Exhibit 4-EE
EXECUTION COPY
SERIES 1996-1 SUPPLEMENT dated as of September
30, 1996 (the "Series Supplement"), among U.S. AUTO
RECEIVABLES COMPANY, a Delaware corporation, as Seller,
CHRYSLER FINANCIAL CORPORATION, a Michigan corporation,
as Servicer, and THE BANK OF NEW YORK, a New York
banking corporation, as Trustee.
Pursuant to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company ("CARCO") to
the Seller on August 8, 1991 (as assigned, amended and supplemented, the
"Agreement"), among the Seller, Chrysler Credit Corporation, which has been
succeeded by Chrysler Financial Corporation, as Servicer, and Manufacturer
and Traders Trust Company, which has been succeeded by The Bank of New York,
as Trustee, CARCO has created and assigned to the Seller the CARCO Auto Loan
Master Trust (the "Trust"). Section 6.03 of the Agreement provides that the
Seller may from time to time direct the Trustee to issue, on behalf of the
Trust, one or more new Series of Investor Certificates representing
fractional undivided interests in the Trust. The Principal Terms of any new
Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Series Supplement, the Seller and the Trustee
shall create a new Series of Investor Certificates and specify the Principal
Terms thereof.
ARTICLE I
Creation of the Series 1996-1 Certificates
SECTION 1.01. Designation. (a) There is hereby created a
Series of Investor Certificates to be issued pursuant to the Agreement and
this Series Supplement to be known as the "Floating Rate Auto Loan Asset
Backed Certificates, Series 1996-1".
(b) In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained
in the Agreement, the terms and provisions of this Series Supplement shall
govern.
ARTICLE II
Definitions
SECTION 2.01. Definitions. (a) Whenever used in this Series
Supplement the following words and phrases shall have the following meanings.
"Accumulation Period" shall mean, unless an Early Amortization
Event shall have occurred prior thereto (other than an Early Amortization
Event which has resulted in an Early Amortization Period which has ended as
described in clause (c) or clause (d) of the definition thereof in this
Series Supplement), the period commencing on the Accumulation Period
Commencement Date and ending upon the first to occur of (a) the commencement
of an Early Amortization Period (other than an Early Amortization Period
which has ended as described in clause (c) or clause (d) of the definition
thereof in this Series Supplement) and (b) the payment in full to Series
1996-1 Certificateholders of the outstanding principal amount of the Series
1996-1 Certificates.
"Accumulation Period Commencement Date" shall mean the first
day of the Collection Period upon which the number of full Collection Periods
remaining until the Expected Payment Date first equals the Accumulation
Period Length; provided, however, that, if at any time after the May 2003
Distribution Date, any other outstanding Series (other than any Excluded
Series) shall have entered into a reinvestment period or an early
amortization period, the Accumulation Period Commencement Date shall be the
earlier of (i) the date that such outstanding Series shall have entered into
its reinvestment period or early amortization period and (ii) the
Accumulation Period Commencement Date as previously determined. If the
Accumulation Period Length is one month, two months, three months, four
months or five months, the Accumulation Period Commencement Date shall mean
the first day of the October 2003 Collection Period, the September 2003
Collection Period, the August 2003 Collection Period, the July 2003
Collection Period or the June 2003 Collection Period, respectively.
"Accumulation Period Length" shall mean a period which is one,
two, three, four or five month(s) long and is calculated as of the May 2003
Distribution Date and each Distribution Date thereafter that occurs prior to
the Accumulation Period Commencement Date, as the lesser of
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(i) the number of full Collection Periods between such Distribution Date and
the Expected Payment Date and (ii) the product, rounded upwards to the
nearest integer not greater than five, of (a) one divided by the lowest
Monthly Payment Rate during the last 12 months and (b) a fraction, the
numerator of which is the sum of (i) the Invested Amount as of such
Distribution Date (after giving effect to all changes therein on such date)
and (ii) the invested amounts of all other Series (other than any Excluded
Series) currently in their amortization or accumulation periods or scheduled
to be in their amortization or accumulation periods by the Expected Payment
Date as of such Distribution Date (after giving effect to all changes therein
on such date) and the denominator of which is the sum of such Invested Amount
and the invested amounts as of such Distribution Date (after giving effect to
all changes therein on such date) of all other outstanding Series (other than
any Excluded Series) which are scheduled to be outstanding on the Expected
Payment Date.
"Additional Carry-Over Amount" shall have the meaning
specified in Section 4.02(b).
"Additional Interest" shall have the meaning specified in
Section 4.02(a).
"Adjusted Invested Amount" shall mean, with respect to Series
1996-1 for any Collection Period, an amount equal to the sum of (a) the
Initial Invested Amount of the Series 1996-1 Certificates on the
Determination Date occurring in such Collection Period, minus the excess, if
any, of the aggregate amount of Investor Charge-Offs for all Distribution
Dates preceding such date over the aggregate amount of any reimbursements of
Investor Charge-Offs for all Distribution Dates preceding such date and (b)
the applicable Available Subordinated Amount, if any, on the Determination
Date occurring in such Collection Period (in each case, after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following the Determination Date during the Collection
Period in which such date occurs).
"Allocable Defaulted Amount" shall mean, with respect to any
Collection Period, the product of (a) the Series 1996-1 Allocation Percentage
with respect to such Collection Period and (b) the Defaulted Amount with
respect to such Collection Period.
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"Allocable Miscellaneous Payments" shall mean, with respect to
any Distribution Date, the product of (a) the Series 1996-1 Allocation
Percentage for the related Collection Period and (b) Miscellaneous Payments
with respect to the related Collection Period.
"Allocable Non-Principal Collections" shall mean, with respect
to any Deposit Date, the product of (a) the Series 1996-1 Allocation
Percentage for the related Collection Period and (b) the aggregate amount of
Collections of Non-Principal Receivables relating to such
Deposit Date.
"Allocable Principal Collections" shall mean, with respect to
any Deposit Date, the product of (a) the Series 1996-1 Allocation Percentage
for the related Collection Period and (b) the aggregate amount of Collections
in respect of Principal Receivables relating to such Deposit
Date.
"Assets Receivables Rate" shall mean, with respect to any
Interest Period, an amount equal to the product of (a) the quotient obtained
by dividing (i) 360 by (ii) the actual number of days elapsed in such
Interest Period and (b) a percentage, expressed as a fraction, (i) the
numerator of which is the sum of (A) Investor Non-Principal Collections for
the Collection Period immediately preceding the last day of such Interest
Period (which, for the purposes of this definition only, shall be determined
based on the interest amounts billed to the Dealers which are due during such
Collection Period) less, unless the Monthly Servicing Fee has been waived by
the Servicer, the Certificateholders Monthly Servicing Fee with respect to
such immediately preceding Collection Period and (B) the Investment Proceeds
to be applied on the Distribution Date related to such Interest Period and
(ii) the denominator of which is the sum of (A) the product of (I) the Series
1996-1 Floating Allocation Percentage, (II) the Series 1996-1 Series
Allocation Percentage and (III) the average Pool Balance (after giving effect
to charge-offs) for such immediately preceding Collection Period, (B) the
principal balance on deposit in the Excess Funding Account on the first day
of such Interest Period (after giving effect to all deposits to and
withdrawals therefrom on such first day) and (C) the principal balance on
deposit in the Principal Funding Account on the first day of such Interest
Period (after giving effect to all deposits to and withdrawals therefrom on
such first day).
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"Automatic Additional Accounts" shall have the meaning
specified in Section 10.01(e).
"Automatic Removal Accounts" shall have the meaning specified
in Section 10.01(c).
"Automatic Removal Date" shall have the meaning specified in
Section 10.01(c).
"Available Investor Principal Collections" shall mean, with
respect to any Distribution Date, the sum of (a) an amount equal to Investor
Principal Collections for such Distribution Date, (b) Allocable Miscellaneous
Payments with respect to such Distribution Date, (c) Series 1996-1 Excess
Principal Collections on deposit in the Collection Account for such
Distribution Date and (d) on the Termination Date, any funds in the Reserve
Fund after giving effect to Section 4.08, except for Section 4.08(d).
"Available Seller's Collections" shall mean, with respect to
any Deposit Date, the sum of (a) the Available Seller's Non-Principal
Collections for such Deposit Date and (b) the Available Seller's Principal
Collections for such Deposit Date; provided, however, that the Available
Seller's Collections shall be zero for any Collection Period with respect to
which the Available Subordinated Amount is zero on the Determination Date
immediately following the end of such Collection Period.
"Available Seller's Non-Principal Collections" shall mean,
with respect to any Deposit Date, an amount equal to the result obtained by
multiplying (a) the excess of (i) the Seller's Percentage for the related
Collection Period over (ii) the Excess Seller's Percentage for such
Collection Period by (b) Allocable Non-Principal Collections for such Deposit
Date.
"Available Seller's Principal Collections" shall mean, with
respect to any Deposit Date, an amount equal to the result obtained by
multiplying (a) the excess of (i) the Seller's Percentage for the related
Collection Period over (ii) the Excess Seller's Percentage for such
Collection Period by (b) Allocable Principal Collections for such Deposit
Date.
"Available Subordinated Amount" for the first Determination
Date shall mean an amount equal to the Required Subordinated Amount. The
Available Subordinated
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Amount for any subsequent Determination Date shall mean an amount equal to
(a) the lesser of (i) the Available Subordinated Amount for the preceding
Determination Date, minus (A) the Required Subordination Draw Amount with
respect to the preceding Distribution Date to the extent provided in Section
4.08, minus (B) withdrawals from the Reserve Fund pursuant to Section 4.08 on
the preceding Distribution Date to make distributions pursuant to Section
4.06(a)(iv) (but excluding any other withdrawals from the Reserve Fund), plus
(C) the portion of Excess Servicing for such preceding Distribution Date
distributed to the Seller pursuant to Section 4.10(c), plus (D) the excess,
if any, of the Required Subordinated Amount for such Determination Date over
the Required Subordinated Amount for the immediately preceding Distribution
Date due to an increase in the Subordination Factor and (ii) the product of
the fractional equivalent of the Subordinated Percentage and the Invested
Amount on such Determination Date, minus (b) in the case of clause (a)(i),
the Incremental Subordinated Amount for such preceding Determination Date,
plus (c) the Incremental Subordinated Amount for the current Determination
Date, plus (d) the Subordinated Percentage of funds to be withdrawn from the
Excess Funding Account on the succeeding Distribution Date and paid to the
Seller or allocated to one or more Series; provided, however, that the
Available Subordinated Amount may be increased on any Determination Date by
the Seller, in its sole discretion, by notice to the Trustee on or before
such Determination Date, so long as the cumulative amount of such increases
does not exceed the lesser of (x) $5,555,555 or (y) 1.11% of the Invested
Amount on such date; provided, however, that, once the Accumulation Period or
any Early Amortization Period (other than an Early Amortization Period which
has ended as described in clause (c) or clause (d) of the definition thereof
in this Series Supplement) shall have commenced, the Available Subordinated
Amount shall be calculated based on the Invested Amount as of the close of
business on the day preceding such Accumulation Period or Early Amortization
Period.
"Calculation Agent" shall mean the Trustee.
"Carry-over Amount" shall mean, for any Distribution Date with
respect to which the related Certificate Rate is calculated on the basis of
the Asset Receivables Rate, the excess of (a) Monthly Interest for such
Distribution Date determined as if such Certificate Rate were calculated on
the basis of the LIBOR formula set
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forth in clause (a) of the definition of Certificate Rate over (b) the actual
Monthly Interest for such Distribution Date.
"Carry-over Shortfall" shall have the meaning specified in
Section 4.02(b).
"Certificate Rate" shall mean, with respect to any Interest
Period, the lesser of (a) LIBOR for such Interest Period, plus 0.135% and (b)
the Asset Receivables Rate for the immediately preceding Interest Period.
"Certificateholders Monthly Servicing Fee" shall have the
meaning specified in Section 3.01.
"Closing Date" shall mean November 6, 1996.
"Controlled Amortization Amount" shall mean an amount equal to
the Invested Amount as of the May 2003 Distribution Date (after giving effect
to any changes therein on such date), divided by the Accumulation Period
Length.
"Controlled Distribution Amount" shall mean, with respect to
any Distribution Date, the excess, if any, of (a) the sum of (i) the product
of the Controlled Amortization Amount and the number of Distribution Dates
from and including the first Distribution Date with respect to the
Accumulation Period through and including such Distribution Date (but not in
excess of the Accumulation Period Length) and (ii) the amount on deposit in
the Excess Funding Account as of the May 2003 Distribution Date (after giving
effect to any withdrawals from or deposits to such account on such date
(other than the transfer to the Principal Funding Account of the amounts on
deposit therein on such date)), over (b) the sum of amounts on deposit in the
Excess Funding Account and the Principal Funding Account, in each case before
giving effect to any withdrawals from or deposits to such accounts on such
Distribution Date.
