,
trustee or other similar official for the Obligor or any
substantial part of the Obligor's property,
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(iii) which is "chattel paper" within the meaning of the
applicable PPSA,
(iv) which is denominated and payable only in Canadian dollars in
Canada,
(v) which (a) has been originated in Canada 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 defence, 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 favour of the Seller 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 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 all of its
right, title and interest therein to) the Seller, and such
assignment of such Contract to the Seller is expressly
contemplated in such Contract,
(ix) which, together with the related Contract, does not
contravene any laws, rules or regulations applicable thereto
and with respect to which no part of the related Contract 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 which is in full force and affect, and the
proceeds of the Required Insurance have been assigned to the
Seller or the Seller is the loss payee thereof and the
Required Insurance, including the proceeds, are fully
assignable to the Purchaser,
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(xi) as to which the Administrative Agent 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 principal 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 assigned to
the Purchaser hereunder and (b) such outstanding balance is
scheduled to be paid in equal consecutive monthly
instalments in accordance with the actuarial method, the
simple interest method or the Rule of 78s, and
(xiii) which Receivable bears interest at the Annual Percentage
Rate and such rate remains fixed during the term of such
Receivable and accrued interest on such Receivable is
payable monthly, in arrears.
"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 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.
"Hedging Proceeds" means any amount payable by CFC to the Purchaser
under the interest rate cap agreement dated the date hereof made between CFC
and the Purchaser with respect to this Agreement.
"Insolvency Event" means, with respect to a specified Person, the
commencement by or against such Person of any proceeding under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
commencement of any proceeding seeking the appointment of or taking possession
by a receiver, liquidator, assignee, custodian, trustee or similar official
for such Person or for any substantial part of such Person's property, or the
winding up or liquidation of such Person, 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 any
action by such Person in furtherance of any of the foregoing.
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"Insurance Policy" means (i) any comprehensive, collision, fire,
theft or other insurance policy maintained by an Obligor in which the Seller
or the 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.
"Investment" means the aggregate amount of cash paid by the Purchaser
to the Seller for the Purchase on the Purchase Date, minus the amount of all
Collections received and applied as reductions of Investment pursuant to
Article V.
"Liquidated Receivable" means any 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 whatever 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 Defaulted Receivables 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 five immediately preceding months,
to the extent such months exist for each Purchased Receivable, 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 five
immediately preceding months, to the extent such months exist for each
Purchased Receivable.
"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 Collection
Period, of all Precomputed Advances as reduced as provided in Section 5.3(a).
"Outstanding Simple Interest Advances" on the Simple Interest
Receivables means the sum, as of the close of business on the last day of a
Collection Period, of all Simple Interest Advances as reduced as provided in
Section 5.3(b).
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"Partial Payoff" has the meaning assigned to that term in Section 5.2.
"Payahead" on a Receivable that is a Precomputed Receivable means the
amount, as of the close of business on the last day of a Collection Period,
computed in accordance with Section 5.2 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 Collection
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 and 5.3.
"Performance Guarantor" means, CFC and its successors and assigns.
"Person" means any corporation, natural person, firm, joint venture,
partnership, trust, unincorporated organization, enterprise, government or any
department or agency of any government.
"PPSA" means the Personal Property Security Act (Ontario) or the
comparable legislation of the other provinces and territories of Canada
including, in Quebec, the Civil Code of Quebec, and in Nova Scotia,
Newfoundland and Prince Edward Island, the respective Assignments of Book
Debts Acts of such provinces.
"Precomputed Advance" means the amount, as of the close of business
on the last day of a Collection 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.
"Prime Rate" means the rate per annum on any day publicly announced
by Bank of Montreal as its "prime rate" for Canadian dollar commercial loans
made by it in Canada.
"Principal Balance" means with respect to any Receivable the
outstanding principal balance thereof determined in accordance with the Credit
and Collection Policy and the Servicer's customary calculation methods.
"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.
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"Purchase Amount" means the amount, as of the close of business on
the last day of a Collection Period, required to prepay in full a Receivable
under the terms thereof including interest to the end of the month of
purchase.
