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As filed with the Securities and Exchange Commission on October 10, 1997
Registration No. 333-32737/-01/-02
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
--------------
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
(Issuer of Notes)
CHASE MANHATTAN BANK THE CHASE MANHATTAN BANK
USA, NATIONAL ASSOCIATION
(Depositors of the Trust described herein)
(Exact name as specified in registrants' charter)
United States New York
(States or other jurisdictions of incorporation)
22-2382028 13-4994650
(I.R.S. employer identification numbers)
802 Delaware Avenue 270 Park Avenue
Wilmington, Delaware 19801 New York, New York 10017
(302) 575-5000 (212) 270-6000
(Address, including zip code, and
telephone number, including area code, of
registrant's Principal Executive Office)
ANDREW T. SEMMELMAN ANTHONY J. HORAN
Secretary Secretary
Chase Manhattan Bank USA, National Association The Chase Manhattan Bank
802 Delaware Avenue 270 Park Avenue
Wilmington, Delaware 19801 New York, New York 10017
(302) 575-5033 (212) 270-7122
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
MARTIN R. JOYCE LAURA PALMA WILLIAM A. GRAY
<S> <C> <C>
The Chase Manhattan Bank Simpson Thacher & Bartlett Orrick, Herrington & Sutcliffe LLP
270 Park Avenue 425 Lexington Avenue 666 Fifth Avenue
New York, New York 10017 New York, New York 10017 New York, New York 10103
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement. If any of
the securities being registered on this Form are to be offered pursuant to
dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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====================================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Securities to be Amount to be Aggregate Price Aggregate Registration
Registered(1) Registered Per Unit(2) Offering Price(2) Fee(3)
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Asset-Backed Notes $266,262,029.25 100% $266,262,029.25 $80,685.46
====================================================================================================================================
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(1) The Notes are also being registered for the purpose of market making.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Of which $80,381.46 is paid herewith, and $304 has been previously paid.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall thereafter
become effective in accordance on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
================================================================================
M
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 10, 1997
PROSPECTUS
$266,262,029.25
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
CLASS A ASSET BACKED NOTES
CLASS B ASSET BACKED NOTES
CLASS C ASSET BACKED NOTES
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
THE CHASE MANHATTAN BANK
SELLERS
THE CIT GROUP/SALES FINANCING, INC.
SERVICER
Chase Manhattan Marine Owner Trust 1997-A (the 'TRUST' or the 'ISSUER'), created
pursuant to an Amended and Restated Trust Agreement, to be dated as of October
1, 1997, among Chase Manhattan Bank USA, National Association, a national
banking association ('CHASE USA'), The Chase Manhattan Bank, a New York banking
corporation ('CHASE,' and together with Chase USA, the 'SELLERS'),
(Continued on following page)
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, THE CHASE
MANHATTAN BANK, THE CIT GROUP/SALES FINANCING, INC. OR ANY OF THEIR RESPECTIVE
AFFILIATES. NONE OF THE NOTES IS A DEPOSIT AND NONE OF THE NOTES IS INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE 'FDIC'). THE RECEIVABLES ARE NOT
INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
THESE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH UNDER THE HEADING 'RISK FACTORS' COMMENCING ON PAGE 11 HEREIN.
----------------
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AGGREGATE UNDERWRITING
PRINCIPAL INTEREST FINAL SCHEDULED PRICE TO DISCOUNT AND PROCEEDS TO
AMOUNT RATE(1) DISTRIBUTION DATE PUBLIC(2) COMMISSION SELLERS(3)
--------------- -------- ------------------- --------- ------------ -----------
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CLASS A-1 NOTES $ 41,800,000.00 % JANUARY 17, 2000 % % %
CLASS A-2 NOTES $ 55,600,000.00 % MARCH 15, 2002 % % %
CLASS A-3 NOTES $ 50,600,000.00 % JANUARY 17, 2005 % % %
CLASS A-4 NOTES $ 37,300,000.00 % APRIL 16, 2007 % % %
CLASS A-5 NOTES $ 29,300,000.00 % OCTOBER 15, 2009 % % %
CLASS A-6 NOTES $ 23,700,000.00 % APRIL 16, 2012 % % %
CLASS B NOTES $ 10,650,000.00 % AUGUST 15, 2013 % % %
CLASS C NOTES $ 17,312,029.25 % OCTOBER 16, 2017 % % %
TOTAL $266,262,029.25 $ $ $
</TABLE>
(1) Plus accrued interest, if any, from the Closing Date.
(2) Before deduction of expenses estimated at $573,000.
----------------
This Prospectus may be used by Chase Securities Inc., an affiliate of each of
the Sellers and a subsidiary of The Chase Manhattan Corporation (the
'CORPORATION'), in connection with offers and sales related to market-making
transactions in the Notes. Chase Securities Inc. may act as principal or agent
in such transactions. Such sales will be made at prices related to prevailing
market prices at the time of sale.
The Notes are being offered by the Underwriters, subject to prior sale, when, as
and if issued to and accepted by the Underwriters, subject to approval of
certain legal matters by counsel for the Underwriters. The Underwriters reserve
the right to reject orders in whole or in part. It is expected that the Notes
will be delivered in book-entry form, on or about October , 1997 (the 'CLOSING
DATE') through the facilities of The Depository Trust Company ('DTC'), Cedel
Bank, societe anonyme ('CEDEL') or the Euroclear System ('EUROCLEAR'), against
payment therefor in immediately available funds.
Underwriters of the Class A Notes
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
Underwriter of the Class B Notes and the Class C Notes
CHASE SECURITIES INC.
THE DATE OF THIS PROSPECTUS IS OCTOBER , 1997.
<PAGE>
(continued from preceding page)
and Wilmington Trust Company, as Owner Trustee (the 'OWNER TRUSTEE'), will issue
eight classes of Asset Backed Notes (collectively, the 'NOTES') in the
respective aggregate principal amounts set forth on the cover page hereof
pursuant to an indenture (as amended and supplemented from time to time, the
'INDENTURE') to be dated as of October 1, 1997, between the Trust and Norwest
Bank Minnesota, National Association, as indenture trustee (the 'INDENTURE
TRUSTEE'). The Trust will also issue Certificates (the 'CERTIFICATES'), which
will not bear interest but will have certain rights to the monies in the Reserve
Account and certain other excess funds (as described in 'Summary of Terms--
Reserve Account') after the payment of all principal and interest then
due on the Notes. The Certificates will represent fractional undivided
beneficial equity interests in the Trust (the 'CERTIFICATE INTEREST'). The
Certificates are not being offered or sold hereby.
The assets of the Trust will consist of a pool of retail installment sales
contracts and purchase money notes and other notes secured by new and used
boats, boat motors and boat trailers, certain monies received or due thereunder
on and after October 1, 1997 (the 'CUTOFF DATE'), security interests in the
boats, boat motors and boat trailers financed thereby, amounts on deposit in the
Collection Account, the Note Distribution Account, the Paid-Ahead Account and
the Reserve Account and proceeds from claims and other rights to payment on
certain insurance policies, all as more fully described herein. The Notes will
be secured by the assets of the Trust pursuant to the Indenture.
Interest on all classes of Notes will accrue at the fixed per annum
interest rates specified above. Interest on the Notes will generally be payable
on the 15th day of each month (each, a 'DISTRIBUTION DATE'), commencing November
17, 1997. Principal of the Notes will be payable on each Distribution Date to
the extent described herein, except that no principal will be paid on any class
of Notes until all of the Notes with preceding class designations have been paid
in full.