"Deficiency Amount" shall have the meaning specified in
Section 4.05.
"Early Amortization Event" shall mean any Early Amortization
Event specified in Section 9.01 of the Agreement, together with any
additional Early Amortization Event specified in Section 6.01 of this Series
Supplement.
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"Early Amortization Period" shall mean a period beginning on
the day on which an Early Amortization Event specified in Section 9.01 of the
Agreement or Section 6.01 of this Series Supplement shall have occurred with
respect to Series 1996-1 and terminating on the earliest of (a) the payment
in full of the outstanding principal balance of the Series 1996-1
Certificates, (b) the Termination Date; (c) if such Early Amortization Period
has resulted from the occur rence of an Early Amortization Event described in
Section 9.01(a) of the Agreement, the end of the first Collection Period
during which an Early Amortization Event would no longer be deemed to exist
pursuant to such Section 9.01(a), so long as no other Early Amortization
Event (other than an Early Amortization Event which has resulted in an Early
Amortization Period which has terminated as described in this clause (c) or
clause (d) below) shall have occurred and the scheduled termination of the
Revolving Period shall not have occurred; and (d) if such Early Amortization
Period has resulted from the occurrence of an Early Amortization Event
described in Sections 9.01(a), (f) or (g) of the Agreement or Section 6.01,
other than Section 6.01(f), (g) or (h), of this Series Supplement, the end of
the first Collection Period after which (i) the Trustee has received written
confirmation from each of Standard & Poor's, Duff & Phelps, Inc. and Fitch
Investors Service, Inc. that termination of such Early Amortization Period
will not result in the downgrading or withdrawal of such entity's rating of
the Series 1996-1 Certificates, and (ii) Series 1996-1 Certificateholders
holding Series 1996-1 Certificates evidencing more than 50% of the aggregate
unpaid principal amount of the Series 1996-1 Certificates shall have
consented to the termination of such Early Amortization Period; provided that
(X) no other Early Amortization Event (other than an Early Amortization Event
which has resulted in an Early Amortization Period which has terminated as
described in this clause (d) or clause (c) above) shall have occurred, and
(Y) the scheduled termination of the Revolving Period shall not have
occurred.
"Eligible Investments" shall mean (a) book-entry securities,
negotiable instruments or securities represented by instruments in bearer or
registered form having original or remaining maturities of 30 days or less
(unless each Rating Agency confirms in writing that a longer maturity will
not result in the downgrade or withdrawal of such Rating Agency's rating of
the Series 1996-1 Certificates), but in no event occurring later than the
Distribution Date
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next succeeding the Trustee's acquisition thereof (unless each Rating Agency
confirms in writing that a longer maturity will not result in the downgrade
or withdrawal of such Rating Agency's rating of the Series 1996-1
Certificates), which evidence:
(i) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(ii) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by Federal or state banking or depository institution
authorities; provided, however, that at the time of the Trust's
investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations
(other than such obligations the rating of which is based on the
credit of a person or entity other than such depository institution
or trust company) thereof shall have a credit rating from each of the
Rating Agencies in the highest investment category granted thereby;
(iii) commercial paper having, at the time of the Trust's
investment or contractual commitment to invest therein, a rating from
each of the Rating Agencies in the highest investment category
granted thereby;
(iv) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment category
granted thereby or otherwise approved in writing thereby;
(v) bankers' acceptances issued by any depository institution
or trust company referred to in clause (ii) above;
(vi) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States
of America or any agency or instrumentality thereof the obligations
of which are backed by the full faith and credit of the United States
of America, in either case entered into
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with a depository institution or trust company (acting as principal)
described in clause (ii); and
(viii) repurchase obligations with respect to any security or
whole loan entered into with (i) a depository institution or trust
company (acting as principal) described in clause (ii) above (except
that the rating referred to in the proviso in such clause (ii) shall
be A-1 or higher in the case of Standard & Poor's) (such depository
institution or trust company being referred to in this definition as
a "Financial Institution"), (ii) a broker/dealer (acting as
principal) registered as a broker or dealer under Section 15 of the
Securities Exchange Act of 1934, as amended (a "Broker/Dealer"), the
unsecured short-term debt obligations of which are rated P-1 by
Moody's and at least A-1 by Standard & Poor's at the time of entering
into such repurchase obligation (a "Rated Broker/Dealer"), (iii) an
unrated Broker/Dealer (an "Unrated Broker/Dealer"), acting as
principal, that is a wholly owned subsidiary of a nonbank holding
company the unsecured short-term debt obligations of which are rated
P-1 by Moody's and at least A-1 by Standard & Poor's at the time of
entering into such repurchase obligation (a "Rated Holding Company")
or (iv) an unrated subsidiary (a "Guaranteed Counterparty"), acting
as principal, that is a wholly owned subsidiary of a direct or
indirect parent Rated Holding Company, which guarantees such
subsidiary's obligations under such repurchase agreement; provided
that the following conditions are satisfied:
(A) the aggregate amount of funds invested in
repurchase obligations of a Financial Institution, a Rated
Broker/Dealer, an Unrated Broker/Dealer or Guaranteed
Counterparty in respect of which the Standard & Poor's
unsecured short-term ratings are A-1 (in the case of an
Unrated Broker/Dealer or Guaranteed Counterparty, such rating
being that of the related Rated Holding Company) shall not
exceed 20% of the sum of the then outstanding principal
balance of Series 1996-1 Certificates (there being no limit on
the amount of funds that may be invested in repurchase
obligations in respect of which such Standard & Poor's rating
is A-1+ (in the case of an Unrated Broker/Dealer or Guaranteed
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Counterparty, such rating being that of the related Rated
Holding Company));
(B) in the case of any Series 1996-1 Account (other
than the Collection Account and the Yield Supplement Account),
the rating from Standard & Poor's in respect of the unsecured
short-term debt obligations of the Financial Institution,
Rated Broker/Dealer, Unrated Broker/Dealer or Guaranteed
Counterparty (in the case of an Unrated Broker/Dealer or
Guaranteed Counterparty, such rating being that of the related
Rated Holding Company) shall be A-1+;
(C) the repurchase obligation must mature within 30
days of the date on which the Trustee enters into such
repurchase obligation;
(D) the repurchase obligation shall not be subordinated
to any other obligation of the related Financial Institution,
Rated Broker/Dealer Unrated Broker/Dealer or Guaranteed
Counterparty;
(E) the collateral subject to the repurchase obligation
is held, in the appropriate form, by a custodial bank on
behalf of the Trustee;
(F) the repurchase obligation shall require that the
collateral subject thereto shall be marked to market daily;
(G) in the case of a repurchase obligation of a
Guaranteed Counterparty, the following conditions shall also
be satisfied:
(i) the Trustee shall have received an opinion
of counsel (which may be in-house counsel) to the
effect that the guarantee of the related Rated Holding
Company is a legal, valid and binding agreement of the
Rated Holding Company, enforceable in accordance with
its terms, subject as to enforceability to bankruptcy,
insolvency, reorganization and moratorium or other
similar laws affecting creditors' rights generally and
to general equitable principles;
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(ii) the Trustee shall have received (x) an
incumbency certificate for the signer of such
guarantee, certified by an officer of such Rated
Holding Company, and (y) a resolution, certified by an
officer of the Rated Holding Company, of the board of
directors (or applicable committee thereof) of the
Rated Holding Company authorizing the execution,
delivery and performance of such guarantee by the Rated
Holding Company;
(iii) the only conditions to the obligation of
such Rated Holding Company to pay on behalf of the
Guaranteed Counterparty shall be that the Guaranteed
Counterparty shall not have paid under such repurchase
obligation when required (it being understood that no
notice to, demand on or other action in respect of the
Guaranteed Counterparty is necessary) and that the
Trustee shall make a demand on the Rated Holding
Company to make the payment due under such guarantee;
(iv) the guarantee of the Rated Holding Company
shall be irrevocable with respect to such repurchase
obligation and shall not be subordinate to other
obligations of the Rated Holding Company; and
(v) each of Standard & Poor's and Moody's has
confirmed in writing to the Trustee that it has
reviewed the form of the guarantee of the Rated Holding
Company and has determined that the Trust's investment
in such repurchase obligation, taking into account the
issuance of such guarantee, will not result in the
downgrade or withdrawal of the ratings assigned to the
Series 1996-1 Certificates; and
(H) the repurchase obligations shall require that the
repurchase obligation be over-collateralized and shall provide
that, upon any failure to maintain such overcollateralization,
the repurchase obligation shall become due and payable, and
unless the repurchase obligation is satisfied immediately, the
collateral subject to the repurchase agreement shall be
liquidated and
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the proceeds applied to satisfy the unsatisfied portion of the
repurchase obligation; and
(b) any other investment consisting of a financial asset that by its terms
converts to cash within a finite period of time; provided that each Rating
Agency shall have notified the Seller, the Servicer and the Trustee that the
Trust's investment therein will not result in a reduction or withdrawal of
the rating of any outstanding class or Series with respect to which it is a
Rating Agency.
"Excess Reserve Fund Required Amount" shall mean, for any
Distribution Date with respect to an Early Amortization Period, an amount
equal to the greater of (a) 5% of the initial principal balance of the Series
1996-1 Certificates and (b) the excess of (i) the sum of (x) the Available
Subordinated Amount on the preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on
such Distribution Date) and (y) an amount equal to (A) the excess of the
Required Participation Percentage over 100%, multiplied by (B) the
outstanding principal balance of the Series 1996-1 Certificates on such
Distribution Date (after giving effect to any changes therein on such
Distribution Date) over (ii) the excess of (x) the Series 1996-1 Allocation
Percentage of the Pool Balance on the last day of the immediately preceding
Collection Period over (y) the Invested Amount on such Distribution Date
(after giving effect to changes therein on such Distribution Date); provided
that the Excess Reserve Fund Required Amount shall not exceed such Available
Subordinated Amount.
"Excess Seller's Percentage" shall mean, with respect to any
Collection Period, a percentage (which percentage shall never be less than 0%
nor more than 100%) equal to (a) 100% minus, when used with respect to
Non-Principal Receivables, Defaulted Receivables and Principal Receivables
during the Revolving Period, the sum of (i) the Floating Allocation
Percentage with respect to such Collection Period and (ii) the percentage
equivalent of a fraction, the numerator of which is the Available
Subordinated Amount as of the Determination Date occurring in such Collection
Period (after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the Distribution Date immediately following such
Determination Date) and the denominator of which is the product of (x) the
Pool Balance as of the last day of such immediately preceding Collection
Period and (y) the Series
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1996-1 Allocation Percentage for the Collection Period in respect of which
the Excess Seller's Percentage is being calculated or (b) 100% minus, when
used with respect to Principal Receivables during the Accumulation Period and
an Early Amortization Period, the sum of (i) the Principal Allocation
Percentage with respect to such Collection Period and (ii) the percentage
equivalent of a fraction, the numerator of which is the Available
Subordinated Amount as of the Determination Date occurring in such Collection
Period (after giving effect to the allocations, distributions, withdrawals
and deposits to be made on the Distribution Date immediately following such
Determination Date) and the denominator of which is the product of (x) the
Pool Balance as of the last day of such immediately preceding Collection
Period and (y) the Series 1996-1 Allocation Percentage for the Collection
Period in respect of which the Excess Seller's Percentage is being
calculated.
"Excess Servicing" shall mean, with respect to any
Distribution Date, the sum of the amount, if any, specified pursuant to
Section 4.06(a)(vii) with respect to such Distribution Date.
"Expected Payment Date" shall mean the November 2003
Distribution Date.
"Final Payment Date" shall mean the first Distribution Date on
which, after giving effect to all payments to be made on that Distribution
Date, the outstanding principal amount of the Series 1996-1 Certificates will
be paid in full.
"Floating Allocation Percentage" shall mean, with respect to
any Collection Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the Invested
Amount as of the last day of the immediately preceding Collection Period and
the denominator of which is the product of (a) the Pool Balance as of such
last day and (b) the Series 1996-1 Allocation Percentage for the Collection
Period in respect of which the Floating Allocation Percentage is being
calculated; provided, however, that, with respect to the October and November
1996 Collection Periods, the Floating Allocation Percentage shall mean the
percentage equivalent of a fraction, the numerator of which is the Initial
Invested Amount on the Closing Date and the denominator of which is
the product of (x) the Pool Balance on the Series Cut-Off
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Date and (y) the Series 1996-1 Allocation Percentage with respect to the
Series Cut-Off Date.