"Purchase Date" means December 18, 1996, 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 Assets" has the meaning assigned to that term in Section
2.1.
"Purchased Receivable" means an Eligible Receivable being sold to
Purchaser under this Agreement arising under a Contract listed on the Schedule
of Contracts delivered to the Administrative Agent prior to the Purchase Date.
"Purchaser" means Canadian Master Trust, a trust established pursuant
to the laws of the Province of Ontario and its successors and assigns.
"Purchaser's Anticipated Recovery" means the sum of the Investment on
the Purchase Date plus the aggregate of all amounts required to be remitted to
the Purchaser pursuant to Section 5.4(i).
"Rating Agency" means Dominion Bond Rating Service Limited or its
successor.
"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
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 Obligor, manufacturer or Dealer in respect of
such Financed Vehicle,
(ii) all guarantees or other security interests or liens and
property subject thereto from time to time, if any,
purporting to secure payment of such Receivable, whether
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pursuant to the Contract related to such Receivable, or
otherwise, together with all financing statements or other
instruments 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 not the primary
Obligor on such Receivable) under or in connection
therewith,
(iii) all books, records and other information relating to such
Receivable, including, without limitation, all Contracts,
(iv) all service contracts and other contracts and agreements
relating to such Receivable, and
(v) 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 Seller or the Servicer noted as the loss payee thereon.
"Reserve" means an amount in the form of Receivables having a
Principal Balance equal to 5.0% of the Investment as of the Purchase Date.
"Sale Documents" means this Agreement and all other certificates,
instruments, agreements and documents executed from time to time by the Seller
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 Chrysler Credit Canada Ltd., a Canada corporation and
its successors and permitted assigns.
"Servicer" means the Seller or any replacement thereof under Article
VI.
"Servicer Default" has the meaning assigned to that term in Section
6.2.
"Servicer Fee" has the meaning assigned to that term in Section
3.1.3.
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"Servicer Report" means the report in the form of Exhibit A hereto to
be provided by the Servicer in accordance with Section 5.5 which report shall
include a calculation of the Delinquency Ratio and the Net Loss Ratio for the
applicable month.
"Settlement Date" means the last day of each month following a
related Settlement Period (or if such day is not a Business Day, the preceding
Business Day).
"Settlement Period" means a calendar month, provided, that, for
purposes of the initial Settlement Period, such period shall commence on the
Cut-Off Date and end on December 31, 1996.
"Significant Event" has the meaning assigned to that term in Section
8.2.(b).
"Simple Interest Advance" means the amount of interest, as of the
close of business on the last day of a Collection 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 or 366, as the case
may be, 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.
"Structuring Fee" has the meaning assigned to that term in Section
4.1.10.
ARTICLE II: 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 all proceeds of the foregoing (collectively,
the "Purchased Assets") and (ii) the Purchaser hereby purchases and accepts
the transfer and assignment of all of the Seller's right, title and interest
to and in the Purchased Receivables, together with the Related Security and
Collections relating to such Purchased Receivables and all proceeds of the
foregoing (the foregoing sale, transfer and assignment being referred to as
the "Purchase").
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SECTION 2.2. Purchase Price. The purchase price payable by the
Purchaser for the Purchase is the sum of the Investment on the Purchase Date
plus the amount, if any, by which aggregate Collections exceed the Purchaser's
Anticipated Recovery. Such purchase price shall be paid by the Purchaser to
the Seller in two components, a cash component and a deferred payment
component. The cash component of the purchase price shall be paid on the
Purchase Date and shall equal the Aggregate Principal Balance as of the
Cut-Off Date minus the Reserve calculated as of such Purchase Date. The
deferred component shall be paid after the Investment has been reduced to zero
as Collections are received by the Purchaser provided that the balance of the
deferred component of the purchase price shall be paid forthwith upon the sale
by the Purchaser of Purchased Receivables pursuant to Section 2.3.