Each class of Notes will be payable in full on the Final Scheduled
Distribution Date with respect to such class specified above. Investors should
be aware that payment in full of a class of Notes could occur earlier than such
dates as described herein. In addition, the Class C Notes will be subject to
prepayment in whole, but not in part, on any Distribution Date on which The CIT
Group/Sales Financing, Inc. ('CITSF'), in its capacity as servicer (in such
capacity, the 'SERVICER'), exercises its option to purchase the Receivables. The
Servicer may purchase all the Receivables on any Distribution Date following the
last day of a Collection Period on which the Pool Balance (as defined herein)
shall have declined to 5% or less of the Cutoff Date Pool Balance (as defined
herein).
The Notes initially will be represented by Notes registered in the name of
Cede & Co. ('CEDE'), the nominee of DTC. The interests of beneficial owners of
the Notes will be represented by book entries on the records of DTC and
participating members thereof (the 'PARTICIPANTS'). Definitive Notes (as defined
herein) will be available only under the limited circumstances described herein.
There currently is no secondary market for the Notes and there is no
assurance that one will develop. The Underwriters expect, but are not obligated,
to make a market in the Notes, and there is no assurance that any such market
will develop or continue.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT TRANSACTIONS, STABILIZING TRANSACTIONS, SYNDICATE COVERING
TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
'UNDERWRITING' HEREIN.
Upon receipt of a request by an investor, or his or her representative,
within the period during which there is a prospectus delivery obligation, the
Underwriters will transmit or cause to be transmitted promptly, without charge
and in addition to any such delivery requirements, a paper copy of this
Prospectus or this Prospectus encoded in an electronic format.
ii
<PAGE>
AVAILABLE INFORMATION
The Sellers have filed with the Securities and Exchange Commission (the
'COMMISSION') a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the 'REGISTRATION STATEMENT') under the
Securities Act of 1933, as amended (the 'SECURITIES ACT'), with respect to the
Notes offered pursuant to this Prospectus. For further information, reference is
made to the Registration Statement and any reports and other documents
incorporated herein by reference as described below under 'Incorporation of
Certain Documents by Reference,' which may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's regional offices at Northwestern
Atrium Center, 500 West Madison Street, 14th Floor, Chicago, Illinois 60661 and
Seven World Trade Center, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Chase
Manhattan Bank, on behalf of the Trust, will agree to file or cause to be filed
with the Commission such periodic reports as are required under the Securities
Exchange Act of 1934, as amended (the 'EXCHANGE ACT'), and the rules and
regulations of the Commission thereunder. In addition, the Commission maintains
a public access site on the Internet through the World Wide Web, at which site
reports, information statements and other information, including all electronic
filings, regarding the Sellers may be viewed. The Internet address of such World
Wide Web site is http://www.sec.gov.
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued, unaudited monthly reports and
annual reports containing information concerning the Trust and prepared by the
Servicer will be sent on behalf of the Trust only to Cede, as the nominee of DTC
and the registered holder of the Notes. See 'Certain Information Regarding the
Notes--Book-Entry Registration,' '--Definitive Notes' and '--Reports.' Such
reports will not constitute financial statements prepared in accordance with
United States generally accepted accounting principles or that have been
examined and reported upon by, with an opinion expressed by, an independent
public or certified public accountant. None of the Sellers or the Servicer
intends to send any of its financial reports to Noteholders or to the owners of
beneficial interests in the Notes.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed on behalf of the Trust with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the date of
this Prospectus and prior to the termination of the offering of the Notes, shall
be deemed to be incorporated by reference herein and to be part hereof. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Servicer will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents incorporated herein by reference, except
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to the Servicer, Attention: Securitization Department. Telephone
requests for such copies should be directed to the Servicer at (201) 740-5408.
iii
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed under the captions 'The Receivables Pool--
Delinquencies and Net Losses' and 'Weighted Average Life of the Notes--CPR
Tables' may constitute forward-looking statements within the meaning of Section
7A of the Securities Act, and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Receivables to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
iv
<PAGE>
SUMMARY OF TERMS
This Summary of Terms is qualified in its entirety by reference to the
detailed information appearing elsewhere herein. Certain capitalized terms used
in this Summary are defined elsewhere herein on the pages indicated in the
'Index of Terms.'
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Issuer................... Chase Manhattan Marine Owner Trust 1997-A (the 'TRUST'
or the 'ISSUER'), a Delaware business trust created
pursuant to an amended and restated trust agreement
(as amended and supplemented, the 'TRUST AGREEMENT'),
to be dated as of October 1, 1997, among the Sellers
and the Owner Trustee.
Sellers.................. Chase USA and Chase (also referred to herein together
as the 'SELLERS' or the 'BANKS'). None of the Sellers
or any of their affiliates has guaranteed, insured or
is otherwise obligated with respect to the Notes. See
'Risk Factors--Limited Assets; Subordination.'
Servicer................. The CIT Group/Sales Financing, Inc., a Delaware
corporation ('CITSF,' or in such capacity, the
'SERVICER'), a wholly-owned subsidiary of The CIT
Group, Inc., a Delaware corporation ('CIT'). The
Servicer will be responsible for managing,
administering, servicing and making collections on the
Receivables and serving as an administrator of the
Trust. Neither CITSF nor any of its affiliates has
guaranteed, insured or is otherwise obligated with
respect to the Notes. CIT is partially owned by the
Corporation, the parent of each of the Sellers. See
'The CIT Group/Sales Financing, Inc., Servicer'
herein.
Chase Marine Finance..... Prior to the Servicing Transfer, Chase and Chase USA,
each a wholly-owned subsidiary of the Corporation,
together with several of their affiliates, were
engaged in the marine product financing and marine
loan servicing business. As used herein, the term
'CHASE MARINE FINANCE' refers to such business of the
Sellers, their respective predecessors and their
affiliates, and such term does not include what was
the marine product financing and marine loan servicing
business of The Chase Manhattan Bank, National
Association ('CHASE N.A.') or any of its affiliates
prior to the Chase/Chemical Merger. Prior to the
Servicing Transfer, the servicing of Marine Loans by
Chase Marine Finance was performed by Chase Financial
Management Corporation ('CFMC'), an Ohio corporation
headquartered in Cleveland, Ohio and a subsidiary of
Chase USA.
On June 3, 1997, the right to service or subservice
the Marine Loans and certain other loans then serviced
by CFMC was sold to CITSF (such transaction, the
'SERVICING TRANSFER'). CITSF began servicing such
Marine Loans and other loans on August 18, 1997. In
connection with the Servicing Transfer, CITSF agreed
to serve as Servicer under the Sale and Servicing
Agreement. Following the Servicing Transfer, none of
the Sellers and their affiliates (other than CIT and
its affiliates) is financing or servicing Marine
Loans. The
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1
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documents effecting the Servicing Transfer are
referred to herein as the 'SERVICING TRANSFER
AGREEMENTS.'
Indenture Trustee........ Norwest Bank Minnesota, National Association, a
national banking association, as Indenture Trustee
under the Indenture. The Indenture Trustee's Corporate
Trust Office is located at Norwest Center, Sixth
Street and Marquette Avenue, Minneapolis, Minnesota
55479-0070, telephone (612) 667-8058. The Banks, the
Servicer and their respective affiliates may have
normal banking relationships with the Indenture
Trustee and its affiliates.
Owner Trustee............ Wilmington Trust Company, a Delaware banking
corporation, as trustee under the Trust Agreement (the
'OWNER TRUSTEE'). The Owner Trustee's Corporate Trust
Office is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001,
telephone (302) 651-1000. The Banks, the Servicer and
their respective affiliates may have normal banking
relationships with the Owner Trustee and its
affiliates.