"Incremental Subordinated Amount" shall mean, with respect to
any Determination Date, the result obtained by multiplying (a) a fraction,
the numerator of which is the sum of (i) (A) the Invested Amount on the last
day of the immediately preceding Collection Period or (B) with respect to the
first Determination Date, the Invested Amount on the Closing Date and (ii)
(A) the Available Subordinated Amount for such Determination Date (calculated
without adding the Incremental Subordinated Amount for such Distribution Date
as described in clause (c) of the definition thereof) or (B) with respect to
the first Determination Date, the product of the Invested Amount on the
Closing Date and the Subordinated Percentage and the denominator of which is
the Pool Balance on such last day by (b) the Trust Incremental Subordinated
Amount.
"Initial Distribution Date" shall mean November 15, 1996.
"Initial Invested Amount" shall mean the portion of initial
principal amount of the Series 1996-1 Certificates which is invested in
Principal Receivables on the Closing Date, which is $500,000,000, plus (a)
the amount of any withdrawals from the Excess Funding Account in connection
with the purchase of an additional interest in Principal Receivables of the
Trust, minus (b) the amount of any additions to the Excess Funding Account in
connection with a reduction in the Principal Receivables in the Trust or an
increase in the Subordination Factor.
"Initial Principal Amount" shall mean $500,000,000.
"Initial Reserve Fund Deposit Amount" shall mean $1,750,000.
"Initial Yield Supplement Account Deposit Amount" shall mean
$2,000,000.
"Interest Period" shall mean, with respect to any Distribution
Date, the period from and including the Distribution Date immediately
preceding such Distribution Date to but excluding such Distribution Date (or,
in the case of the Initial Distribution Date, the period from and including
the Closing Date to but excluding the Initial
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Distribution Date). Interest will be calculated on the basis of the actual
number of days in each Interest Period divided by 360 days.
"Interest Shortfall" shall have the meaning specified in
Section 4.02.
"Invested Amount" shall mean, when used with respect to any
date, an amount equal to (a) the Initial Invested Amount, minus (b) the
amount, without duplication, of principal payments (except principal payments
made from the Excess Funding Account and any transfers from the Excess
Funding Account to the Principal Funding Account) made to Series 1996-1
Certificateholders or deposited to the Principal Funding Account prior to
such date, minus (c) the excess, if any, of the aggregate amount of Investor
Charge-Offs over Investor Charge-Offs reimbursed pursuant to Section 4.08
prior to such date. In addition, for purposes of the definition of "Early
Amortization Period", the Invested Amount shall be an amount equal to the
outstanding principal amount of the Series 1996-1 Certificates.
"Investment Proceeds" shall mean, with respect to any
Determination Date, all interest and other investment earnings (net of losses
and investment expenses) on funds on deposit in the Series 1996-1 Accounts,
together with an amount equal to the Series 1996-1 Allocation Percentage of
the interest and other investment earnings on funds held in the Collection
Account credited to the Collection Account pursuant to Section 4.02 of the
Agreement.
"Investor Charge-Offs" shall have the meaning specified in
Section 4.09.
"Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Allocable
Defaulted Amount for the related Collection Period and (b) the Floating
Allocation Percentage for the related Collection Period.
"Investor Non-Principal Collections" shall mean, with respect
to any Distribution Date, an amount equal to the product of (a) the Floating
Allocation Percentage for the related Collection Period and (b) Allocable
Non-Principal Collections deposited in the Collection Account for the
related Collection Period.
16
"Investor Principal Collections" shall mean, with respect to
any Distribution Date, the sum of (a) the product of (i) the Floating
Allocation Percentage, with respect to the Revolving Period, or the Principal
Allocation Percentage, with respect to the Accumulation Period or an Early
Amortization Period for the related Collection Period (or any partial
Collection Period which occurs as the first Collection Period during an Early
Amortization Period) and (ii) Allocable Principal Collections deposited in
the Collection Account for the related Collection Period (or any partial
Collection Period which occurs as the first Collection Period during an Early
Amortization Period) and (b) the amount, if any, of Collections of
Non-Principal Receivables, Excess Servicing and Available Seller's
Collections to be distributed pursuant to Section 4.06(a)(iv), 4.08(b) or
4.10(a) on such Distribution Date.
"LIBOR" shall mean, with respect to any Interest Period, the
offered rate for United States dollar deposits for one month that appears on
Telerate Page 3750 as of 11:00 A.M., London time, on the LIBOR Determination
Date. If on any LIBOR Determination Date the offered rate does not appear on
Telerate Page 3750, the Calculation Agent will request each of the reference
banks (which shall be major banks that are engaged in transactions in the
London interbank market selected by the Calculation Agent) to provide the
Calculation Agent with its offered quotation for United States dollar
deposits for one month to prime banks in the London interbank market as of
11:00 A.M., London time, on such date. If at least two reference banks
provide the Calculation Agent with such offered quotations, LIBOR on such
date will be the arithmetic mean, rounded upwards, if necessary, to the
nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward, of all such quotations. If on such date fewer than two
of the reference banks provide the Calculation Agent with such quotations,
LIBOR on such date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward, of the offered per annum
rates that one or more leading banks in The City of New York selected by the
Calculation Agent are quoting as of 11:00 A.M., New York City time, on such
date to leading European banks for United States dollar deposits for one
month; provided, however, that if such banks are not quoting as described
above, LIBOR for such date will be LIBOR applicable to the Interest Period
immediately preceding such Interest Period.
17
"LIBOR Business Day" shall mean any day that is both a
Business Day and a day on which banking institutions in the City of London,
England are not required or authorized by law to be closed.
"LIBOR Determination Date" shall mean, with respect to any
Interest Period, the second LIBOR Business Day prior to such Interest Period.
"Monthly Interest" shall have the meaning specified in Section
4.02.
"Monthly Payment Rate" shall mean, for any Collection Period,
the percentage derived from dividing the Principal Collections for such
Collection Period by the average daily Pool Balance for such Collection
Period.
"Monthly Principal" shall have the meaning specified in
Section 4.03.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.01.
"Pool Factor" shall mean, with respect to any Determination
Date, a number carried out to 11 decimals representing the ratio of the
Invested Amount as of such Determination Date (determined after taking into
account any increases or decreases in the Invested Amount which will occur on
the following Distribution Date) to the Initial Invested Amount.
"Principal Allocation Percentage" shall mean, with respect to
any Collection Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the Invested
Amount as of the last day of the Revolving Period and the denominator of
which is the product of (a) the Pool Balance as of the last day of the
immediately preceding Collection Period and (b) the Series 1996-1 Allocation
Percentage with respect to the Collection Period in respect of which the
Principal Allocation Percentage is being calculated; provided, however, that,
with respect to that portion of any Collection Period that falls after the
date on which any Early Amortization Event occurs (other than an Early
Amortization Event which has resulted in an Early Amortization Period which
has ended as described in clause (c) or clause (d) of the definition thereof
in this Series Supplement), the Principal Allocation Percentage shall be
18
reset using the Pool Balance as of the close of business on the date on which
such Early Amortization Event shall have occurred and Principal Collections
shall be allocated for such portion of such Collection Period using such
reset Principal Allocation Percentage.
"Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (a) the Invested
Amount on such Distribution Date, (b) accrued and unpaid interest on the
unpaid balance of the Series 1996-1 Certificates (calculated on the basis of
the outstanding principal balance of the Series 1996-1 Certificates at the
Certificate Rate as in effect during the applicable Interest Periods) through
the day preceding such Distribution Date, (c) the amount of Additional
Interest, if any, for such Distribution Date and any Additional Interest
previously due but not distributed to the Series 1996-1 Certificateholders on
a prior Distribution Date, (d) any Carry-over Amount for such Distribution
Date and any Carry-over Amount previously due but not distributed to the
Series 1996-1 Certificateholders on a prior Distribution Date and (e) any
Additional CarryOver Amount for such Distribution Date and any Additional
Carry-Over Amount previously due but not distributed to the Series 1996-1
Certificateholders on a prior Distribution Date.
"Required Participation Percentage" shall mean, with respect
to Series 1996-1, 103%; provided, however, that if the aggregate amount of
Principal Receivables due from any Dealer or group of affiliated Dealers at
the close of business on the last day of any Collection Period with respect
to which such determination is being made pursuant to Section 10.04 is
greater than 1.5% of the Pool Balance on such last day, the Required
Participation Percentage shall mean, as of such last day and with respect to
such Collection Period and the immediately following Collection Period only,
104%; provided further that the Seller may, upon 10 days' prior notice to the
Trustee and each Rating Agency, reduce the Required Participation Percentage
to a percentage which shall not be less than 100%; provided that no Rating
Agency shall have notified the Seller or the Servicer that any such reduction
will result in a reduction or withdrawal of the rating of any outstanding
Series or Class with respect to which it is a Rating Agency.
19
"Required Subordinated Amount" shall mean, as of any date of
determination, the sum of (a) the product of (i) the Subordinated Percentage
and (ii) the Invested Amount on such date and (b) the Incremental
Subordinated Amount.
"Required Subordination Draw Amount" shall have the meaning
specified in Section 4.05.
"Reserve Fund" shall have the meaning specified in Section
4.04.
"Reserve Fund Deposit Amount" shall mean, with respect to any
Distribution Date, the amount, if any, by which (a) the Reserve Fund Required
Amount for such Distribution Date exceeds (b) the amount of funds in the
Reserve Fund after giving effect to any withdrawals therefrom on such
Distribution Date.
"Reserve Fund Required Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) 0.35% and (b) the
outstanding principal balance of the Series 1996-1 Certificates on such
Distribution Date (after giving effect to any changes therein on such
Distribution Date).
"Revolving Period" shall mean the period beginning at the
close of business on the Business Day immediately preceding the Series
Cut-Off Date and terminating on the earlier of (a) the close of business on
the day immediately preceding the Accumulation Period Commencement Date and
(b) the close of business on the day an Early Amortization Period commences;
provided, however, that, if any Early Amortization Period terminates as
described in clause (c) or clause (d) of the definition thereof in this
Series Supplement, the Revolving Period will recommence as of the close of
business on the day such Early Amortization Period terminates.
"Seller's Collections" shall mean, with respect to any
Collection Period, the sum of (a) the Seller's Percentage of Allocable
Non-Principal Collections for the related Collection Period, plus (b) the
Seller's Percentage of Allocable Principal Collections for the related
Collection Period.
"Seller's Percentage" shall mean 100% minus (a) the Floating
Allocation Percentage, when used with respect to Non-Principal Receivables,
Defaulted Receivables
20
and Principal Receivables during the Revolving Period, and (b) the Principal
Allocation Percentage, when used with respect to Principal Receivables during
the Accumulation Period and an Early Amortization Period.
"Series 1996-1" shall mean the Series of Investor
Certificates, the terms of which are specified in this Series Supplement.
"Series 1996-1 Accounts" shall have the meaning specified in
Section 4.04(e)(i).
"Series 1996-1 Allocation Percentage" shall mean the Series
Allocation Percentage with respect to Series 1996-1.
"Series 1996-1 Certificateholders" shall mean the Holders of
Series 1996-1 Certificates.
"Series 1996-1 Certificateholders' Interest" shall mean that
portion of the Certificateholders' Interest evidenced by the Series 1996-1
Certificates.
"Series 1996-1 Certificates" shall mean any one of the
certificates executed by the Seller and authenticated by the Trustee,
substantially in the form of Exhibit A.
"Series 1996-1 Excess Principal Collections" shall mean that
portion of Excess Principal Collections allocated to Series 1996-1 pursuant
to Section 4.11.
"Series 1996-1 Principal Shortfall" shall have the meaning
specified in Section 4.11.
"Series Cut-off Date" shall mean September 30, 1996.
"Servicing Fee Rate" shall mean, with respect to Series
1996-1, l% or, for any Distribution Date in respect of which the Monthly
Servicing Fee has been waived, 0%.
"Special Payment Date" shall mean each Distribution Date with
respect to any Early Amortization Period (other than an Early Amortization
Period which has ended as described in clause (c) or clause (d) of the
definition thereof in this Series Supplement).
21
"Subordinated Percentage" shall mean the percentage equivalent
of a fraction, the numerator of which is the Subordination Factor and the
denominator of which will be the excess of 100% over the Subordination
Factor.
"Subordination Factor" means 10%; provided, however, that the
Subordination Factor will be 11% in the event that the rating of the
long-term unsecured debt of CFC is lowered below BBB- by Standard & Poor's or
withdrawn by Standard & Poor's, unless, in either such case, the Seller
receives written confirmation from Standard & Poor's that the failure to so
increase the Subordination Factor would not result in the downgrade or
withdrawal of Standard & Poor's rating of the Series 1996-1 Certificates.
"Telerate Page 3750" shall mean the display page so designated
on the Dow Jones Telerate Service (or such other page as may replace that
page on that service, or such other service as may be nominated as the
information vendor, for the purpose of displaying London interbank offered
rates of major banks).