SECTION 2.3. Seller's Optional Termination. The Seller shall have the
right, on five Business Days' written notice to the Administrative Agent
expiring on a Settlement Date, at any time following the reduction of the
Aggregate Principal Balance hereunder to a level that is less than ten percent
(10%) of the Aggregate Principal Balance on the Purchase Date and is greater
than the aggregate of the Investment outstanding after the application of
Collections remitted on that Settlement Date and all other amounts payable
(whether due or accrued) hereunder or under any other Sale Document, 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 Aggregate Principal Balance as at the last day
of the preceding Settlement Period. The assignment giving effect to 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 except
as to the Purchaser's unencumbered title to the said Purchased Receivables,
Related Security and Collections. The Seller shall pay and account for the
amount so payable as a Collection with respect to the Purchased Receivables.
SECTION 2.4 Repurchase of Ineligible Receivables. In the event the
Seller is in breach of a representation and warranty as set forth in Article
VII or of the covenant set forth in Section 8.3(c) made with respect to a
Purchased Receivable, then on the Settlement Date following the Settlement
Period in which such breach is discovered the Seller shall repurchase each
such Purchased Receivable for the Purchase Amount thereof. The Seller shall
pay and account for the amount so payable as a Collection with respect to the
Purchased Receivables.
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.
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(a) A Purchase Discount equal to the weighted average of the
following (net of any Hedging Proceeds in respect of the related
Settlement Period):
(i) the weighted average of the discount rates on all
commercial paper notes issued at a discount and outstanding
during the related Settlement Period (other than commercial
paper notes the proceeds of which are used by the Purchaser
to (A) purchase receivables, or extend financing secured
thereby, at a fixed interest rate or (B) conduct any
arbitrage activities of the Purchaser), converted to an
annual yield-equivalent rate on the basis of a 365-day year;
(ii) the weighted average of the annual interest rates
payable on all interest-bearing commercial paper notes
outstanding during the related Settlement Period (other than
the commercial paper notes described in clauses (A) and (B)
of paragraph (i) above), on the basis of a 365-day year; and
(iii) the weighted average of the annual interest rates
applicable to any Liquidity Facilities under which the
Purchaser has borrowed loans during the related Settlement
Period (which loans shall be borrowed only 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); provided that to the
extent that the Investment is funded by a specific issuance
of commercial paper notes and/or by a specific borrowing
under a Liquidity Facility or a Credit Facility, the
Purchase Discount shall equal the rate or weighted average
of the rates applicable to such issuance or borrowing,
provided, further, that, for purposes of the foregoing, the
interest rates applicable under any Liquidity Facility shall
be equal to one-half of one per cent (0.50%) per annum in
excess of the greater of (A) the rate of interest per annum
for overnight interbank loans in respect of Canadian dollar
funds having a term of one day, and (B) the Banker's
Acceptance Rate for the applicable Settlement Period.
(b) Two calendar days prior to the end of each Settlement Period (or
if such day is not a Business Day, the immediately preceding Business
Day), 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 and the Carrying Costs 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,
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the amount of Collections remitted to the Purchaser pursuant to
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 Purchaser pursuant to 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 0.18% per annum
which shall include all annual expenses, including but not limited to legal
fees and disbursements, audit fees, filing and administrative fees, liquidity
and credit enhancement fees, and dealer commissions.
SECTION 3.1.3. Servicer Fee. In respect of any period during which
the Seller is not the Servicer, a Servicer Fee in respect of each Collection
Period, not to exceed 1.0% per annum of the Aggregate Principal Balance on the
first day of such Collection Period, which shall be remitted by the Purchaser
to the Servicer.
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 1.0% per annum in
excess of the Prime Rate.
SECTION 3.2.1. Interest Act (Canada). For the purposes of disclosure
under the Interest Act (Canada) the equivalent annual rate to any rate of
interest or discount calculated on the basis of a period less than a year is
the rate so calculated multiplied by a fraction the numerator of which is the
number of days in the calendar year and the denominator of which is the number
of days in such period.
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 and all proceeds thereof are free and clear of any
Adverse Claim.
SECTION 4.1.2. PPSA Registrations. The Administrative Agent will have
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received verification statements, or other documents reasonably requested by
the Administrative Agent, to evidence the recording of the Purchaser's
interest in the Purchased Receivables, the Related Security and the
Collections under the applicable PPSA.