The Notes................ Class A-1 % Asset Backed Notes in the aggregate
principal amount of $41,800,000.00 (the 'CLASS A-1
NOTES').
Class A-2 % Asset Backed Notes in the aggregate
principal amount of $55,600,000.00 (the 'CLASS A-2
NOTES').
Class A-3 % Asset Backed Notes in the aggregate
principal amount of $50,600,000.00 (the 'CLASS A-3
NOTES').
Class A-4 % Asset Backed Notes in the aggregate
principal amount of $37,300,000.00 (the 'CLASS A-4
NOTES').
Class A-5 % Asset Backed Notes in the aggregate
principal amount of $29,300,000.00 (the 'CLASS A-5
NOTES').
Class A-6 % Asset Backed Notes in the aggregate
principal amount of $23,700,000.00 (the 'CLASS A-6
NOTES' and, together with the Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class
A-5 Notes, the 'CLASS A NOTES').
Class B % Asset Backed Notes in the aggregate
principal amount of $10,650,000.00 (the 'CLASS B
NOTES').
Class C % Asset Backed Notes in the aggregate
principal amount of $17,312,029.25 (the 'CLASS C
NOTES').
To the extent described herein, the Class A Notes will
be senior in right of payment to the Class B Notes and
the Class C Notes, and the Class B Notes will be
senior in right of payment to the Class C Notes.
The Notes will be issued by the Trust pursuant to an
Indenture to be dated as of October 1, 1997 (the
'INDENTURE'), between the Trust and the Indenture
Trustee. The Notes will be secured by the assets of
the Trust.
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2
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<TABLE>
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The Notes will be available for purchase in book-entry
form only in minimum denominations of $1,000 and
integral multiples thereof. The Noteholders will not
be entitled to receive Definitive Notes, except in the
limited circumstances described herein. Noteholders
may elect to hold their Notes through DTC (in the
United States) or Cedel or Euroclear (in Europe). All
references herein to Noteholders shall reflect the
rights of Noteholders, as such rights may be exercised
through DTC and its Participants (including Cedel and
Euroclear), except as otherwise specified herein. See
'Description of the Notes--General' and 'Certain
Information Regarding the Notes--Book-Entry
Registration' herein.
The Certificates......... The Certificates will represent fractional undivided
beneficial equity interests in the Trust, including
residual interests in amounts in the Reserve Account
(after the payment of all outstanding interest and
principal then due on the Notes) in excess of the
Specified Reserve Account Balance, and will be issued
pursuant to the Trust Agreement. The Certificates are
not being offered or sold hereby. Each Seller (each, a
'CERTIFICATEHOLDER') will initially retain the
Certificates. Chase will retain a portion of 49.40% of
the Certificate Interest and Chase USA will retain
50.60% of the Certificate Interest. The Sellers may
subsequently transfer the Certificates, subject to
certain restrictions.
The Trust................ The Trust is a business trust created under the laws
of Delaware pursuant to the Trust Agreement. The
activities of the Trust are limited by the terms of
the Trust Agreement to acquiring, owning and managing
the Receivables, issuing and making payments on the
Notes and other activities related thereto. The assets
of the Trust will include (i) the Receivables,
including (A) with respect to Simple Interest
Receivables, certain monies received thereunder on and
after the Cutoff Date, and (B) with respect to
Precomputed Receivables, certain monies due thereunder
on and after the Cutoff Date, (ii) such amounts as
from time to time may be held in one or more Trust
Accounts established and maintained pursuant to the
Sale and Servicing Agreement, as described herein,
(iii) security interests in the Financed Boats, (iv)
proceeds from the exercise of any Seller's recourse
rights against Dealers, (v) proceeds from claims and
other rights to payment on certain insurance policies
and (vi) any and all proceeds of the foregoing.
The Receivables.......... The Receivables are marine retail installment sales
contracts and purchase money notes and other notes
secured by new and used boats and motors and trailers
for boats (collectively, the 'FINANCED BOATS'). On the
Closing Date, the Sellers will transfer the
Receivables to the Trust in exchange for the Notes and
Certificates pursuant to a Sale and Servicing
Agreement to be dated as of October 1, 1997 (as
amended and supplemented from time to time, the 'SALE
AND SERVICING AGREEMENT'), among the Trust, the
Sellers and the Servicer. Chase will transfer
Receivables to the Trust having an
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3
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aggregate Principal Balance of $131,543,761.78 as of
the Cutoff Date, and Chase USA will transfer
Receivables to the Trust having an aggregate Principal
Balance of $134,718,267.47 as of the Cutoff Date. See
'Description of the Transfer and Servicing Agreements'
herein.
The Receivables consist of all of the Marine Loans
owned by the Sellers which met the criteria stated
herein as of the Cutoff Date. No Receivable has a
scheduled maturity that, after giving prospective
effect to any permitted extensions or deferrals, would
be later than September 30, 2017 (the 'FINAL SCHEDULED
MATURITY DATE'). As of the Cutoff Date, the weighted
average remaining maturity of the Receivables was
approximately 140.36 months and the weighted average
original maturity of the Receivables was approximately
188.44 months.
The aggregate Principal Balance of the Receivables as
of the Cutoff Date (the 'CUTOFF DATE POOL BALANCE')
was $266,262,029.25, and the aggregate Principal
Balance of the Receivables as of each of their
respective origination dates (the 'ORIGINAL POOL
BALANCE') was $365,982,443.52.
The 'POOL BALANCE' as of any date will equal the
aggregate Principal Balance of the Receivables as of
the close of business on such date.
Terms of the Notes....... The principal terms of the Notes are described below:
Distribution Dates. Payments of interest on and
principal of the Notes will be made on the 15th day of
each month or, if any such day is not a Business Day,
on the next succeeding Business Day, commencing
November 17, 1997. Payments will be made to holders of
record of the Class A Notes (the 'CLASS A
NOTEHOLDERS'), the holders of record of the Class B
Notes (the 'CLASS B NOTEHOLDERS') and the holders of
record of the Class C Notes (the 'CLASS C NOTEHOLDERS'
and, together with the Class A Noteholders and the
Class B Noteholders, the 'NOTEHOLDERS') as of the day
immediately preceding such Distribution Date or, if
Definitive Notes are issued, as of the last day of the
preceding calendar month (each, a 'RECORD DATE'). A
'BUSINESS DAY' is a day on which banks located in New
York, New York; Oklahoma City, Oklahoma; Wilmington,
Delaware; and Minneapolis, Minnesota are open for the
purpose of conducting a commercial banking business.
Interest Rates. Each class of Notes will bear
interest at the fixed rate per annum specified for
such class on the cover page hereof. The interest rate
for each class of Notes is referred to herein as an
'INTEREST RATE.'
Interest. Interest on the outstanding principal
amount of each class of Notes will accrue at the
applicable Interest Rate from and including the
Closing Date (in the case of the first Distribution
Date) or from and including the most recent
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4
<PAGE>
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<S> <C>
Distribution Date on which interest has been paid to
but excluding the following Distribution Date (each,
an 'INTEREST ACCRUAL PERIOD'). Interest on the Class B
Notes and Class C Notes will not be paid on any
Distribution Date until interest on the Class A Notes
for such Distribution Date has been paid in full, and
interest on the Class C Notes will not be paid on any
Distribution Date until interest on the Class B Notes
for such Distribution Date has been paid in full. In
addition, if an Event of Default occurs and the Notes
are accelerated, (i) payments of interest on and
principal of the Class B Notes and the Class C Notes
will not be made until the Class A Notes have been
paid in full and (ii) payments of interest on and
principal of the Class C Notes will not be made until
the Class B Notes have been paid in full. Interest on
the the Notes will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
Interest on the Notes of any class for any
Distribution Date due but not paid on such
Distribution Date will be due on the next Distribution
Date in addition to an amount equal to interest on
such amount at the applicable Interest Rate (to the
extent lawful). See 'Description of the Notes--
Payments of Interest' and 'Description of the Transfer
and Servicing Agreements--Distributions' herein.