"Termination Date" shall mean the October 2005 Distribution
Date.
"Termination Proceeds" shall mean any Termination Proceeds
arising out of a sale of Receivables (or interests therein) pursuant to
Section 12.02(c) of the Agreement with respect to Series 1996-1.
"Trust Available Subordinated Amount" means the sum of the
Available Subordinated Amount and the sum of the aggregate available
subordinated amounts for all other outstanding Series.
"Yield Supplement Account" shall have the meaning specified in
Section 4.04.
"Yield Supplement Account Deposit Amount" shall mean, with
respect to any Distribution Date, the amount, if any, by which the Yield
Supplement Account Required Amount exceeds the amount on deposit in the Yield
Supplement Account after giving effect to any deposits thereto and
withdrawals therefrom otherwise to be made on such Distribution Date.
"Yield Supplement Account Required Amount" shall mean, with
respect to any Distribution Date, an amount equal
22
to the product of (a) 0.40% and (b) the outstanding principal balance of the
Series 1996-1 Certificates on such Distribution Date (after giving effect to
any changes therein on such Distribution Date).
(b) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the term "Rating Agency" shall mean, whenever
used in this Series Supplement or the Agreement with respect to Series
1996-1, Moody's and Standard & Poor's. As used in this Series Supplement and
in the Agreement with respect to Series 1996-1, "highest investment category"
shall mean (i) in the case of Standard & Poor's, A-l+ or AAA, as applicable,
and (ii) in the case of Moody's, P-1 or Aaa, as applicable. Any notice
required to be given to a Rating Agency pursuant to the Agreement or this
Series Supplement shall also be given to Fitch Investors Service, Inc.
("Fitch"), and Duff & Phelps, Inc. ("D&P"), although no such entity shall be
deemed to be a Rating Agency for any purposes of the Agreement or this Series
Supplement with respect to Series 1996-1.
(c) All capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in the Agreement. The
definitions in Section 2.01 are applicable to the singular as well as to the
plural forms of such terms and to the masculine as well as to the feminine
and neuter genders of such terms.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Series Supplement shall refer to this Series
Supplement as a whole and not to any particular provision of this Series
Supplement; references to any Article, Section or Exhibit are references to
Articles, Sections and Exhibits in or to this Series Supplement unless
otherwise specified; and the term "including" means "including without
limitation".
ARTICLE III
Servicing Fee
SECTION 3.01. Servicing Compensation. The monthly servicing
fee (the "Monthly Servicing Fee") shall be payable to the Servicer, in
arrears, on each Distribution Date in respect of any Collection Period (or
portion thereof) occurring prior to the earlier of the first Distribution
Date following the Series 1996-1 Termination
23
Date and the first Distribution Date on which the Invested Amount is zero, in
an amount equal to one-twelfth of the product of (a) the Servicing Fee Rate,
(b) the Pool Balance as of the last day of the Collection Period second
preceding such Distribution Date and (c) the Series 1996-1 Allocation
Percentage with respect to the immediately preceding Collection Period. The
share of the Monthly Servicing Fee allocable to the Series 1996-1
Certificateholders with respect to any Distribution Date (the
"Certificateholders Monthly Servicing Fee") shall be equal to one-twelfth of
the product of (a) the Servicing Fee Rate and (b) the Invested Amount as of
the last day of the Collection Period second preceding such Distribution
Date. The remainder of the Monthly Servicing Fee shall be paid by the Seller
and in no event shall the Trust, the Trustee or the Series 1996-1
Certificateholders be liable for the share of the Monthly Servicing Fee to be
paid by the Seller; and the remainder of the Servicing Fee shall be paid by
the Seller and the Investor Certificateholders of other Series and the Series
1996-1 Certificateholders shall in no event be liable for the share of the
Servicing Fee to be paid by the Seller or the Investor Certificateholders of
other Series. The Certificateholders Monthly Servicing Fee shall be payable
to the Servicer solely to the extent amounts are available for distribution
in accordance with the terms of this Series Supplement.
The Servicer will be permitted, in its sole discretion, to
waive the Monthly Servicing Fee for any Distribution Date by notice to the
Trustee on or before the related Determination Date; provided that the
Servicer believes that sufficient Collections of Non-Principal Receivables
will be available on any future Distribution Date to pay the
Certificateholders Monthly Servicing Fee relating to the waived Monthly
Servicing Fee. If the Servicer so waives the Monthly Servicing Fee for any
Distribution Date, the Monthly Servicing Fee and the Certificateholders
Monthly Servicing Fee for such Distribution Date shall be deemed to be zero
for all purposes of this Series Supplement and the Agreement; provided,
however, that such Certificateholders Monthly Servicing Fee shall be paid on
a future Distribution Date solely to the extent amounts are available
therefor pursuant to Section 4.10(b); provided further that, to the extent
any such waived Certificateholders Monthly Servicing Fee is so paid, the
related portion of the Monthly Servicing Fee to be paid by the Seller shall
be paid by the Seller to the Servicer.
24
ARTICLE IV
Rights of Series 1996-1 Certificateholders and
Allocation and Application of Collections
SECTION 4.01. Allocations; Payments to Seller; Excess
Principal Collections and Unallocated Principal Collections. (a) Collections
of Non-Principal Receivables and Principal Receivables, Miscellaneous
Payments and Defaulted Amounts allocated to Series 1996-1 pursuant to Article
IV of the Agreement shall be allocated and distributed as set forth in this
Article.
(b) Subject to Section 4.01(d) below, the Servicer shall
instruct the Trustee to withdraw from the Collection Account and pay to the
Seller on the dates set forth below the following amounts:
(i) on each Deposit Date:
(A) an amount equal to the Excess Seller's Percentage
for the related Collection Period of Allocable Non-Principal
Collections deposited in the Collection Account for such
Deposit Date; and
(B) an amount equal to the Excess Seller's Percentage
for the related Collection Period of Allocable Principal
Collections deposited in the Collection Account for such
Deposit Date, if the Seller's Participation Amount (determined
after giving effect to any Principal Receivables transferred
to the Trust on such Deposit Date) exceeds the Trust Available
Subordinated Amount for the immediately preceding
Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination
Date); and
(ii) on each Deposit Date with respect to the Revolving
Period, an amount equal to the Available Seller's Principal
Collections for such Deposit Date, if the Seller's Participation
Amount (determined after giving effect to any Principal Receivables
transferred to the Trust on such Deposit Date) exceeds the Trust
Available Subordinated Amount for the immediately preceding
Determination Date (after giving effect to
25
the allocations, distributions, withdrawals and deposits to be made
on the Distribution Date immediately following such Determination
Date); provided, however, that Available Seller's Principal
Collections shall be paid to the Seller with respect to any
Collection Period only after an amount equal to the sum of (A) the
Deficiency Amount, if any, relating to the immediately preceding
Collection Period and (B) the excess, if any, of the Reserve Fund
Required Amount over the amount in the Reserve Fund on the
immediately preceding Distribution Date (after giving effect to the
allocations of, distributions from, and deposits in, the Reserve Fund
on such Distribution Date) has been deposited in the Collection
Account from such Available Seller's Principal Collections.
The withdrawals to be made from the Collection Account
pursuant to this Section 4.01(b) do not apply to deposits into the Collection
Account that do not represent Collections, including Miscellaneous Payments,
payment of the purchase price for the Certificateholders' Interest pursuant
to Section 2.03 of the Agreement, payment of the purchase price for the
Series 1996-1 Certificateholders' Interest pursuant to Section 7.01 of this
Series Supplement and proceeds from the sale, disposition or liquidation of
Receivables pursuant to Section 9.02 or 12.02 of the Agreement.
(c) The Servicer shall instruct the Trustee to withdraw from
the Collection Account and deposit into the Reserve Fund on Deposit Dates
with respect to the Revolving Period Available Seller's Principal Collections
for such Deposit Date, up to the amount of the excess, if any, determined
pursuant to Section 4.01(b)(ii)(B).
(d) Notwithstanding the provisions of Section 4.01(b)(i), on
each Deposit Date during any Collection Period on which any amount is on
deposit in the Excess Funding Account or Principal Funding Account, the
Servicer shall instruct the Trustee to withdraw from the Collection Account
and deposit in the Yield Supplement Account the amounts otherwise
distributable to the Seller pursuant to Section 4.01(b)(i) until the amount
on deposit in the Yield Supplement Account is equal to the Yield Supplement
Account Required Amount.
SECTION 4.02. Monthly Interest. (a) The amount of monthly
interest ("Monthly Interest") with respect to the
26
Series 1996-1 Certificates on any Distribution Date, commencing with the
Initial Distribution Date, shall be an amount equal to the product of (i) the
Certificate Rate, (ii) the outstanding principal balance of the Series 1996-1
Certificates as of the close of business on the preceding Distribution Date
(after giving effect to all repayments of principal made to Series 1996-1
Certificateholders on such preceding Distribution Date, if any) and (iii) a
fraction, the numerator of which is the actual number of days elapsed in such
Interest Period and the denominator of which is 360.
On the Determination Date preceding each Distribution Date,
commencing with the Initial Distribution Date, the Servicer shall determine
the excess, if any (the "Interest Shortfall"), of (x) the aggregate Monthly
Interest for the Interest Period applicable to such Distribution Date over
(y) the amount which will be available to be distributed to Series 1996-1
Certificateholders on such Distribution Date in respect thereof pursuant to
this Series Supplement. If the Interest Shortfall with respect to any
Distribution Date is greater than zero, an additional amount ("Additional
Interest") equal to the product of (i) the Certificate Rate (calculated
pursuant to clause (a) of the definition thereof) for the Interest Period
commencing on the related Distribution Date (or, for subsequent Interest
Periods, the Certificate Rate (calculated pursuant to clause (a) of the
definition thereof) for such subsequent Interest Periods), (ii) such Interest
Shortfall (or the portion thereof which has not been paid to Series 1996-1
Certificateholders) and (iii) a fraction, the numerator of which is the
actual number of days elapsed in such Interest Period (or in a subsequent
Interest Period) and the denominator of which is 360, shall be payable as
provided herein with respect to the Series 1996-1 Certificates on each
Distribution Date following such Distribution Date to and including the
Distribution Date on which such Interest Shortfall is paid to Series 1996-1
Certificateholders. Notwithstanding anything to the contrary herein,
Additional Interest shall be payable or distributed to Series 1996-1
Certificateholders only to the extent permitted by applicable law.
(b) On the Determination Date preceding each Distribution
Date, commencing with the Initial Distribution Date, the Servicer shall
determine the excess, if any (the "Carry-over Shortfall"), of (x) the
Carry-over Amount, if any, for such Distribution Date over (y) the amount
which will be available to be distributed to Series 1996-1
27
Certificateholders in respect thereof on such Distribution Date pursuant to
this Series Supplement. If the Carry-over Shortfall with respect to any
Distribution Date is greater than zero, an additional amount ("Additional
Carry-over Amount") equal to the product of (i) the Certificate Rate
(calculated pursuant to clause (a) of the definition thereof) for the
Interest Period commencing on the related Distribution Date (or, for
subsequent Interest Periods, the Certificate Rate (calculated pursuant to
clause (a) of the definition thereof) for such subsequent Interest Periods),
(ii) such Carry-over Shortfall (or the portion thereof which has not been
paid to Series 1996-1 Certificateholders) and (iii) a fraction, the numerator
of which is the actual number of days elapsed in such Interest Period (or in
a subsequent Interest Period) and the denominator of which is 360, shall be
payable as provided herein with respect to the Series 1996-1 Certificates on
each Distribution Date following such Distribution Date to the Distribution
Date on which such Carry-over Shortfall is paid to Series 1996-1
Certificateholders. Notwithstanding anything to the contrary herein, any
Additional Carry-Over Amount shall be payable or distributed to Series 1996-1
Certificateholders only to the extent permitted by applicable law.
SECTION 4.03. Determination of Monthly Principal. The amount
of monthly principal ("Monthly Principal") distributable with respect to the
Series 1996-1 Certificates on each Distribution Date with respect to an Early
Amortization Period and the Accumulation Period shall be equal to the
Available Investor Principal Collections with respect to such Distribution
Date; provided, however, that, for each Distribution Date with respect to the
Accumulation Period, Monthly Principal shall not exceed the Controlled
Distribution Amount for such Distribution Date; and provided further that
Monthly Principal shall not exceed the Invested Amount of the Series 1996-1
Certificates.
SECTION 4.04. Establishment of Reserve Fund and Funding
Accounts. (a) (i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall cause to be established and maintained in the name
of the Trustee, on behalf of the Trust, an Eligible Deposit Account (the
"Reserve Fund") which shall be identified as the "Reserve Fund for the CARCO
Auto Loan Master Trust, Series 1996-1" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1996-1 Certificateholders. On the Closing Date, the
28
Seller shall cause to be deposited in the Reserve Fund the Initial Reserve
Fund Deposit Amount.