SECTION 4.1.3. Schedule of Contracts. The Administrative Agent will
have received the Schedule of Contracts.
SECTION 4.1.4. Seller Officer's Certificate. The Administrative Agent
will have received a certificate of an officer of the Seller attesting to:
(a) the resolution of the directors of the Seller authorizing this
Agreement and the execution by the Seller of the Sale Documents
to be executed by the Seller;
(b) the names and specimen signatures of the officers of the Seller
authorized to execute the Sale Documents to be executed by the
Seller; and
(c) the completeness and correctness of the articles of incorporation
and by-laws of the Seller attached thereto.
SECTION 4.1.5. CFC Officer's Certificate. The Administrative Agent
will have received a certificate of an officer of CFC attesting to:
(a) the resolution of the Directors of CFC (or the executive
committee thereof) authorizing the guarantee of CFC contained in this
Agreement and the execution by CFC of the Sale Documents to be
executed by CFC;
(b) the names and specimen signatures of the officers of CFC
authorized to execute the Sale Documents to be executed by
CFC; and
(c) the completeness and correctness of the restated articles of
incorporation and by-laws of CFC attached thereto.
SECTION 4.1.6. Legal Opinion of Counsel to the Seller. The
Administrative Agent will have received an opinion from counsel to the Seller
in the form and as to such 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 evidencing the legal existence
and good standing of the Seller and CFC.
SECTION 4.1.8. Representations and Covenants. On and as of the date
of the Purchase (i) the representations and warranties of the Seller set forth
in Article VII shall be true and correct with the same effect as if made on
such date and (ii) the Seller shall be in compliance
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with the covenants set forth in Article VIII. The Seller, by 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).
SECTION 4.1.9. 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 4.1.10. Upfront Fee. The Seller shall have paid at closing
(i) a fee to the Administrative Agent in the amount of $20,000 which shall
include all upfront expenses, including but not limited to legal fees and
disbursements, filing and administrative fees, rating agency fees, liquidity
and credit enhancement fees incurred with respect to the Purchase and (ii) an
interest rate cap fee to the Purchaser in the amount of $616,000 in respect of
the agreement referred to in the definition of Hedging Proceeds
SECTION 4.1.11. Advance Ruling Certificate. The Seller shall have
obtained an Advance Ruling Certificate in connection with the sale of the
Purchased Receivables hereunder pursuant to the Competition Act (Canada).
ARTICLE V: SETTLEMENT PROCEDURES
SECTION 5.1. Collections. On the last day of each Settlement Period,
or if such last day is not a Business Day, then on the next preceding Business
Day, the Servicer shall remit to the Administrative Agent that portion of
Collections for such Settlement Period which is not greater than the amount of
Carrying Costs for the related Settlement Period, as determined in accordance
with Section 3.1. Thereafter, the Servicer shall remit to the Administrative
Agent the balance, if any, of such Collections on the Settlement Date relating
to such Settlement Period. If the Seller is the Servicer on the Business Day
immediately following the date on which the long term debt rating of CFC by
Moody's Investor Services, Inc. or any successor thereof falls below Baa3 (or
its then equivalent), and until such time as CFC's rating is increased by
Moody's Investor Services, Inc. to at least Baa3 (or its then equivalent), the
Servicer shall, within two Business Days of receipt, pay all Collections
received by the Servicer to the Administrative Agent.
SECTION 5.2. Application of Collections. All Collections for each
Collection Period shall be applied by the Servicer as follows: With respect to
each Receivable, 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
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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.
SECTION 5.3. Advances.