Principal. Principal of the Notes will be payable on
each Distribution Date in an amount equal to the
Noteholders' Principal Distributable Amount for such
Distribution Date, to the extent of the Available
Amount remaining after the Servicer has been paid the
Servicer Payment and the Noteholders' Interest
Distributable Amount has been deposited into the Note
Distribution Account. The Noteholders' Principal
Distributable Amount for each Distribution Date will
be calculated by the Servicer in the manner described
under 'Description of the Transfer and Servicing
Agreements--Distributions.'
No principal payments will be made on any class of
Class A Notes until all Class A Notes with preceding
class designations have been paid in full. For
example, no principal payments will be made on the
Class A-2 Notes until the Class A-1 Notes have been
paid in full, and no principal payments will be made
on the Class A-3 Notes until the Class A-2 Notes have
been paid in full. Notwithstanding the foregoing, if
an Event of Default occurs and the Notes are
accelerated, each class of Class A Notes will be paid
pro rata on the basis of their respective unpaid
principal amounts.
No principal will be paid on the Class B Notes or the
Class C Notes until the Class A Notes have been paid
in full, and no principal will be paid on the Class C
Notes until the Class B Notes have been paid in full.
The outstanding principal amount of each class of
Notes, to the extent not previously paid, will be
payable on the Distribution Date specified for such
class on the cover page
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hereof (each, a 'FINAL SCHEDULED DISTRIBUTION DATE')
from funds available therefor as described herein.
Optional Redemption. After the Class A Notes and the
Class B Notes have been paid in full, the Class C
Notes will be redeemed in whole, but not in part, on
any Distribution Date on which the Servicer exercises
its option to purchase the Receivables, which can
occur following the last day of any Collection Period
as of which the Pool Balance declines to 5% or less of
the Cutoff Date Pool Balance, at a redemption price
equal to the unpaid principal amount of the Class C
Notes plus accrued and unpaid interest thereon. See
'Description of the Notes--Optional Redemption'
herein.
Limited Rights. Except as described herein, if an
Event of Default occurs under the Indenture, (i)
neither the Class B Noteholders nor the Class C
Noteholders will have any right to direct or to
consent to any remedies therefor by the Indenture
Trustee, including the sale of Receivables, until the
Class A Notes have been paid in full and (ii) the
Class C Noteholders will not have any right to direct
or to consent to any remedies therefor by the
Indenture Trustee, including the sale of the
Receivables, until the Class B Notes have been paid in
full. If an Event of Servicing Termination occurs, (i)
neither the Class B Noteholders nor the Class C
Noteholders will have any right to direct or consent
to removal of the Servicer or waiver of any Event of
Servicing Termination until the Class A Notes have
been paid in full and (ii) the Class C Noteholders
will not have any right to direct or consent to
removal of the Servicer or waiver of any Event of
Servicing Termination until the Class B Notes have
been paid in full. See 'Risk Factors--Rights of
Noteholders,' 'Description of the Notes--The Indenture
--Events of Default; Rights upon an Event of Default'
and 'Description of the Transfer and Servicing
Agreements--Rights Upon Event of Servicing
Termination' and '--Waiver of Past Defaults' herein.
Reserve Account.......... The Sellers will establish a reserve account (the
'RESERVE ACCOUNT') in the name of the Indenture
Trustee on behalf of the Noteholders to be pledged by
the Trust to the Indenture Trustee as collateral for
the Notes. The Reserve Account will be funded with an
initial deposit by the Sellers of cash or certain
investments having a value of $11,981,791.32 (4.50% of
the Cutoff Date Pool Balance) (the 'RESERVE ACCOUNT
INITIAL DEPOSIT'). In addition, on each Distribution
Date, any remaining Available Amount with respect to
the preceding calendar month (the 'COLLECTION PERIOD'
with respect to such Distribution Date) after payment
of the Servicing Payment to the Servicer and deposits
into the Note Distribution Account have been made will
be deposited into the Reserve Account. On each
Distribution Date, any amounts on deposit in the
Reserve Account in excess of the Specified Reserve
Account Balance will be distributed to the
Certificateholders in accordance with their respective
Certificate Interests.
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On or prior to each Deposit Date, the Indenture
Trustee will withdraw funds from the Reserve Account,
to the extent of the funds therein, to the extent (x)
the amounts required to be distributed to the Servicer
and the Noteholders on the related Distribution Date
exceed (y) the Available Amount for such Distribution
Date. Amounts so withdrawn will be deposited into the
Collection Account. If the amount in the Reserve
Account is reduced to zero, the Noteholders will bear
the credit and other risks associated with ownership
of the Receivables, including the risk that the Trust
may not have a perfected security interest in the
Financed Boats. See 'Description of the Transfer and
Servicing Agreements-- Subordination of the Class B
Notes and the Class C Notes; Reserve Account' and
'Certain Legal Aspects of the Receivables' herein.
Specified Reserve Account
Balance................ On any Distribution Date, the specified reserve
account balance (the 'SPECIFIED RESERVE ACCOUNT
BALANCE') will equal 4.50% (8.00% under certain
circumstances described herein) of the Pool Balance as
of the related Settlement Date, but in no event will
be less than the lesser of (i) $5,325,240.59 (2.00% of
the Cutoff Date Pool Balance) and (ii) such Pool
Balance. The Specified Reserve Account Balance with
respect to any Distribution Date may be reduced to a
lesser amount as determined by the Certificateholders,
provided that such reduction does not adversely affect
the rating by a Rating Agency of any class of Notes.
Monthly Advances......... With respect to each Receivable as to which there has
been a Payment Shortfall during the related Collection
Period (other than a Payment Shortfall arising from a
Receivable which has been prepaid in full or which has
been subject to a Relief Act Reduction during the
related Collection Period), on each Deposit Date the
Servicer will be obligated to advance funds in the
amount of such Payment Shortfall (each, a 'MONTHLY
ADVANCE'), but only to the extent that the Servicer,
in its good faith judgment, expects to recover such
Monthly Advance from subsequent payments on such
Receivable made by or on behalf of the obligor
thereunder (the 'OBLIGOR') (but only to the extent of
expected interest collections in the case of a Simple
Interest Receivable) or from Net Liquidation Proceeds
or insurance proceeds with respect to such Receivable.
The Servicer shall be reimbursed for any Monthly
Advance from subsequent collections with respect to
such Receivable. If the Servicer determines in its
good faith judgment that an unreimbursed Monthly
Advance will not ultimately be recoverable from
subsequent collections or that the related Receivable
will be sold pursuant to the Sale and Servicing
Agreement, the Servicer shall be reimbursed for such
Monthly Advance from collections on all Receivables in
accordance with the priority of distributions
described herein. In determining whether a Monthly
Advance is or will be nonrecoverable, the Servicer
need not take into account any
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amounts it might receive in a deficiency judgment
against an Obligor. The Servicer will not make a
Monthly Advance in respect of (i) the principal
component of any scheduled payment on a Simple
Interest Receivable or (ii) a Payment Shortfall
arising from a Receivable which has been prepaid in
full or which has been subject to a Relief Act
Reduction during the related Collection Period. See
'Description of the Transfer and Servicing
Agreements--Monthly Advances' herein.