(ii) At the direction of the Servicer, funds on deposit in the
Reserve Fund shall be invested by the Trustee in Eligible Investments
selected by the Servicer that will mature so that such funds will be
available at the close of business on or before the Business Day next
preceding the following Distribution Date. All Eligible Investments shall be
held by the Trustee for the benefit of the Series 1996-1 Certificateholders.
On each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Reserve Fund
received prior to such Distribution Date shall be applied as set forth in
Section 4.06(a) of this Series Supplement. Funds deposited in the Reserve
Fund on a Business Day (which immediately precedes a Distribution Date) upon
the maturity of any Eligible Investments are not required to be invested
overnight.
(b) (i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Yield Supplement
Account"), which shall be identified as the "Yield Supplement Account for the
CARCO Auto Loan Master Trust Series 1996-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Series 1996-1 Certificateholders. On the Closing Date, the Seller
shall cause to be deposited into the Yield Supplement Account the Initial
Yield Supplement Account Deposit Amount.
(ii) At the direction of the Servicer, funds on deposit in the
Yield Supplement Account shall be invested by the Trustee in investments
consisting of financial assets selected by the Servicer; provided, however,
that such assets must, by their terms, convert to cash within a finite period
of time. All such financial assets shall be held by the Trustee for the
benefit of the Series 1996-1 Certificateholders. On each Distribution Date,
all interest and other investment earnings (net of losses and investment
expenses) on funds on deposit in the Yield Supplement Account shall be
applied as set forth in Section 4.06(a) of this Series Supplement.
(iii) If on any Distribution Date there is a Carry-over Amount,
the Servicer shall cause the Trustee to apply
29
the amounts on deposit in the Yield Supplement Account up to the amount of
such Carry-over Amount to satisfy such Carryover Amount. The Trustee shall be
authorized to dispose of investments in the Yield Supplement Account in order
to obtain funds with which to satisfy any Carry-over Amount.
(iv) If on any Distribution Date the amount on deposit in the
Yield Supplement Account (after giving effect to any withdrawals to be made
from the Yield Supplement Account on such Distribution Date) is greater than
the Yield Supplement Account Required Amount, the Servicer shall cause the
Trustee to pay to the Seller on such Distribution Date the excess of such
amount on deposit in the Yield Supplement Account over the Yield Supplement
Account Required Amount.
(c) (i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Principal Funding
Account"), which shall be identified as the "Principal Funding Account for
CARCO Auto Loan Master Trust, Series 1996-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Series 1996-1 Certificateholders.
(ii) At the direction of the Servicer, funds on deposit in the
Principal Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Series 1996-1 Certificateholders.
On each Distribution Date all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit therein shall be applied
as set forth in Section 4.06(a) of this Series Supplement. Funds on deposit
in the Principal Funding Account shall be invested at the direction of the
Servicer in Eligible Investments that will mature so that such funds will be
available on or before the close of business on the Business Day next
preceding the Expected Payment Date. Funds deposited in the Principal Funding
Account on a Business Day (which immediately precedes the Expected Payment
Date) upon the maturity of any Eligible Investments are not required to be
invested overnight.
(d) (i) The Servicer, for the benefit of the Series 1996-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Excess Funding
Account"),
30
which shall be identified as the "Excess Funding Account for CARCO Auto Loan
Master Trust, Series 1996-1" and shall bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series
1996-1 Certificateholders. No deposit will be made to the Excess Funding
Account on the Closing Date.
(ii) At the direction of the Servicer, funds on deposit in the
Excess Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Series 1996-1 Certificateholders.
On each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Excess Funding
Account shall be applied as set forth in Section 4.06(a) of this Series
Supplement. Funds deposited in the Excess Funding Account on any Distribution
Date shall be invested at the direction of the Servicer in Eligible
Investments that will mature so that such funds will be available on or
before the close of business on the Business Day next preceding the following
Distribution Date. Funds deposited in the Excess Funding Account on a
Business Day (which immediately precedes a Distribution Date) upon the
maturity of any Eligible Investments are not required to be invested over
night.
(e) (i) The Trustee shall possess all right, title and
interest in and to all funds on deposit from time to time in, and all
Eligible Investments and other financial assets credited to, the Reserve
Fund, the Yield Supplement Account, the Principal Funding Account and the
Excess Funding Account (collectively the "Series 1996-1 Accounts") and in all
proceeds thereof. The Series 1996-1 Accounts shall be under the sole dominion
and control of the Trustee for the benefit of the Series 1996-1
Certificateholders. If, at any time, any of the Series 1996-1 Accounts ceases
to be an Eligible Deposit Account, the Trustee (or the Servicer on its
behalf) shall within 10 Business Days (or such longer period, not to exceed
30 calendar days, as to which each Rating Agency may consent) establish a new
Series 1996-1 Account meeting the conditions specified in paragraph (a)(i),
(b)(i), (c)(i) or (d)(i) above, as applicable, as an Eligible Deposit Account
and shall transfer any cash and/or any investments to such new Series 1996-1
Account. Neither the Seller, the Servicer nor any person or entity claiming
by, through or under the Seller, the Servicer or any such person or entity
shall have any right, title or interest in,
31
or any right to withdraw any amount from, any Series 1996-1 Account, except
as expressly provided herein. Schedule 1, which is hereby incorporated into
and made part of this Series Supplement, identifies each Series 1996-1
Account by setting forth the account number of each such account, the account
designation of each such account and the name of the institution with which
such account has been established. If a substitute Series 1996-1 Account is
established pursuant to this Section, the Servicer shall provide to the
Trustee an amended Schedule 1, setting forth the relevant information for
such substitute Series 1996-1 Account.
(ii) Pursuant to the authority granted to the Servicer in
Section 3.01(a) of the Agreement, the Servicer shall have the power,
revocable by the Trustee, to make withdrawals and payments or to instruct the
Trustee to make withdrawals and payments from the Series 1996-1 Accounts for
the purposes of carrying out the Servicer's or Trustee's duties hereunder.
SECTION 4.05. Deficiency Amount. With respect to each
Distribution Date, commencing with the Initial Distribution Date, on the
related Determination Date, the Servicer shall determine the amount (the
"Deficiency Amount"), if any, by which (a) the sum of (i) Monthly Interest
for such Distribution Date, (ii) any Monthly Interest previously due but not
distributed to the Series 1996-1 Certificateholders on a prior Distribution
Date, (iii) Additional Interest, if any, for such Distribution Date and any
Additional Interest previously due but not distributed to the Series 1996-1
Certificateholders on a prior Distribution Date; (iv) the Certificateholders
Monthly Servicing Fee for such Distribu tion Date, (v) the Investor Default
Amount, if any, for such Distribution Date; (vi) the Series 1996-1 Allocation
Percentage of the amount of any Adjustment Payment required to be deposited
in the Collection Account pursuant to Section 3.09(a) of the Agreement with
respect to the related Collection Period that has not been so deposited as of
such Determination Date; and (vii) if such Distribution Date constitutes the
Final Payment Date the sum of (A) the amount of any Carry-over Amount for
such Distribution Date, (B) the amount of any Carry-over Amount previously
due but not previously distributed to Series 1996-1 Certificateholders on a
prior Distribution Date, (C) the amount of any Additional Carry-over Amount
for such Distribution Date and (D) the amount of any Additional Carry-over
Amount previously due but not previously paid to Series 1996-1
Certificateholders on a prior Distribution Date, in each
32
case that will not be satisfied on such date by application, pursuant to
Section 4.04(b)(iii), of amounts on deposit in the Yield Supplement Account,
exceeds (b) the sum of (i) Investor Non-Principal Collections for such
Distribution Date plus any Investment Proceeds with respect to such
Distribution Date and (ii) the amount of funds in the Reserve Fund which are
available pursuant to Section 4.08(a) and Section 4.08(d) to cover any
portion of the Deficiency Amount. The lesser of the Deficiency Amount and the
Available Subordinated Amount shall be the "Required Subordination Draw
Amount".
SECTION 4.06. Application of Investor Non-Principal
Collections, Investment Proceeds and Available Investor Principal
Collections. The Servicer shall cause the Trustee to apply, on each
Distribution Date, commencing with the Initial Distribution Date, Investor
Non-Principal Collections, Investment Proceeds and Available Investor
Principal Collections to make the following distributions:
(a) On each Distribution Date, commencing with the Initial
Distribution Date, an amount equal to the sum of Investor Non-Principal
Collections and any Investment Proceeds with respect to such Distribution
Date will be distributed in the following priority:
(i) first, an amount equal to Monthly Interest for such
Distribution Date, plus the amount of any Monthly Interest previously
due but not distributed to the Series 1996-1 Certificateholders on a
prior Distribution Date, plus the amount of any Additional Interest
for such Distribution Date and any Additional Interest previously due
but not distributed to the Series 1996-1 Certificateholders on a
prior Distribution Date shall be distributed to the Series 1996-1
Certificateholders;
(ii) second, an amount equal to the Certificateholders Monthly
Servicing Fee for such Distribution Date shall be distributed to the
Servicer (unless such amount has been netted against deposits to the
Collection Account or waived);
(iii) third, an amount equal to the Reserve Fund Deposit
Amount, if any, for such Distribution Date shall be deposited in the
Reserve Fund;
33
(iv) fourth, an amount equal to the Investor Default Amount
for such Distribution Date shall be treated as a portion of Investor
Principal Collections for such Distribution Date;
(v) fifth, an amount equal to the Carry-over Amount (after
giving effect to any withdrawals from the Yield Supplement Account on
such Distribution Date), if any, for such Distribution Date, plus the
amount of any Carry-over Amount previously due but not previously
distributed to the Series 1996-1 Certificateholders on a prior
Distribution Date, plus the amount of any Additional Carry-over
Amount for such Distribution Date and any Additional Carry-over
Amount previously due but not previously distributed to the Series
1996-1 Certificateholders on a prior Distribution Date shall be
distributed to the Series 1996-1 Certificateholders;
(vi) sixth, an amount equal to the Yield Supplement Account
Deposit Amount, if any, for such Distribution Date shall be deposited
in the Yield Supplement Account; and
(vii) seventh, the balance, if any, shall constitute Excess
Servicing and shall be allocated and distributed as set forth in
Section 4.10.
(b) On each Distribution Date, commencing with the Initial
Distribution Date, with respect to the Revolving Period, an amount equal to
Available Investor Principal Collections deposited in the Collection Account
for the related Collection Period shall be allocated first to make a deposit
to the Excess Funding Account if the sum of (i) the Invested Amount (reduced
for this purpose by the amount, if any, by which the Required Participation
Amount exceeds the Pool Balance due to an increase in the Subordination
Factor) and (ii) the amount on deposit in the Excess Funding Account (other
than any Investment Proceeds) prior to the allocation on such Distribution
Date is less than the outstanding principal balance of the Series 1996-1
Certificates and second treated as Excess Principal Collections and applied
in accordance with Section 4.04 of the Agreement.
(c) On each Distribution Date with respect to the Accumulation
Period or an Early Amortization Period, an
34
amount equal to Available Investor Principal Collections will be distributed
in the following priority:
(i) first, an amount equal to Monthly Principal for such
Distribution Date, shall be deposited by the Servicer or the Trustee
into the Principal Funding Account, in the case of the Accumulation
Period, or distributed to the Series 1996-1 Certificateholders, in
the case of any Early Amortization Period; and
(ii) second, for each Distribution Date with respect to the
Accumulation Period unless an Early Amortization Event has occurred
(other than an Early Amortization Event which has resulted in an
Early Amortization Period which has ended as described in clause (c)
or clause (d) of the definition thereof in this Series Supplement),
after giving effect to the transactions referred to in clause (i)
above, an amount equal to the balance, if any, of such Available
Investor Principal Collections shall be treated as Excess Principal
Collections and applied in accordance with Section 4.04 of the
Agreement and Section 4.11 hereof.
SECTION 4.07. Distributions to Series 1996-1
Certificateholders. (a) The Servicer shall cause the Trustee to make the
following distributions at the following times from the Collection Account,
the Reserve Fund, the Principal Funding Account and the Excess Funding
Account:
(i) on each Distribution Date, all amounts on deposit in the
Collection Account or the Reserve Fund that are payable to the Series
1996-1 Certificatehol ders with respect to accrued interest will be
distributed to the Series 1996-1 Certificateholders;
(ii) on each Special Payment Date and on the Expected Payment
Date, all amounts on deposit in the Principal Funding Account and the
Excess Funding Account, and all amounts on deposit in the Collection
Account that are payable to the Series 1996-1 Certificateholders with
respect to principal, up to a maximum amount on any such day equal to
the excess of the outstanding principal balance of the Series 1996-1
Certificates over the unreimbursed Investor Charge-Offs, shall be
distributed to the Series 1996-1 Certificateholders.