(a) As of the close of business on the last day of each Collection
Period, if such payments by or on behalf of the Obligor on a
Precomputed Receivable shall be less than the scheduled payment, 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 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 made
by the Seller in accordance with Section 2.4 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 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 Collection
Period, the Servicer shall advance an amount equal to the amount of
interest due on the Simple Interest Receivables at their respective
APRs for the related Collection 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 Collection Period (such amount, a "Simple Interest
Advance"). With respect to each Simple Interest Receivable, the
Simple Interest Advance 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 Receivable
attributable to accrued and unpaid interest thereon (but not
including interest for the then current Collection Period)
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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 and Hedging Proceeds on
Settlement Dates. Subject to Section 5.1, the Servicer will, by 12:00 noon
(Toronto time) on each Settlement Date, from Collections received during the
preceding Settlement Period, pay to the Administrative Agent and the
Administrative Agent shall on each Settlement Date distribute such Collections
to the Purchaser (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 determined pursuant to Section 3.1.1(b)) and (ii) second,
all remaining Collections as a reduction to Investment. CFC will also, by the
same time on each Settlement Date, pay to the Administrative Agent all Hedging
Proceeds payable with respect to such preceding Settlement Period and the
Administrative Agent shall distribute such Hedging Proceeds to the Purchaser.
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 the seventh Business Day following the
end of such Settlement Period.
ARTICLE VI: SERVICING OF RECEIVABLES
SECTION 6.1.1 Power of Attorney. The Seller hereby appoints the
Purchaser, the Administrative Agent, any officer of the trustee of the
Purchaser or any officer of the Administrative Agent from time to time, with
full power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority, coupled with an interest, in the place and
stead of the Seller and in the name of the Seller or in the name of any such
attorney, from time to time in the Purchaser or Administrative Agent's
discretion, as the case may be, for the purpose of enforcing the Receivables,
the related Contracts and the Related Security.
SECTION 6.1.2 Appointment and Duties of Servicer. The Purchaser
hereby appoints the Seller as the Servicer and the Seller hereby accepts such
appointment. The Servicer, for the benefit of the Purchaser (to the extent
provided herein) and without payment to it of any fee in respect thereof so
long as the Seller is the Servicer, shall manage, service, administer, make
collections and discharge Adverse Claims 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
Administrative
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Agent shall, at the Servicer's expense and direction, take steps to enforce
such Receivable, including bringing suit in its name or the name of the
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 two Business Days (after
written notice thereof from the Purchaser if the Purchaser
or the Administrative Agent has actual notice of such
failure prior to the expiry of two Business Days after the
occurrence of such failure) or such longer period as may be
approved in writing by the Rating Agency;
(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, shall prove to have been incorrect in any material
respect when made and, provided that such representation or
warranty is capable of being subsequently made true and
correct, which continues to be incorrect in any material
respect for a period of thirty two days after the date on
which written notice thereof requiring the same to be
remedied has been given to the Servicer by the Purchaser or
the Administrative Agent or such longer period as may be
approved in writing by the Rating Agency;
(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 thirty two days after the date on
which written notice of such failure requiring the same to
be remedied has been given to the Servicer by the Purchaser
or the Administrative Agent or such longer period as may be
approved in writing by the Rating Agency; 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 the Seller (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
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and appointed and such successor Servicer meets industry-wide
standards for being a Servicer of retail automotive receivables and
the successor Servicer shall have agreed to perform the duties and
obligations of the Servicer pursuant to the terms hereof and to be
bound by the terms of this Agreement.
(b) If the Seller is removed as Servicer, the Seller 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 the Seller to the use of such
software for the purpose of discharging the obligations of the
successor Servicer under or in connection with the Sale Documents.
(c) Following the removal of the Seller 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, and (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 Insurance Policy
thereon), and (ii) the Purchaser and the Administrative Agent shall
have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under
the applicable PPSA and other applicable laws, which rights shall be
cumulative.
SECTION 6.3. Custody of Receivable Files. To assure uniform quality
in servicing the Purchased Receivables and to reduce administrative costs, the
Purchaser hereby irrevocably appoints 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 Administrative Agent as of
the Purchase Date with respect to each Purchased Receivable (the "Receivable
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) such documents that the Servicer 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 shall keep on
file, in accordance
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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 Receivable 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 Receivable File as shall enable the Seller
and the Servicer to comply with this Agreement. In performing its duties as
custodian the Servicer shall act with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to receivable
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 the Seller 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 Receivable Files to the
Administrative Agent or to a Person designated by the Administrative Agent at
a place or places as the Administrative Agent may reasonably designate.