'PAYMENT SHORTFALL' means (i) with respect to any
Simple Interest Receivable and any Collection Period,
the excess of (A) the product of (1) one-twelfth of
the Contract Rate of such Receivable and (2) the
outstanding principal amount of such Receivable as of
the related Settlement Date (or, in the case of the
first Collection Period, as of the Cutoff Date) over
(B) the amount of interest, if any, collected on such
Receivable during the related Collection Period and
(ii) with respect to any Precomputed Receivable and
any Collection Period, the excess of (A) the scheduled
payment due on such Precomputed Receivable during the
related Collection Period over (B) the amount with
respect to such payment collected on such Receivable
(including any amounts allocated from the Paid-Ahead
Account with respect to such Collection Period).
Collection Account;
Priority of Payments... The Servicer will be required to remit collections
(including Net Liquidation Proceeds) received with
respect to the Receivables during the related
Collection Period and any other amounts constituting
the Available Amount to an account in the name of the
Indenture Trustee (the 'COLLECTION ACCOUNT') on each
Deposit Date, net of any amounts due or distributable
to the Sellers and the Servicer to the extent
described in 'Description of the Transfer and
Servicing Agreement--Net Deposits' herein (except upon
the occurrence of certain conditions described in
'Description of the Transfer and Servicing Agreement--
Collections' herein). Pursuant to the Sale and
Servicing Agreement, the Servicer will have the
revocable power to instruct the Indenture Trustee or
the Paying Agent to withdraw the Available Amount on
deposit in the Collection Account and to apply such
funds on each Distribution Date to the following (in
the priority indicated): (i) the Servicer Payment (if
not deducted from the Servicer's remittance as
described herein), (ii) the Class A Noteholders'
Interest Distributable Amount, (iii) the Class B
Noteholders' Interest Distributable Amount (except as
described below), (iv) the Class C Noteholders'
Interest Distributable Amount (except as described
below) and (v) the Noteholders' Principal
Distributable Amount.
Notwithstanding the foregoing, if an Event of Default
occurs and the maturity of the Notes is accelerated,
(i) payments of interest on and principal of the Class
B Notes and the Class C Notes will not be paid until
the Class A Notes have been paid in full and (ii)
payments of interest on and principal of the
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Class C Notes will not be paid until the Class B Notes
have been paid in full.
Paid-Ahead Amounts....... Payments by or on behalf of Obligors on Precomputed
Receivables received during any Collection Period
which do not constitute scheduled payments or full
prepayments ('PAID-AHEAD AMOUNTS') will be retained by
the Servicer and deposited into the Paid-Ahead Account
on the related Deposit Date (except upon the
occurrence of certain events described in 'Description
of the Transfer and Servicing Agreement--Collections'
herein). As of the Cutoff Date, there was $594,187.70
of Paid-Ahead Amounts with respect to the Receivables.
See 'Description of the Transfer and Servicing
Agreements--Paid-Ahead Precomputed Receivables'
herein.
Servicer Payment......... The Servicer will be entitled to receive a servicing
fee, payable on each Distribution Date (the 'SERVICING
FEE'), in an amount equal to the sum of (i)
one-twelfth of the product of 0.50% (the 'SERVICING
FEE RATE') and the Pool Balance as of the close of
business on the last day of the second preceding
Collection Period (the 'SETTLEMENT DATE') and (ii) any
Administrative Fees paid by the Obligors during the
related Collection Period. The 'SERVICER PAYMENT' with
respect to any Distribution Date will be equal to the
sum of the reimbursement then due to the Servicer for
outstanding Monthly Advances and the Servicing Fee for
such Distribution Date (including any unpaid Servicing
Fees for past Distribution Dates). See 'Description of
the Transfer and Servicing Agreements--Servicing
Compensation' and '--Net Deposits' herein.
Administration
Agreements............. Each of CITSF and Chase, in its capacity as an
administrator of the Trust (each, an 'ADMINISTRATOR'),
will enter into an agreement (each, an 'ADMINISTRATION
AGREEMENT') with the Trust and the Indenture Trustee.
Pursuant to each Administration Agreement, each
Administrator will agree to provide certain notices
and to perform certain other administrative functions
required of the Trust pursuant to the Transfer and
Servicing Agreements and specified in such
Administration Agreement as being the responsibility
of such Administrator. See 'Description of the
Transfer and Servicing Agreements--Administration
Agreements' herein.
Certain Federal Income
Tax Considerations..... Upon issuance of the Notes, Simpson Thacher &
Bartlett, special United States federal income tax
counsel to the Sellers, will deliver its opinion
generally to the effect that under current law the
Notes will be characterized as debt, and the Trust
will not be characterized as an association (or a
publicly traded partnership) taxable as a corporation.
Each Noteholder, by the acceptance of a Note, will
agree to treat the Notes as indebtedness. See 'Certain
Federal Income Tax Consequences' herein.
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ERISA Considerations..... Subject to the considerations described herein under
'ERISA Considerations,' the Notes are eligible for
purchase with Plan Assets of any Plan. A fiduciary or
other person contemplating purchasing the Notes on
behalf of or with Plan Assets of any Plan should
carefully review with its legal advisors whether the
purchase or holding of the Notes could give rise to a
transaction prohibited or not otherwise permissible
under ERISA or Section 4975 of the Code.
Ratings of the Notes..... It is a condition to the issuance of the Notes that
(i) the Class A Notes be rated in the highest
long-term rating category, (ii) the Class B Notes be
rated at least in the 'A' category and (iii) the Class
C Notes be rated at least in the investment grade
category, in each case by Moody's Investors Service, a
division of Dun & Bradstreet ('MOODY'S'), Standard &
Poor's Ratings Services, a division of the McGraw-Hill
Companies ('STANDARD & POOR'S') and Duff & Phelps
Credit Rating Company ('DUFF & PHELPS,' and together
with Moody's and Standard & Poor's, the 'RATING
AGENCIES'). There can be no assurance that any rating
will not be lowered or withdrawn by the related Rating
Agency if, in its judgment, circumstances in the
future so warrant. See 'Risk Factors--Ratings of the
Notes' herein.
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RISK FACTORS
Investors should consider, among other things, the following risk factors
in connection with any purchase of the Notes.
LIMITED LIQUIDITY
There is currently no secondary market for the Notes offered hereby. The
Underwriters currently intend to make a market in the Notes, but are not under
any obligation to do so. There can be no assurance that a secondary market will
develop or, if a secondary market does develop, that it will provide the
Noteholders with liquidity of investment or that it will continue for the life
of the Notes.
TRUST'S RELATIONSHIP TO THE SELLERS AND THE SERVICER
The Notes represent obligations of the Trust only and do not represent
obligations of, or interests in, either Seller, the Servicer or any of their
respective Affiliates. None of the Sellers or the Servicer is generally
obligated to make any payments in respect of the Notes or the Receivables. See
'Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables' herein.
SERVICING
In connection with the Servicing Transfer, the right to service or
subservice the Receivables and all other Marine Loans then serviced by CFMC was
sold to CITSF. CITSF began servicing the Receivables on August 18, 1997. The
Sellers and their affiliates (other than CIT and its affiliates) are no longer
financing or servicing Marine Loans. Although steps were taken and will continue
to be taken to ensure an orderly and efficient transfer of the servicing of the
Receivables to CITSF, the Sellers anticipate a temporary increase in the number
of delinquent Receivables during the first few months following such transfer.