35
(b) On each Distribution Date on which there is any Carry-over
Amount or Additional Carry-over Amount, the Servicer shall instruct the
Trustee to distribute to the Series 1996-1 Certificateholders the amounts on
deposit in the Yield Supplement Account and the Collection Account payable
with respect thereto pursuant to Section 4.04(b)(iii) and Section
4.06(a)(other than from Available Seller's Collections), respectively.
(c) If, on the Final Payment Date, there is any Carry-over
Amount or Additional Carry-over Amount (after giving effect to any
distributions on such date pursuant to Section 4.07(b)), the Servicer shall
instruct the Trustee to distribute to the Series 1996-1 Certificateholders
the amounts payable with respect thereto pursuant to Sections 4.08(b) and
4.08(d).
(d) The distributions to be made pursuant to this Section are
subject to the provisions of Sections 2.03, 9.02, 10.01 and 12.02 of the
Agreement and Sections 8.01 and 8.02 of this Series Supplement.
SECTION 4.08. Application of Reserve Fund and Available
Subordinated Amount. (a) If the portion of Investor Non-Principal Collections
and Investment Proceeds allocated to the Series 1996-1 Certificateholders on
any Distribution Date pursuant to Section 4.06(a) is not sufficient to make
the entire distributions required on such Distribution Date by Sections
4.06(a)(i), (ii) and (iv), the Servicer shall cause the Trustee to withdraw
funds from the Reserve Fund to the extent available therein, and apply such
funds to complete the distributions pursuant to Section 4.06(a)(i), (ii) and
(iv); provided, however, that during any Early Amortization Period (other
than an Early Amortization Period which has ended as described in clause (c)
or clause (d) of the definition thereof in this Series Supplement) funds
shall not be withdrawn from the Reserve Fund to make distributions otherwise
required by Section 4.06(a)(iv) to the extent that, after giving effect to
such withdrawal, the amount on deposit in the Reserve Fund shall be less than
$1,000,000.
(b) If there is a Required Subordination Draw Amount for such
Distribution Date, and such Distribution Date is not the Final Payment Date,
the Servicer shall apply or cause the Trustee to apply the Available Seller's
Collections on deposit in the Collection Account on such Distribution Date,
but only up to the amount of the Required
36
Subordination Draw Amount, to make the distributions required by Sections
4.06(a)(i), (ii) and (iv) that have not been made through the application of
funds from the Reserve Fund in accordance with the preceding paragraph. If
there is a Required Subordination Draw Amount for such Distribution Date, and
such Distribution Date is the Final Payment Date, the Servicer shall apply or
cause the Trustee to apply the Available Seller's Collections on deposit in
the Collection Account on such Distribution Date, but only up to the amount
of the Required Subordination Draw Amount, to make the distributions required
by Sections 4.06(a)(i), (ii), (iv) and (v) that have not been made through
the application of funds from the Reserve Fund in accordance with Section
4.08(d). Any such Available Seller's Collections remaining after the
application thereof pursuant to the first or second preceding sentence, as
applicable, shall be treated as a portion of Investor Principal Collections
for such Distribution Date, but only up to the amount of unpaid Adjustment
Payments allocated to Series 1996-1 as described in Section 4.05(a)(vi). The
amount of the Available Seller's Collections applied in accordance with the
three preceding sentences shall reduce the Available Subordinated Amount in
all other cases as described in clause (A) of the definition thereof. If the
Required Subordination Draw Amount exceeds Available Seller's Collections for
such Distribution Date, the Available Subordinated Amount shall be further
reduced by the amount of such excess, but not by more than the sum of (x) the
Investor Default Amount and (y) the amount of unpaid Adjustment Payments
allocated to Series 1996-1 as described in Section 4.05(a)(vi).
(c) If, after giving effect to the allocations of,
distributions from, and deposits in, the Reserve Fund made pursuant to
Sections 4.01(c), 4.04, 4.06(a), 4.08(a) and 4.08(e), (i) the amount in the
Reserve Fund is greater than the Reserve Fund Required Amount (or, for any
Distribution Date with respect to an Early Amortization Period, the Excess
Reserve Fund Required Amount) for such Distribution Date, the Servicer shall
cause the Trustee to distribute such excess amount to the Seller, subject to
the proviso contained in paragraph (f) or (ii) the amount in the Reserve Fund
is less than such Reserve Fund Required Amount, then the Trustee shall
deposit any remaining Available Seller's Collections on deposit in the
Collection Account for such Distribution Date after giving effect to Section
4.08(b) into the Reserve Fund until the amount in the Reserve Fund is equal
to such Reserve Fund Required
37
Amount. On the Termination Date, any funds in the Reserve Fund will be
treated as Available Investor Principal Collections.
(d) If, on the Final Payment Date, after giving effect to (c)
above, there is a Carry-over Amount or Additional Carry-over Amount after
giving effect to withdrawals from the Yield Supplement Account on such date,
the Servicer shall cause the Trustee to withdraw funds in the amount of such
Carry-over Amount or Additional Carryover Amount from the Reserve Fund (to
the extent available therein), and distribute such funds to the Series 1996-1
Certificateholders. Any funds remaining on deposit in the Reserve Fund after
the earlier of (i) payment in full of the outstanding principle balance of
the Series 1996-1 Certificates and (ii) the Series Termination Date shall be
paid to the Seller.
(e) If, for any Distribution Date with respect to an Early
Amortization Period, after giving effect to the allocations of, distributions
from, and deposits in, the Reserve Fund made pursuant to Sections 4.01(c),
4.04, 4.06(a) and 4.08(a), the amount in the Reserve Fund is less than the
Excess Reserve Fund Required Amount for such Distribution Date, the Trustee
shall deposit any remaining Available Seller's Collections on deposit in the
Collection Account for such Distribution Date into the Reserve Fund until the
amount in the Reserve Fund is equal to such Excess Reserve Fund Required
Amount.
(f) The balance of Available Seller's Collections on any
Distribution Date, after giving effect to any distributions thereof pursuant
to Section 4.08(a), (b), (c) or (e), shall be distributed to the Seller on
such Distribution Date; provided that, in the case of any remaining Available
Seller's Principal Collections, if the Trust Available Subordinated Amount
for the immediately preceding Determination Date exceeds the Seller's
Participation Amount on such date (determined after giving effect to any
Principal Receivables transferred to the Trust on such Distribution Date),
Section 4.08(c) hereof shall not apply and the amount of such excess shall be
deposited into the Reserve Fund, with any remaining Available Seller's
Principal Collections paid to the Seller.
SECTION 4.09. Investor Charge-Offs. If, on any Distribution
Date on which the Available Subordinated Amount on the preceding
Determination Date (after giving effect to
38
the allocations, distributions, withdrawals and deposits to be made on such
Distribution Date) is zero and the Deficiency Amount for such Distribution
Date is greater than zero, the Invested Amount shall be reduced by the amount
of the excess of such Deficiency Amount over any remaining Available
Subordinated Amount on such Determination Date, but not by more than the
Investor Default Amount (an "Investor Charge-Off"). Investor Charge-Offs
shall thereafter be reimbursed and the Invested Amount increased (but not by
an amount in excess of the aggregate unreimbursed Investor Charge-Offs on any
Distribution Date) by the sum of (a) Allocable Miscellaneous Payments with
respect to such Distribution Date and (b) the amount of Excess Servicing
allocated and available for that purpose pursuant to Section 4.10(a).
SECTION 4.10. Excess Servicing. The Servicer shall cause the
Trustee to apply, on each Distribution Date, commencing with the Initial
Distribution Date, Excess Servicing with respect to the Collection Period
immediately preceding such Distribution Date, to make the following
distributions in the following priority:
(a) an amount equal to the aggregate amount of Investor
Charge-Offs which have not been previously reimbursed as provided in
Section 4.09 (after giving effect to the allocation on such
Distribution Date of any amount for that purpose pursuant to Section
4.09) shall be treated as a portion of Available Investor Principal
Collections with respect to such Distribution Date;
(b) an amount equal to the aggregate outstanding amounts of
the Certificateholders Monthly Servicing Fee which have been
previously waived pursuant to Section 3.01 shall be distributed to
the Servicer; and
(c) the balance, if any, shall be distributed to the Seller.
SECTION 4.11. Excess Principal Collections. (a) That portion
of Excess Principal Collections for any Distribution Date equal to the amount
of Series 1996-1 Excess Principal Collections for such Distribution Date will
be allocated to Series 1996-1 and will be distributed as set forth in this
Series Supplement.
39
(b) Series 1996-1 Excess Principal Collections, with respect
to any Distribution Date, shall mean an amount equal to the Series 1996-1
Principal Shortfall for such Distribution Date; provided, however, that, if
the aggregate amount of Excess Principal Collections for all Series for such
Distribution Date is less than the aggregate amount of Principal Shortfalls
for all Series for such Distribution Date, then Series 1996-1 Excess
Principal Collections for such Distribution Date shall equal the product of
(x) Excess Principal Collections for all Series for such Distribution Date
and (y) a fraction, the numerator of which is the Series 1996-1 Principal
Shortfall for such Distribution Date and the denominator of which is the
aggregate amount of Principal Shortfalls for all Series for such Distribution
Date. The Series 1996-1 Principal Shortfall, with respect to any Distribution
Date, shall equal the excess of (i) (x) for any Distribution Date with
respect to the Accumulation Period, the Controlled Distribution Amount, or
(y) for any Distribution Date with respect to an Early Amortization Period,
the Invested Amount, over (ii) Available Investor Principal Collections for
such Distribution Date (excluding any portion thereof attributable to Excess
Principal Collections).
SECTION 4.12. Excess Funding Account. (a) Any funds on deposit
in the Excess Funding Account on the May 2003 Distribution Date will be
deposited in the Principal Funding Account on such date. In addition, no
funds will be deposited in the Excess Funding Account during any Early
Amortization Period or with respect to any Collection Period following the
March 2003 Collection Period.
(b) On each Determination Date during the Revolving Period,
the Seller shall determine whether the sum of the Invested Amount (reduced
for this purpose by the amount, if any, by which the Required Participation
Amount exceeds the Pool Balance due to an increase in the Subordination
Factor) and the amount on deposit in the Excess Funding Account (other than
any Investment Proceeds) is greater than the outstanding principal balance of
the Series 1996-1 Certificates. If on any such Determination Date such sum is
greater than the outstanding principal balance of the Series 1996-1
Certificates and thus there are sufficient Principal Receivables in the Trust
to permit an increase in the Invested Amount without causing an Early
Amortization Event to occur with respect to any outstanding Series, the
Seller shall notify the Trustee of the amount of the increase in the Invested
Amount. Subject to the
40
provisions set forth below in this Section 4.12(b) and to Sections 4.12(c)
and (d) below, upon receipt of such notice the Invested Amount shall be
increased by the amount specified, and the Servicer shall instruct the
Trustee to withdraw from the Excess Funding Account and pay to the Seller or
allocate to one or more other Series, on the immediately succeeding
Distribution Date, an amount equal to the amount of such increase in the
Invested Amount. Such payment shall be in payment or partial payment pursuant
to the Receivables Purchase Agreement for additional Principal Receivables
transferred to the Trust or allocated to Series 1996-1. To the extent that
the Invested Amount is increased by any payment to the Seller or any
allocation to one or more other Series, the Seller's Interest or such other
Series' invested amount, as applicable, shall be reduced by the amount of
such payment. In addition, any increase in the Invested Amount is subject to
the condition that after giving effect to such increase (i) the Pool Balance
equals or exceeds (ii) the sum of (A) the Required Participation Amount, (B)
the sum of the Required Subordinated Amount and the sum of the required
subordinated amounts for all other Series (or, if such other series shall
have no required subordinated amount, the available subordinated amount with
respect to such Series) and (C) the sum of any subordinated amounts
supporting any Enhancement for all other Series. In connection with the
foregoing, the Seller shall endeavor (taking into account any seasonality
experienced in the Accounts in the Trust) to minimize the amounts on deposit,
from time to time, in the Excess Funding Account.
(c) In the event that other Series issued by the Trust provide
for excess funding accounts or other arrangements similar to the Excess
Funding Account involving fluctuating levels of investments in Principal
Receivables, (i) the allocation of additional Principal Receivables to
increase the Invested Amount and the invested amounts of such other Series
(and the related withdrawals from the Excess Funding Account and the other
excess funding or similar accounts) will be based on the proportion that the
amount on deposit in the Excess Funding Account bears to amounts on deposit
in the excess funding accounts of all Series providing for excess funding
accounts or such similar arrangements or to amounts otherwise similarly
available and (ii) the deposit of amounts into the Excess Funding Account and
the excess funding accounts of such other Series will be pro rata based on
the proportion that the Adjusted Invested Amount bears to the adjusted
invested amounts of all Series
41
providing for excess funding accounts or such similar arrangements.