ARTICLE VII: REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Seller. The Seller
makes in its capacity as Seller and Servicer the following representations and
warranties to the Purchaser as of the date hereof and the Purchase Date:
(a) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation
and is duly qualified in good standing 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 of the Sale
Documents, and the Seller's use of the proceeds of the Purchase, are
within the Seller's corporate powers, have been duly authorized by
all necessary corporate action, do not contravene (i) the Seller's
articles of incorporation or by-laws or (ii) any law or contractual
restriction binding on or affecting the Seller, and do not result in
or require the creation of any Adverse Claim (other than pursuant
hereto) upon or with respect to any of its properties; and no
transaction contemplated hereby requires compliance with any bulk
sales act or similar law.
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(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 of the Sale Documents, or for the perfection of or the
exercise by the Purchaser of its rights and remedies under the Sale
Documents, except for the filing of the financing statements or other
documents referred to in Section 4.1.2 and except for compliance with
Section 4.1.11.
(d) Each Sale Document constitutes the legal, valid and binding
obligation of the Seller enforceable in accordance with its terms.
(e) There is no pending or threatened action or proceeding affecting
the Seller 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 Assets.
(f) The Seller is the legal and beneficial owner of the Receivables,
the Related Security and Collections, each Purchased Receivable will
be an Eligible Receivable on the Purchase Date and the Receivables
and Collections are free and clear of any Adverse Claim, except as
created by this Agreement; upon consummation of the Purchase, the
Purchaser will acquire a valid ownership interest in the Purchased
Receivables and in the Related Security and the Collections with
respect thereto, and the Receivables and Collections will be free and
clear of any Adverse Claim except as created by this Agreement.
(g) The information to be 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.
(h) The Seller is treating the sale and assignment to the Purchaser
under this Agreement of the Purchased Receivables, Related Security
and Collections as a sale for all purposes.
ARTICLE VIII: COVENANTS
SECTION 8.1. Affirmative Covenants of the Seller. Until the
Investment is reduced to zero and all other amounts to be remitted to the
Purchaser hereunder have been paid in full, the Seller in its capacity as
Seller and Servicer covenants and agrees with the Purchaser that it will,
unless the Purchaser has otherwise consented in writing:
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(a) comply with all laws, rules, regulations and orders applicable to
it and all or any of its businesses and properties, except where the
failure to do so would not materially adversely affect the
Purchaser's interest hereunder or its ability to perform its
obligations hereunder;
(b) maintain its existence in the jurisdiction of its incorporation,
and qualify and remain qualified in good standing in each
jurisdiction where the failure to be so qualified could materially
adversely affect its ability to perform its obligations hereunder;
(c) 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);
(d) at any time and from time to time, after the occurrence of a
Servicer Default which is continuing, during regular business hours,
permit the Administrative Agent, its agents or representatives upon
five Business Days' prior written notice to (i) examine and make
copies of all Receivable Files in its possession (or under its
control), and (ii) visit its zone offices for the purpose of
examining such Receivable Files and discussing matters relating to
the Related Security and its performance under the Purchased
Receivables or hereunder with any of its officers or employees having
knowledge of such matters;
(e) at its expense timely and fully perform and comply with all
material provisions and covenants required to be observed by the
Seller under the Contracts related to the Purchased Receivables;
(f)comply in all material respects with the Credit and Collection
Policy in regard to each Purchased Receivable and any Contract
related to such Receivable;
(g) make all payments payable by it to government agencies in
accordance with applicable law and others where a statutory lien or
deemed trust might arise having priority over the Purchaser's
interest in any Purchased Receivables and Related Security;
(h) take all steps necessary to obtain the discharge of any financing
statement, registration, recording, filing or other document similar
in effect relating to any Purchased Receivables, Related Security or
Collections except those in favour of the Purchaser in accordance
herewith or subordinate to the rights of the Purchaser thereunder;
and
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(i) treat the sale and assignment to the Purchaser under this
Agreement of the Purchased Receivables, Related Security and
Collections as a sale for all purposes.