CITSF began originating and servicing retail installment sales contracts
for marine products in January 1993. As of June 30, 1997, CITSF serviced for
itself and others approximately 231,500 contracts, representing an outstanding
balance of approximately $5.9 billion. Of this portfolio, approximately 19,900
contracts (representing an outstanding balance of approximately $500 million)
consisted of marine contracts. CITSF's extensive experience in servicing
consumer financing contracts for manufactured housing and other types of
products may not be in all respects directly applicable to the servicing of
marine contracts and the Receivables in particular.
The Sale and Servicing Agreement provides that if, at the end of any
calendar year or, in the case of 1997, the last three months of 1997, Aggregate
Losses on the Receivables exceed 1.20% of the average of the month-end principal
balances of the Receivables for each month in such calendar year or, in the case
of 1997, partial calendar year, the Servicer may be replaced at the direction of
the Sellers as described herein. There can be no assurance that the replacement
of CITSF as Servicer would not adversely affect the performance of the
Receivables or result in delays in payments on the Notes. See 'Description of
the Transfer and Servicing Agreements--Certain Matters Regarding the Servicer'
herein.
The Servicing Transfer Agreements set forth certain requirements and
restrictions with respect to CITSF's activities as Servicer, including a
restriction on CITSF's ability to make any changes to the servicing policies and
procedures applicable to the Receivables that would have a material effect on
the collectibility of the Receivables without CFMC's consent. These requirements
and restrictions could result in the Servicer's servicing the Receivables from
time to time in accordance with policies and procedures which are materially
different than those it follows with respect to its own serviced portfolio of
marine loans at such time. There can be no assurance that such requirements and
restrictions will not adversely affect the performance of the Receivables. See
'Description of the Transfer and Servicing Agreements--Servicing and Insurance
Procedures' herein.
LIMITED ASSETS; SUBORDINATION
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
amounts on deposit in the Reserve Account. Noteholders generally must rely for
repayment upon payments on the Receivables and, if and to the extent
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available on each Distribution Date to cover shortfalls in distributions of
interest and principal on the Notes, amounts on deposit in the Reserve Account.
However, funds deposited in the Reserve Account are limited in amount, and the
amount required to be maintained on deposit therein will be reduced as the Pool
Balance declines. If the amount on deposit in the Reserve Account is exhausted,
to the extent the subordination of amounts payable to Noteholders is
insufficient, the Trust will depend solely on current distributions on the
Receivables to make payments on the Notes. The Notes will not be insured or
guaranteed by the Sellers, the Servicer, the Owner Trustee, the Indenture
Trustee or any affiliate thereof.
Payments of interest on and principal of the Class B Notes and the Class C
Notes will be subordinated in priority of payment to payments of interest on and
principal of the Class A Notes and payments of interest on and principal of the
Class C Notes will be subordinated in priority of payment to payments of
interest on and principal of the Class B Notes. In addition, if an Event of
Default occurs and the Notes are accelerated, (i) payments of interest on and
principal of the Class B Notes will not be made until the Class A Notes have
been paid in full and (ii) payments of interest on and principal of the Class C
Notes will not be made until the Class B Notes have been paid in full.
RATINGS
It is a condition to the issuance of the Notes that (i) the Class A Notes
be rated in the highest long-term rating category, (ii) the Class B Notes be
rated at least in the 'A' category and (iii) the Class C Notes be rated at least
in the investment grade category, in each case by each Rating Agency. A rating
is not a recommendation to purchase, hold or sell the Notes, inasmuch as such
rating does not comment as to market price or suitability for a particular
investor. The ratings of the Notes address the likelihood of the timely payment
of interest on and ultimate payment of principal of the Notes pursuant to their
terms. There can be no assurance that a rating will remain for any given period
of time or that a rating will not be lowered or withdrawn entirely by the
related Rating Agency if in its judgment circumstances in the future so warrant.
CERTAIN LEGAL ASPECTS
Security Interest in Financed Boats. When originated, each Receivable was
secured by a security interest in the Financed Boat financed thereby. Each such
security interest was required to be perfected under applicable state law and,
in the case of certain Financed Boats eligible for federal documentation, under
applicable federal law. In connection with the sale of the Receivables to the
Trust, each Seller will assign its security interest in each Financed Boat to
the Trust. However, due to administrative burden and expense, none of the
Sellers, the Servicer or the Owner Trustee will amend the certificates of title
or file assignments of the UCC-1 financing statements, if any, with respect to
the Financed Boats to identify the Trust or the Indenture Trustee as the new
secured party nor will any of the Sellers or the Owner Trustee file an
assignment of the Preferred Mortgages with respect to any Financed Boats
documented or to be documented under federal law until after the Closing Date.
See 'Certain Legal Aspects of the Receivables--Security Interests in the
Financed Boats' for a description of those Preferred Mortgages that the Sellers
will be obligated to assign to the Trust subsequent to the Closing Date. In
addition, the certificates of title have not and will not be amended and the
UCC-1 financing statements have not and will not be assigned with respect to the
Financed Boats relating to the Receivables not originated by either Seller to
reflect any interim transfers of ownership of the security interests in such
Financed Boats. Furthermore, those Preferred Mortgages that will not be assigned
to the Trust will not have been previously assigned to reflect any interim
transfers of ownership of the security interests in such Financed Boats. In a
majority of states, the assignment of a Receivable together with the related
security interest is, as a matter of state law, an effective conveyance of such
security interest without amendment of any lien noted on the related certificate
of title or any assignment of any UCC-1 financing statements, and the new owner
of the Receivables succeeds to the original secured party's rights in the
related Financed Boat as against creditors of the Obligor. In certain title
states, in the absence of such certificate of title amendment or assignment of
record to reflect the successive assignments of the security interest in such
Financed Boat, the related Seller (if not the secured party of record), the
Trust and/or the Indenture Trustee may not have a
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perfected security interest in the related Financed Boat. Under the Ship
Mortgage Statutes, in the absence of an assignment of record of a Preferred
Mortgage, the assignment of the related Receivable by itself will not convey the
perfected preferred mortgage lien on the Financed Boat subject to such Preferred
Mortgage, and neither the related Seller (if not the secured party of record)
nor the Trust will have a perfected preferred mortgage lien on such Financed
Boat.
Each Seller will be obligated to repurchase any Receivable sold by it to
the Trust as to which such Seller has represented that the originator of such
Receivable has a first perfected security interest in the Financed Boat securing
such Receivable, if a breach of such representation shall materially adversely
affect the interest of the Trust in such Receivable. In addition, the Sellers
will be obligated to file assignments of the Designated Preferred Mortgages to
reflect the ultimate assignment of record of such Preferred Mortgages to the
Trust within 120 days of the Closing Date, and each Seller will be obligated to
repurchase any Receivable sold by it to the Trust secured by any such Preferred
Mortgage if, after such 120-day period, the Trust does not have a perfected
preferred mortgage lien on the Financed Boat securing such Receivable, such
failure has a material adverse effect on the interest of the Trust in such
Receivable and such failure continues for 30 days after the related Seller
discovers or receives written notice of such failure. If the Trust does not have
a perfected security interest in a Financed Boat, it will not be effective as
against third parties. In such case, if third party liens equal or exceed the
value of the Financed Boat, the only recourse of the Trust would be against the
related Obligor on an unsecured basis or (if the related originator, or in the
case of those Receivables described above, the Trust, did not have a perfected
security interest in such Financed Boat) against the related Seller pursuant to
its repurchase obligation.
To the extent the Trust's security interest in a Financed Boat is
perfected, the Trust will have a prior claim over subsequent purchasers of such
Financed Boat and holders of subsequently perfected security interests in such
Financed Boat. Under the laws of many states, certain possessory liens for
repairs on a boat and storage, as well as certain rights in favor of federal and
state governmental authorities arising from the use of a boat in connection with
illegal activities, may take priority even over a perfected security interest.