(d) In the event that any other Series is in an amortization,
early amortization or accumulation period the amounts of any withdrawals from
the Excess Funding Account shall be applied first to satisfy in full any then
applicable funding or payment requirements of such Series and second to make
a payment to the Seller. In the event that more than one other Series is in
an amortization, early amortization or accumulation period, the amounts of
any withdrawals from the Excess Funding Account shall be allocated (and, if
necessary, reallocated) among such Series as specified in the related Series
Supplement to meet the funding or payment requirements of each such Series
first to satisfy in full all then applicable funding or payment requirements
of each such Series and second to make a payment to the Seller.
SECTION 4.13. Accumulation Period Length; Accumulation Period
Commencement Date. Beginning on the May 2003 Distribution Date, and on each
Distribution Date thereafter that occurs prior to the Accumulation Period
Commencement Date, the Servicer shall calculate the Accumulation Period
Length and, if applicable, determine the Accumulation Period Commencement
Date. Once the Servicer has determined the Accumulation Period Commencement
Date, the Servicer shall promptly notify the Trustee in writing of such
determination. In connection therewith, the Seller hereby agrees not to cause
the Trust to issue any new Series during the period from the date hereof
until the date that the Series 1996-1 Certificates shall have been paid in
full, if such issuance would have an adverse effect on the results obtained
by application of the formula used to compute the Accumulation Period Length.
ARTICLE V
Distributions and Reports
to Series 1996-1 Certificateholders
SECTION 5.01. Distributions. (a) On each Distribution Date,
commencing with the Initial Distribution Date, the Trustee shall distribute
to each Series 1996-1 Certificateholder of record on the preceding Record
Date (other than as provided in Section 12.02 of the Agreement respecting a
final distribution) such Certificateholder's
42
pro rata share (based on the aggregate fractional undivided interests
represented by the Series 1996-1 Certificates held by such Certificateholder)
of the amounts on deposit in the Series 1996-1 Accounts as is payable to the
Series 1996-1 Certificateholders on such Distribution Date pursuant to
Section 4.07.
(b) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to Series 1996-1
Certificateholders hereunder shall be made by check mailed to each Series
1996-1 Certificateholder at such Certificateholder's address appearing in the
Certificate Register without presentation or surrender of any Series 1996-1
Certificate or the making of any notation thereon; provided, however, that,
with respect to Series 1996-1 Certificates registered in the name of a
Depository, such distributions shall be made to such Depository in
immediately available funds.
SECTION 5.02. Reports and Statements to Series 1996-1
Certificateholders. (a) At least two Business Days prior to each Distribution
Date, commencing with the Initial Distribution Date, the Servicer will
provide to the Trustee, and on each such Distribution Date, the Trustee shall
forward to each Series 1996-1 Certificateholder, a statement substantially in
the form of Exhibit B prepared by the Servicer setting forth certain
information relating to the Trust and the Series 1996-1 Certificates.
(b) A copy of each statement provided pursuant to paragraph
(a) will be made available for inspection at the Corporate Trust Office.
(c) On or before January 31 of each calendar year, beginning
with calendar year 1997, the Trustee shall furnish or cause to be furnished
to each Person who at any time during the preceding calendar year was a
Series 1996-1 Certificateholder (or Certificate Owner), a statement prepared
by the Servicer containing the information which is required to be contained
in the statement to Series 1996-1 Certificateholders as set forth in
paragraph (a) above, aggregated for such calendar year or the applicable
portion thereof during which such Person (or any related Certificate Owner)
was a Series 1996-1 Certificateholder (or Certificate Owner), together with
other information as is required to be provided by an issuer of indebtedness
under the Internal Revenue Code and such other customary information as is
necessary to enable the Series 1996-1 Certificateholders (or
43
Certificate Owners) to prepare their tax returns. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Internal Revenue Code as from time to
time in effect.
ARTICLE VI
Amortization Events
SECTION 6.01. Additional Amortization Events. The occurrence
of any of the following events shall be deemed to be an Early Amortization
Event solely with respect to Series 1996-1:
(a) on any Determination Date, the average of the Monthly
Payment Rates for the three preceding Collection Periods is less than
20%;
(b) on any Determination Date, the Available Subordinated
Amount for the next Distribution Date will be less than the Required
Subordinated Amount on such Determination Date, after giving effect
to the distributions to be made on the next Distribution Date;
(c) any Service Default with respect to Series 1996-1 occurs;
(d) on any Determination Date, as of the last day of the
preceding Collection Period, the aggregate amount of Principal
Receivables relating to Used Vehicles exceeds 20% of the Pool Balance
on such last day;
(e) any Carry-over Amount or Additional Carry-over Amount is
outstanding on six consecutive Distribution Dates;
(f) the outstanding principal amount of the Series 1996-1
Certificates is not repaid by the Expected Payment Date;
(g) the Trust shall file a petition commencing a voluntary
case under any chapter of the Federal bankruptcy laws; or the Trust
shall file a petition or answer or consent seeking reorganization,
arrangement,
44
adjustment, or composition under any other similar applicable Federal
law, or shall consent to the filing of any such petition, answer, or
consent; or the Trust shall appoint, or consent to the appointment
of, a custodian, receiver, liquidator, trustee, assignee,
sequestrator or other similar official in bankruptcy or insolvency of
it or of any substantial part of its property; or the Trust shall
make an assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due;
and
(h) any order for relief against the Trust shall have been
entered by a court having jurisdiction in the premises under any
chapter of the Federal bankruptcy laws, and such order shall have
continued undischarged or unstayed for a period of 60 days; or a
decree or order by a court having jurisdiction in the premises shall
have been entered approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of the Trust
under any other similar applicable Federal law, and such decree or
order shall have continued undischarged or unstayed for a period of
120 days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a custodian, receiver, liquidator,
trustee, assignee, sequestrator, or other similar official in
bankruptcy or insolvency of the Trust or of any substantial part of
its property, or for the winding up or liquidation of its affairs,
shall have been entered, and such decree or order shall have remained
in force undischarged or unstayed for a period of 120 days.
The Trustee agrees that upon gaining knowledge of the
occurrence of any event described in Section 9.01 of the Agreement or Section
6.01 of this Series Supplement it shall (a) promptly provide notice to the
Rating Agencies of the occurrence of such event and (b) notify the Series
1996-1 Certificateholders of the occurrence of such event within 45 days of
the expiration of the applicable grace period, if any. In the case of any
event described in Sections 9.01(f) or (g) of the Agreement or Section
6.01(c) of this Series Supplement, an Early Amortization Event with respect
to Series 1996-1 will be deemed to have occurred only if, after the
applicable grace period described in such Sections, if any, either the
Trustee or Series 1996-1 Certificateholders evidencing more than 50% of the
aggregate unpaid principal amount of the Series 1996-1 Certificates by
written notice
45
to the Seller and the Servicer (and the Trustee, if given by Series 1996-1
Certificateholders) declare that an Early Amortization Event has occurred as
of the date of such notice. In the case of any other Early Amortization
Event, such Early Amortization Event will be deemed to have occurred
immediately upon the occurrence of such event, without any notice or other
action on the part of the Trustee or the Series 1996-1 Certificateholders.
In the case of any Early Amortization Event described in
Sections 9.01(a), (f) or (g) of the Agreement or this Section 6.01, other
than Sections 6.01(f), (g) or (h), provided that (i) no other Early
Amortization Event (other than an Early Amortization Event which has resulted
in an Early Amortization Period which has terminated as described in clause
(c) or clause (d) of the definition thereof in this Series Supplement) has
occurred and (ii) the scheduled termination of the Revolving Period has not
occurred, the Trustee agrees that it shall request written confirmation from
Standard & Poor's, Duff & Phelps, Inc. and Fitch Investors Service, Inc. that
the termination of the Early Amortization Period caused by the occurrence of
such Early Amortization Event will not result in the downgrading or
withdrawal of such entity's rating of the Series 1996-1 Certificates.
The Trustee further agrees that, where applicable, it shall
promptly notify the Series 1996-1 Certificateholders that it has received the
written confirmation referred to in the preceding paragraph, and that the
Series 1996-1 Certificateholders may elect to terminate the related Early
Amortization Period.
ARTICLE VII
Optional Repurchase
SECTION 7.01. Optional Repurchase. (a) On any Distribution
Date occurring after the date on which the Invested Amount is reduced to
$50,000,000 or less, the Seller shall have the option to purchase the entire
Series 1996-1 Certificateholders' Interest, at a purchase price equal to the
Reassignment Amount for such Distribution Date.
(b) The Seller shall give the Servicer and the Trustee at
least 10 days' prior written notice of the Distribution Date on which the
Seller intends to exercise
46
such purchase option. Not later than 12:00 noon, New York City time, on such
Distribution Date the Seller shall deposit the Reassignment Amount into the
Collection Account in immediately available funds. Such purchase option is
subject to payment in full of the Reassignment Amount. The Reassignment
Amount shall be distributed as set forth in Section 8.01(b).
(c) If at the time the Seller exercises its purchase option
hereunder the Seller's long-term unsecured debt has a rating lower than Baa3
by Moody's, the Seller shall deliver to the Trustee on such Distribution Date
an Opinion of Counsel (which must be an independent outside counsel) to the
effect that, in reliance on certain certificates to the effect that the
Series 1996-1 Certificateholders' Interest purchased by the Seller
constitutes fair value for the consideration paid therefor and as to the
solvency of the Seller, the purchase of the Series 1996-1 Certificateholders'
Interest would not be considered a fraudulent conveyance under applicable
law.
ARTICLE VIII
Final Distributions
SECTION 8.01. Sale of Certificateholders' Interest Pursuant to
Section 2.03 of the Agreement; Distributions Pursuant to Section 7.01 of this
Series Supplement or Section 2.03 or 12.02(c) of the Agreement. (a) The
amount to be paid by the Seller to the Collection Account with respect to
Series 1996-1 in connection with a purchase of the Series 1996-1
Certificateholders' Interest pursuant to Section 2.03 of the Agreement shall
equal the Reassignment Amount for the Distribution Date on which such
repurchase occurs.
(b) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 7.01 or 8.01 of this Series Supplement
or Section 2.03 of the Agreement or any Termination Proceeds deposited into
the Collection Account pursuant to Section 12.02(c) of the Agreement, the
Trustee shall, not later than 12:00 noon, New York City time, on the
Distribution Date on which such amounts are deposited (or, if such date is
not a Distribution Date, on the immediately following Distribution Date) (in
the priority set forth below): (i) first, (x) deposit the Invested Amount on
such
47
date into the Principal Funding Account and (y) deposit the amount of accrued
and unpaid interest on the unpaid balance of the Series 1996-1 Certificates,
plus the amount of Additional Interest, if any, for such Distribution Date
and any Additional Interest, Carry-over Amount or Additional Carry-over
Amount previously due but not paid to Series 1996-1 Certificateholders on any
prior Distribution Date, up to the Reassignment Amount for Series 1996-1 and
(ii) second, pay the remainder of any Termination Proceeds to the Seller.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Principal
Funding Account pursuant to Section 7.01 or 8.01 and all other amounts on
deposit therein shall be distributed in full to the Series 1996-1
Certificateholders on such date and any distribution made pursuant to
paragraph (b) above shall be deemed to be a final distribution pursuant to
Section 12.02 of the Agreement with respect to Series 1996-1.
SECTION 8.02. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables Pursuant to Section 9.02 of the Agreement. (a)
Not later than 12:00 noon, New York City time, on the Distribution Date
following the date on which the Insolvency Proceeds are deposited into the
Collection Account pursuant to Section 9.02(b) of the Agreement, the Trustee
shall first (in each case, after giving effect to any deposits and
distributions otherwise to be made on such Distribution Date) deduct an
amount equal to the Invested Amount on such Distribution Date from the
portion of the Insolvency Proceeds allocated to Allocable Principal
Collections and deposit such amount in the Principal Funding Account;
provided that the amount of such deposit shall not exceed the product of (x)
the portion of the Insolvency Proceeds allocated to Allocable Principal
Collections and (y) 100% minus the Excess Seller's Percentage with respect to
the related Collection Period. The remainder of the portion of the Insolvency
Proceeds allocated to Allocable Principal Collections shall be allocated to
the Seller's Interest and shall be released to the Seller on such
Distribution Date.