SECTION 8.2. Reporting Requirements of the Servicer. Until the
Investment is reduced to zero and all amounts to be remitted to the Purchaser
hereunder have been paid in full, the Seller in its capacity as Seller and
Servicer covenants and agrees with the Purchaser that it 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 five Business Days
after the Servicer becomes aware thereof, a description of each event
or condition (each such event or condition being referred to as a
"Significant Event") and, if applicable, the steps being taken with
respect thereto by the Person(s) affected thereby that is: (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 as the Purchaser may from time to time
reasonably request.
SECTION 8.3. Negative Covenants of the Servicer. Until the Investment
is reduced to zero and all other amounts to be remitted to the Purchaser
hereunder have been paid in full, the Servicer covenants and agrees with the
Purchaser that it will not, 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 any Adverse Claim upon
or with respect to any Purchased Receivables, Related Security or any
Collections or assign any right to receive income in respect thereof
or suffer to exist any Adverse Claim upon or with respect to any
Purchased Receivables or any Collections;
(b) amend or otherwise modify the terms of any Purchased Receivable,
or amend, modify or waive any term or condition of any Contract
related thereto, in each case, in any manner which is inconsistent
with the Credit and Collection Policy; or
(c) extend the term of any Purchased Receivable if such extension
would be adverse to the Purchaser.
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SECTION 8.4. Protection of the Purchaser's Interest. Until the
Investment is reduced to zero and all other amounts to be remitted to the
Purchaser hereunder have been paid in full, the Seller in its capacity as
Seller and Servicer covenants and agrees with the Purchaser that from time to
time, at its expense, it will promptly execute and deliver all instruments and
documents and take all action that the Administrative Agent may from time to
time reasonably request in order to evidence and protect the validity and
enforceability of the Purchaser's interests in the Purchased Receivables, the
Related Security and the Collections and to enable the Administrative Agent
and/or the Purchaser to exercise or enforce any of their respective rights
under the Sale Documents. Without limiting the generality of the foregoing,
the Seller will: (i) on or prior to the date hereof, mark its master data
processing records relating to the Purchased Receivables with a legend
describing the Purchaser's interests therein; and (ii) upon the request of the
Administrative Agent, execute and file such financing statements or amendments
thereto as may be requested by the Administrative Agent.
ARTICLE IX: ADMINISTRATIVE AGENT
SECTION 9. 1. Appointment of Administrative Agent. The Purchaser has
appointed Nesbitt Burns Inc. 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 compliance with the terms of this
Agreement and to take all actions required or permitted to be performed by the
Purchaser under this Agreement.
SECTION 9.1.1. Replacement of Administrative Agent. The Purchaser
may, at any time in its discretion but at no additional expense to the Seller,
remove the Administrative Agent and appoint a new Administrative Agent, which
shall have the duties described in Section 9.1.
ARTICLE X: COVENANTS OF CFC
SECTION 10.1. Covenants of CFC. Until the Investment is reduced to
zero and all other amounts to be remitted to the Purchaser hereunder have been
paid in full, CFC covenants and agrees with the Purchaser that it will, unless
the Purchaser has otherwise consented in writing:
(a) comply with all laws, rules, regulations and orders applicable to
it and all or any of its businesses and properties, except where the
failure to do so would not materially adversely affect the
Purchaser's interest hereunder or its ability to perform its
obligations hereunder;
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(b) preserve and maintain its corporate existence, except in the case
of a merger or other action permitted under the Short Term Revolving
Credit Agreement and the Long Term Revolving Credit Agreement each
dated as of April 26, 1996 between it and Chemical Bank, as
administrative agent and Royal Bank of Canada, as Canadian
administrative agent, and the several banks party thereto, as
amended, modified, supplemented or restated from time to time, and
where the continuing or surviving entity assumes CFC's obligations
hereunder;
(c) furnish to the Purchaser, unless the Seller has previously
complied with Section 8.2(b), as soon as possible and in any event
within five Business Days after CFC becomes aware of the occurrence
of each Significant Event, a statement of an officer of CFC setting
forth details as to such Significant Event and the action which CFC
or the Seller or Servicer has taken or is proposing to take with
respect thereto;
(d) at any time following the occurrence of a Significant Event which
is continuing, ensure the due performance of all of the obligations
of the Seller (including those arising in its capacity as Servicer,
if the Seller is at such time the Servicer) under this Agreement and,
in the event of any failure of the Seller to perform such
obligations, assume all of the liabilities of the Seller (including
those arising in its capacity as Servicer, if the Seller is at such
time the Servicer) hereunder;
(e) make all payments to be made by it in the performance of its
obligations hereunder without set-off or counterclaim and without
deduction or withholding for or on account of any present or future
taxes, levies, imposts, duties, charges, assessments or fees of any
nature (including any interest, penalties and additions thereto)
unless such deduction or withholding is required by any applicable
treaty, law, rule or regulation (as modified by the practice of any
relevant governmental revenue authority then in effect), in which
case it shall pay to the Purchaser, in addition to any payment to
which the Purchaser is otherwise entitled under this Agreement, such
additional amount as is necessary to ensure that the net amount
actually received by the Purchaser will equal the full amount the
Purchaser would have received had no such deduction or withholding
been required; and
(f) continue to hold such number of shares in the capital of the
Seller such that the Seller is at all times a subsidiary of CFC.