Under the Ship Mortgage Statutes, certain preferred maritime liens will have
priority over security interests in Financed Boats perfected under federal law.
Certain federal tax liens may have priority over the lien of a secured party. In
addition, through fraud or negligence, the Trust could lose its security
interest or the priority of its security interest in a Financed Boat. If a
security interest in a Financed Boat is initially perfected (by titling or a UCC
filing) under applicable state law and the Financed Boat subsequently is
federally documented, the Trust could lose the priority of its security interest
in such Financed Boat to a purchaser thereof or to the holder of a subsequently
perfected Preferred Mortgage covering such Financed Boat. See 'Certain Legal
Aspects of the Receivables--Security Interests in Financed Boats' herein for a
description of Chase Marine Finance's policies on federal documentation. None of
the Sellers or the Servicer will have an obligation to repurchase a Receivable
as to which any of the aforementioned occurrences result in the Trust's losing
the priority of its security interest or its security interest in such Financed
Boat after the date such security interest was conveyed to the Trust (other than
through fraud or negligence of a Seller or the Servicer). See 'Certain Legal
Aspects of the Receivables--Security Interests in Financed Boats' herein.
Foreclosure. Applicable state law may impose requirements and restrictions
on foreclosure sales of boats and on obtaining deficiency judgments following
such sales. Even if the Financed Boat securing a Receivable is successfully
repossessed or arrested and sold, the full amount due on the Receivable may not
be realized because of depreciation, loss of or damage to the Financed Boat and
because the resale value of the Financed Boat may vary significantly due to the
limited market for used boats, seasonal factors and other economic and social
factors.
In sum, the Trust may not realize the full amount due on a Receivable in
the event of default by the Obligor because of the failure to make all necessary
amendments to the certificate of title or the UCC-1 financing statement with
respect to the related Financed Boat or the failure make to all necessary
assignments of record of the Preferred Mortgage, if any, covering such Financed
Boat, as the case may be, or the application of requirements and restrictions on
foreclosure and deficiency judgments,
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or because of depreciation, damage or loss of or to a Financed Boat, the
application of federal and state bankruptcy and insolvency laws, or other
factors. As a result, the Noteholders may be subject to delays in payments and
losses.
Transfer of Receivables to the Trust. Each of the Sellers intends that the
transfer of the Receivables by it to the Trust under the Sale and Servicing
Agreement constitute a sale. In the event that either Seller were to become
insolvent, the Federal Deposit Insurance Act ('FDIA'), as amended by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ('FIRREA'),
sets forth certain powers that the FDIC may exercise if it were appointed
receiver of such Seller. To the extent that a Seller has granted a security
interest in the Receivables transferred by it to the Trust and that interest was
validly perfected before such Seller's insolvency and was not taken in
contemplation of insolvency or with the intent to hinder, delay or defraud such
Seller or its creditors, that security interest would not be subject to
avoidance by the FDIC as receiver of such Seller. Positions taken by the FDIC
staff prior to the passage of FIRREA do not suggest that the FDIC, if appointed
receiver of either Seller, would interfere with the timely transfer to the Trust
of payments collected on the Receivables. If, however, the FDIC were to assert a
contrary position, or were to require the Owner Trustee to establish its rights
to those payments by submitting to and completing the administrative claims
procedure established under the FDIA, or the conservator or receiver were to
request a stay of proceedings with respect to such Seller as provided under the
FDIA, delays in payments on the Notes and possible reductions in the amount of
those payments could occur.
Prior to the Closing Date, 6.28% of the Receivables by Cutoff Date Pool
Balance were sold by Chase Financial Acceptance Corporation, an Ohio corporation
headquartered in Cleveland, Ohio and a wholly-owned subsidiary of Chase USA
('CFAC'), and Chase Financial Holdings, Inc., Ohio corporation headquartered in
Cleveland, Ohio and an affiliate of Chase and Chase USA ('CFHI'), to Chase USA
(collectively, the 'CHASE FINANCIAL RECEIVABLES'). Each of CFAC, CFHI and Chase
USA intends that the transfers of the Chase Financial Receivables to Chase USA
constitute true sales, rather than pledges to secure indebtedness. CFAC and CFHI
will take all actions that are required to perfect Chase USA's ownership
interest in such Receivables by filing UCC-1 financing statements with the
appropriate governmental authorities in the State of Ohio. Notwithstanding the
foregoing, if CFAC or CFHI were to become a debtor under the Bankruptcy Code and
CFAC or CFHI or a creditor or trustee-in-bankruptcy of CFAC or CFHI were to take
the position that the sale of those Chase Financial Receivables transferred by
CFAC or CFHI, as the case may be, to Chase USA should be recharacterized as a
pledge of such Receivables to secure a borrowing of such debtor, then delays in
payments of collections of those Chase Financial Receivables to the Trust could
occur or (should the court rule in favor of any such trustee, debtor or
creditor) reductions in the amount of such payments, or a reduction in the
amount of those Chase Financial Receivables securing such a borrowing, could
result.
The U.S. Court of Appeals for the Tenth Circuit issued its opinion in
Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided May
27, 1993) in which it concluded (noting that its position is in contrast to that
taken by another court) that accounts receivable sold by the debtor prior to the
filing for bankruptcy remain property of the debtor's bankruptcy estate.
Although the Chase Financial Receivables are likely to be viewed as 'chattel
paper,' as defined in the UCC, rather than as accounts, the rationale behind the
Octagon ruling is equally applicable to chattel paper. The circumstances under
which the Octagon ruling would apply are not fully known, and the extent to
which the Octagon decision will be followed in other courts or outside the Tenth
Circuit is not certain. If the holding in the Octagon case were applied in a
bankruptcy of CFAC or CFHI, however, even if the transfers of the Chase
Financial Receivables to Chase USA were treated as sales, the Chase Financial
Receivables transferred by CFAC or CFHI, as the case may be, would be part of
the bankruptcy estate of such debtor and would be subject to claims of certain
creditors and delays and reductions in payments to the Trust and holders of the
Notes, or a reduction in the amount of Receivables supporting the Notes, could
result.
14
<PAGE>
GEOGRAPHIC CONCENTRATION OF RECEIVABLES
Based on the Cutoff Date Pool Balance, 21.55%, 11.15%, 10.18%, 8.54% and
4.74% of the Receivables had Obligors (in the case of Receivables originated
without the involvement of Dealers) or were originated by Dealers (in the case
of Receivables originated with the involvement of Dealers) with mailing
addresses in New York, Florida, New Jersey, California and Connecticut,
respectively. Because of the relative lack of geographic diversity, losses on
the Receivables may be more sensitive to the economies of such states than would
be the case if there were more geographic diversification. An economic downturn
in New York, Florida, New Jersey, California or Connecticut may have an adverse
effect on the ability of Obligors in any such state to meet their payment
obligations under the Receivables.
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of the Notes will generally be influenced by the
rate at which the Principal Balances of the Receivables are paid, which payment
may be in the form of scheduled amortization or prepayments. The Receivables are
prepayable by the Obligors at any time. Prepayments may also result from
Receivables becoming Liquidated Receivables. Any reinvestment risks resulting
from a faster or slower incidence of prepayment of the Receivables will be borne
entirely by the Noteholders. See also 'Description of the Transfer and Servicing
Agreements--Termination' regarding the Servicer's option to purchase the
Receivables.