(b) Not later than 12:00 noon, New York City time, on such
Distribution Date, the Trustee shall first (in each case, after giving effect
to any deposits and distributions otherwise to be made on such Distribution
Date) deduct an amount equal to the sum of (i) Monthly
48
Interest for such Distribution Date, (ii) any Monthly Interest previously due
but not distributed on a prior Distribution Date, (iii) the amount of
Additional Interest, if any, for such Distribution Date and any Additional
Interest previously due but not distributed on a prior Distribution Date,
(iv) any Carry-over Amount for such Distribution Date and any Carry-over
Amount previously due but not distributed to the Series 1996-1
Certificateholders on a prior Distribution Date and (v) the amount of any
Additional Carry-over Amount for such Distribution Date and any Additional
Carry-over Amount previously due but not distributed to the Series 1996-1
Certificateholders on a prior Distribution Date, from the portion of the
Insolvency Proceeds allocated to Allocable Non-Principal Collections and
deposit such amount in the Collection Account with such funds designated by
the Trustee as being held for the benefit of the Series 1996-1
Certificateholders; provided that the amount of such distribution shall not
exceed (x) the product of (A) the portion of the Insolvency Proceeds
allocated to Allocable Non-Principal Collections and (B) 100% minus the
Excess Seller's Percentage. The remainder of the portion of the Insolvency
Proceeds allocated to Allocable Non-Principal Collections shall be allocated
to the Seller's Interest and shall be released to the Seller on such
Distribution Date.
(c) Notwithstanding anything to the contrary in this Series
Supplement or in the Agreement, the entire amount deposited in the Principal
Funding Account and the Collection Account pursuant to this Section and all
other amounts on deposit therein shall be distributed in full to the Series
1996-1 Certificateholders on the Distribution Date on which funds are
deposited pursuant to this Section (or, if not so deposited on a Distribution
Date, on the immediately following Distribution Date) and any distribution
made pursuant to this Section shall be deemed to be a final distribution
pursuant to Section 12.02 of the Agreement with respect to Series 1996-1.
ARTICLE IX
The Series 1996-1 Certificates
SECTION 9.01. The Series 1996-1 Certificates. (a) The Series
1996-1 Certificates may not be acquired by or for the account of any employee
benefit plan, trust or account, including an individual retirement account,
that is
subject to Section 406 of ERISA, or that is described in Section 4975(e)(1)
of the Code, or an entity whose underlying assets include plan assets by
reason of a plan's investment in such entity (a "Benefit Plan"). By accepting
and holding any Series 1996-1 Certificate, the Holder thereof shall be deemed
to have represented and warranted that it is not a Benefit Plan. By acquiring
any interest in any Series 1996-1 Certificate, the applicable Certificate
Owner or Owners shall be deemed to have represented and warranted that it or
they are not Benefit Plans.
(b) Each Series 1996-1 Certificate will contain a legend
substantially to the following effect:
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE
ACCOUNT OF A BENEFIT PLAN (AS DEFINED BELOW).
ARTICLE X
Miscellaneous Provisions
SECTION 10.01. Certain Permitted Actions; Amendments to the
Agreement; Additional Covenants. (a) Notwithstanding anything to the contrary
in the Agreement, funds on deposit in the Collection Account may be invested
in any Eligible Investments (as that term is defined in this Series
Supplement).
(b) Notwithstanding anything to the contrary in the Agreement,
including Section 2.07(c) thereof, the Seller shall not be required to make
any deposit to the Collection Account in respect of the Repurchased
Receivables Price of any receivables repurchased by the Seller from the Trust
pursuant to such Section.
(c) Notwithstanding anything to the contrary contained herein
or in the Agreement, the Seller shall have the right to require the
reassignment to it of all the Trust's right, title and interest in, to and
under the Receivables then existing and thereafter created, all monies due or
to become due and all amounts received with respect thereto and all proceeds
thereof in or with respect to the Accounts ("Automatic Removed Accounts")
designated by the Seller, upon satisfaction of the following conditions: (a)
on or before the fifth business day immediately preceding the date upon which
such Accounts are to be removed, the Seller shall have given the Trust, each
50
Enhancement Provider and the Rating Agencies a Removal Notice specifying the
date for removal of the Automatic Removed Accounts (the "Automatic Removal
Date"); (b) on or prior to the date that is five Business Days after the
Automatic Removal Date, the Seller shall have delivered to the Trustee a
computer file or microfiche or written list containing a true and complete
list of the Automatic Removed Accounts specifying for each such Account, as
of the removal notice date, its account number and the aggregate amount of
Receivables outstanding in such Account; (c) the Seller shall have
represented and warranted as of each Automatic Removal Date that the list of
Automatic Removed Accounts delivered pursuant to clause (b) above, as of the
Automatic Removal Date, is true and complete in all material respects; (d)
the Trustee shall have received confirmation from each Rating Agency that
such removal will not result in a reduction or withdrawal of such Rating
Agency's rating of any outstanding Series or Class of Certificates; (e) the
Seller shall have delivered to the Trustee, each Rating Agency and any
Enhancement Providers an officers' certificate, dated the Automatic Removal
Date, to the effect that the Seller reasonably believes that such removal
will not cause an early amortization event to occur with respect to any
Series; and (f) the Seller shall have delivered to the Trustee, each Rating
Agency and any Enhancement Providers a Tax Opinion, dated the Automatic
Removal Date, with respect to such removal.
Upon satisfaction of the above conditions, on the Automatic
Removal Date all the right, title and interest of the Trust in and to the
Receivables arising in the Automatic Removed Accounts, all monies due and to
become due and all amounts received with respect thereto and all proceeds
thereof shall be deemed removed from the Trust for all purposes.
(d) Notwithstanding anything to the contrary herein or in the
Agreement, subject to the other limitations described in Section 4.03 of the
Agreement, CFC need not deposit collections with respect to any Collection
Period in the Collection Account until the related Distribution Date.
(e) Unless otherwise agreed to by the Rating Agencies,
notwithstanding anything to the contrary herein or in the Agreement, the
Seller may from time to time, at its discretion, and subject only to the
limitations specified in this paragraph, designate Additional Accounts to be
added to the Trust. (Additional Accounts designated to be added to
51
the Trust in accordance with the provisions of this Section 10.01(e) are
referred to herein as "Automatic Additional Accounts".) On the Addition Date
with respect to any Automatic Additional Accounts, the Trust shall purchase
the Receivables in such Automatic Additional Accounts (and such Automatic
Additional Accounts shall be deemed to be Accounts for purposes of the
Agreement) as of the close of business on the applicable Additional Cut-Off
Date, subject to the satisfaction of the following conditions:
(i) such Automatic Additional Accounts shall be Eligible
Accounts;
(ii) the Seller shall, to the extent required by Section 4.03
of the Agreement, have deposited in the Collection Account all
Collections with respect to such Automatic Additional Accounts since
the Additional Cut-Off Date;
(iii) no selection procedures believed by the Seller to be
adverse to the interests of the Series 1996-1 Certificateholders were
used in selecting such Automatic Additional Accounts;
(iv) as of each of the Additional Cut-Off Date and the
Addition Date, no Insolvency Event with respect to CFC or the Seller
shall have occurred nor shall the transfer of the Receivables arising
in the Automatic Additional Accounts to the Trust have been made in
contemplation of the occurrence thereof;
(v) the addition of the Receivables arising in the Automatic
Additional Accounts shall not cause an early amortization event or
any event that, after the giving of notice or the lapse of time,
would constitute a early amortization event to occur with respect to
any Series;
(vi) on or before each Addition Date with respect to Automatic
Additional Accounts, the Seller shall have delivered to the Trustee
and the Rating Agencies (A) an Opinion of Counsel with respect to the
Receivables in the Automatic Additional Accounts substantially in the
form of Exhibit G-2 to the Agreement and (B) a Tax Opinion with
respect to such addition;
(vii) within ten Business Days of the date on which any such
Receivables are added to the Trust, the Seller
52
shall have delivered to the Trustee a written assignment and a
computer file or a microfiche list containing a true and complete
list of the related Automatic Additional Accounts specifying for each
such Account its account number, the collection status, the aggregate
amount outstanding in such Account and the aggregate amount of
Principal Receivables outstanding in such Account; and
(viii) the Seller shall have delivered to the Trustee an
Officer's Certificate of the Seller, dated the Addition Date, to the
effect that conditions (i) through (v) and (vii) above have been
satisfied.
The Seller hereby represents and warrants to the Trust as of
the related Addition Date as to the matters relating to it set forth in
paragraphs (iii) and (iv) above and that the file or list described below is,
as of the applicable Additional Cut-Off Date, true and complete in all
material respects.
In connection with the designation of Automatic Additional
Account to be added to the Trust, the Seller shall deliver to the Trustee (i)
the computer file or microfiche list required to be delivered pursuant to
Section 2.01 of the Agreement with respect to such Automatic Additional
Accounts and (ii) a duly executed, written Assignment (including an
acceptance by the Trustee for the benefit of the Certificateholders),
substantially in the form of Exhibit B to the Agreement (the "Assignment").
Unless each Rating Agency otherwise consents, the number of
Automatic Additional Accounts added to the Trust with respect to any of the
three consecutive Collection Periods beginning in January, April, July and
October of each calendar year shall not exceed 8% of the number of Accounts
as of the first day of the calendar year during which such Collection Periods
commence and the number of Automatic Additional Accounts designated during
any such calendar year shall not exceed 20% of the number of Accounts as of
the first day of such calendar year. On or before the first business day of
each Collection Period beginning in January, April, July and October of each
calendar year, the Seller shall have requested and obtained notification from
each Rating Agency of any limitations to the right of the Seller to designate
Eligible Accounts as Automatic Additional Accounts during any period which
includes such Collection Period. To the extent that Automatic Additional
53
Accounts have been added to the Trust during the three consecutive Collection
Periods ending in the calendar month prior to such date, on or before January
31, April 30, July 31, October 31 of each calendar year, the Trustee shall
have received confirmation from each Rating Agency that the addition of all
Automatic Additional Accounts included as Accounts during the three
consecutive Collection Periods ending in the calendar month prior to such
date shall not have resulted in any applicable Rating Agency reducing or
withdrawing its rating of any outstanding Series or Class of Certificates. If
such Rating Agency confirmation with respect to any Automatic Additional
Accounts is not so received, such Automatic Additional Accounts will be
removed from the Trust.
(f) Each Holder of a Series 1996-1 Certificate, by such
Holder's acceptance thereof, will be deemed to have consented to an amendment
to the Agreement that incorporates the provisions of Sections 10.01(a) and
10.01(b), 10.01(c), 10.01(d) and 10.01(e), it being understood that no such
amendment shall be effective unless and until each Series of Investor
Certificates issued prior to October 20, 1994 shall no longer be outstanding
or shall have consented to such amendment in accordance with the Agreement.
(g) Except for the conveyance hereunder to the Trustee, the
Seller will not sell, pledge, assign or transfer to any other Person any
rights it might have to funds on deposit in the Reserve Fund, the Principal
Funding Account, the Excess Funding Account or the Yield Supplement Account,
or Investment Proceeds with respect thereto.
SECTION 10.02. Ratification of Agreement. As supplemented by
this Series Supplement, the Agreement is in all respects ratified and
confirmed and the Agreement as so supplemented by this Series Supplement
shall be read, taken and construed as one and the same instrument.
SECTION 10.03. Counterparts. This Series Supplement may be
executed in two or more counterparts (and by different parties on separate
counterparts) each of which shall be an original, but all of which together
shall constitute one and the same instrument.
SECTION 10.04. Dealer Concentrations. So long as this Series
1996-1 shall be outstanding, on the last day of each Collection Period, the
Servicer shall determine if the aggregate amount of Principal Receivables due
54
from any Dealer or group of affiliated Dealers on such date is greater than
1.5% of the Pool Balance on such date. The Servicer shall promptly provide
the Trustee a report setting forth the basis for such determination. The
Trustee upon request from any Rating Agency will make such report available
to such Rating Agency.
SECTION 10.05. GOVERNING LAW. THIS SERIES SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
55
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee
have caused this Series Supplement to be duly executed by their respective
officers as of the day and year first above written.
U.S. AUTO RECEIVABLES COMPANY,
Seller,
by /s/ D.M. Cantwell
-------------------------
CHRYSLER FINANCIAL CORPORATION,
Servicer,
by /s/ D.M. Cantwell
-------------------------
THE BANK OF NEW YORK,
Trustee,
by /s/ Laura Bertolini
-------------------------
SCHEDULE 1
Each of (i) the Principal Funding Account, (ii) the Excess
Funding Account, (iii) the Reserve Fund and (iv) the Yield Supplement Account
for the CARCO Auto Loan Master Trust, Series 1996-1 has been duly and validly
created with The Bank of New York in the name of The Bank of New York as
Trustee on behalf of the Series 1996-1 Certificateholders.
Principal Funding Account . . . . . (Account No. 052340)
Excess Funding Account . . . . . . (Account No. 052338)
Reserve Fund Account . . . . . . . (Account No. 052341)
Yield Supplement Account . . . . . (Account No. 052339)