ARTICLE XI: MISCELLANEOUS
SECTION 11.1. 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
- 26 -
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 11.2. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including photocopy, facsimile, 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 11.3. 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 11.4. Binding Effect; Assignability. This Agreement shall be
binding upon and enure to the benefit of the Seller, the Servicer, CFC, 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 Purchaser. The
Purchaser may assign any of its rights or obligations hereunder to any Person;
provided, that in the case of any such assignment proposed to be made prior to
the occurrence of a Servicer Default, the consent of the Seller (which consent
shall not be unreasonably withheld) shall be required.
SECTION 11.5. Governing Law. This Agreement and the Sale Documents
shall be governed by, and construed in accordance with, the laws of the
province of Ontario and the federal laws of Canada applicable therein.
SECTION 11.6. Confidentiality. The Purchaser and the Administrative
Agent agree to maintain the confidentiality of any information regarding the
Seller obtained in connection with this Agreement which is not publicly
available, but the Purchaser and the Administrative Agent may, with notice to
the Seller, reveal such information, (a) to applicable rating agencies,
liquidity providers and credit enhancement providers, (b) as necessary or
appropriate in connection with the administration or enforcement of this
Agreement or its funding of the Purchase under this Agreement, (c) as required
by law, government regulation, court proceeding or subpoena or (d) to bank
regulatory agencies and examiners.
SECTION 11.7. 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.
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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.
CHRYSLER CREDIT CANADA LTD.
as Seller and Servicer
By: "D.M. Cantwell"
______________________________________
Title: Vice President and Treasurer
____________________________
Address: #308 - 390 Brant Street
Burlington, Ontario
L7R 4J4
Attention: Assistant Secretary
Facsimile: 905-333-2723
With a copy to:
Address: 27777 Franklin Road
Southfield, Michigan 48034
Attention: Assistant Secretary
Facsimile: 810-948-3138
CHRYSLER FINANCIAL CORPORATION
as Performance Guarantor
By: "D.M. Cantwell"
_______________
Title: Vice President and Treasurer
____________________________
Address: 27777 Franklin Road
Southfield, Michigan 48034
Attention: Assistant Secretary
Facsimile: 810-948-3138
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CANADIAN MASTER TRUST
by its Administrative Agent,
NESBITT BURNS INC.
as Purchaser
By: "I. Bandeen"
________________________
Title: Managing Director
_________________
Address: Canadian Master Trust
c/o Nesbitt Burns Inc.
3rd Floor Podium
1 First Canadian Place
Toronto, Ontario
M5X 1H3
Attention: Managing Director,
Securitization and Structured Finance
Facsimile: 416-359-1910
NESBITT BURNS INC.,
as Administrative Agent
By: "I. Bandeen"
____________
Title: Managing Director
_________________
Address: 3rd Floor Podium
1 First Canadian Place
Toronto, Ontario
M5X 1H3
Attention: Managing Director,
Securitization and Structured Finance
Facsimile: 416-359-1910