In addition, the Servicer may, on a case-by-case basis, permit extensions
with respect to the Due Dates of payments on Receivables in accordance with the
Servicing Transfer Agreements and the Sale and Servicing Agreement. See
'Description of the Transfer and Servicing Agreements--Servicing and Insurance
Procedures' herein. Any such deferrals or extensions may increase the weighted
average life of the Notes. However, the Servicer will not be permitted to grant
any such deferral or extension if as a result the final scheduled payment on a
Receivable would fall after the Final Scheduled Maturity Date unless the
Servicer purchases the affected Receivable.
RISK OF COMMINGLING
Under the Sale and Servicing Agreement, for so long as CITSF is the
Servicer and CITSF satisfies certain requirements for making deposits less than
daily, the Servicer will not be required to deposit payments on and proceeds of
the Receivables collected during each Collection Period (including Paid-Ahead
Amounts) into the Collection Account (or the Paid-Ahead Account, in the case of
Paid-Ahead Amounts) until the related Deposit Date. Pending deposit into the
Collection Account (or the Paid-Ahead Account, in the case of Paid-Ahead
Amounts) as provided in the Servicing Transfer Agreements, collections will be
transferred by the Servicer to CFMC and held by CFMC until the Business Day
prior to the Deposit Date. The Servicer is required to make deposits into the
Collection Account (or the Paid-Ahead Account, in the case of Paid-Ahead
Amounts) on the related Deposit Date regardless of whether CFMC returns such
funds to the Servicer. If the Servicer were unable to remit such funds (if, for
example, CFMC fails to return such funds to the Servicer prior to such Deposit
Date and the Servicer does not otherwise have funds available), the Noteholders
might incur a loss. The Sellers or the Servicer may, in order to satisfy the
requirements for making deposits less frequently than daily, obtain a letter of
credit or other security for the benefit of the Trust to secure timely
remittances of collections on the Receivables and payment of the aggregate
Repurchase Amount with respect to Receivables repurchased by a Seller or
purchased by the Servicer. See 'Description of the Transfer and Servicing
Agreements--Collections' herein.
INSURANCE
Each Receivable requires the Obligor to obtain fire, theft and collision
insurance or comprehensive and collision insurance with respect to the related
Financed Boat. Since Obligors may choose their own insurers to provide the
required coverage, the specific terms and conditions of their policies vary.
Prior to August 18, 1997, in the event an obligor under a Marine Loan did not
maintain the required insurance coverage with respect to the related financed
boat and the outstanding balance and months remaining to maturity on such Marine
Loan were greater than $5,000 and 15 months,
15
<PAGE>
respectively, CFMC purchased a collateral protection insurance policy on behalf
of such obligor. Although insurance will continue to be required pursuant to the
terms of the Receivables, none of the Sellers or CITSF as Servicer will be
obligated to purchase collateral protection insurance on behalf of any Obligor,
verify if any insurance required under a Receivable is being maintained by any
Obligor or be obligated to pursue any remedies under any Receivable or
applicable law as a result of any failure of an Obligor to maintain any such
insurance. See 'Description of Transfer and Servicing Agreements--Servicing and
Insurance Procedures' herein. As a result of this change in policy, the number
of Financed Boats that are not covered by collateral protection insurance may be
greater than that reflected in the historical performance of the Chase Marine
Finance Portfolio. The term 'CHASE MARINE FINANCE PORTFOLIO' refers to the
portfolio of Marine Loans owned and/or serviced by Chase Marine Finance prior to
the Servicing Transfer (including the Marine Loans sold pursuant to prior
securitizations which CFMC continued to service prior to the Servicing
Transfer).
RIGHTS OF NOTEHOLDERS
The Indenture Trustee will have the power to direct the Owner Trustee to
take certain actions in connection with the administration of the Trust property
until the Notes have been paid in full and the lien of the Indenture has been
released. The Indenture will specifically prohibit the Owner Trustee from taking
any action that would impair the Indenture Trustee's security interest in the
Trust property and will require the Owner Trustee to obtain the consent of the
Indenture Trustee or Noteholders representing not less than a majority of the
aggregate principal amount of the Notes then outstanding before modifying,
amending, supplementing, waiving or terminating any provision of the Sale and
Servicing Agreement. Therefore, until the Notes have been paid in full, the
ability to direct the Trust with respect to certain actions permitted to be
taken under the Sale and Servicing Agreement rests with the Indenture Trustee
and the Noteholders.
If an Event of Default under the Indenture occurs and the Notes are
accelerated, the Indenture Trustee will have the right or will be required in
certain circumstances to exercise remedies as a secured party, including selling
the Receivables, to pay the principal of, and accrued interest on, the Notes.
Except as described herein, upon the occurrence of an Event of Default, (i)
neither the Class B Noteholders nor the Class C Noteholders will have any right
to direct or to consent to any actions by the Indenture Trustee until the Class
A Notes have been paid in full and (ii) the Class C Noteholders will not have
any such rights until the Class B Notes have been paid in full. There is no
assurance that the proceeds of any sale of the Receivables would be equal to or
greater than the aggregate outstanding principal amount of the Notes plus
accrued interest thereon. Because following an Event of Default and acceleration
of the Notes neither interest nor principal is paid to the Class B Noteholders
or the Class C Noteholders until the Class A Notes have been paid in full and
neither interest nor principal is paid to Class C Noteholders until the Class B
Notes have been paid in full, the interests of the Class A Noteholders, the
Class B Noteholders and the Class C Noteholders may conflict, and the exercise
by the Indenture Trustee of its right to sell the Receivables or exercise other
remedies may cause the Class B Noteholders and/or the Class C Noteholders to
suffer a loss of all or part of their investment. See 'Description of the
Notes--The Indenture--Events of Default; Rights upon Event of Default' herein.
In the event that an Event of Servicing Termination occurs, the Indenture
Trustee or Noteholders representing not less than a majority of the aggregate
principal amount of the Controlling Notes then outstanding, as described under
'Description of the Transfer and Servicing Agreements--Rights upon an Event of
Servicing Termination' herein, may remove the Servicer without the consent of
any of the other Noteholders or the Owner Trustee. None of the other Noteholders
will have the ability, with certain specified exceptions, to waive defaults by
the Servicer, including defaults that could materially adversely affect such
Noteholders. See 'Description of the Transfer and Servicing Agreements--Waiver
of Past Defaults' herein.
THE TRUST
GENERAL
The Issuer, Chase Manhattan Marine Owner Trust 1997-A, is a business trust
created for the transaction described herein under the laws of the State of
Delaware pursuant to a Certificate of Trust
16
<PAGE>
filed with the Secretary of State of the State of Delaware on July 17, 1997 and
the Trust Agreement. The activities of the Trust are limited by the terms of the
Trust Agreement to (i) acquiring, holding and managing the Receivables and the
other assets of the Trust and proceeds thereof, (ii) issuing the Notes and the
Certificates to finance such assets, (iii) making payments on the Notes and the
Certificates issued by it and (iv) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith. The Trust will not acquire any contracts or
assets other than the Trust property described below and will not have any need
for additional capital resources. As the Trust does not have any operating
history and will not engage in any activity other than acquiring and holding the
Receivables, issuing the Notes and Certificates and making distributions
thereon, there has not been included herein any historical or pro forma
financial statements or ratio of earnings to fixed charges with respect to the
Trust. Inasmuch as the Trust has no operating history, it is not possible to
predict the operating performance of the Trust while the Notes and Certificates
are outstanding. While management of each of the Sellers believes that the loss
and delinquency experience contained herein for recent periods are
representative of past performance of Marine Loans in the Chase Marine Finance
Portfolio, there is no assurance that such performance is indicative of the
future performance of the Receivables, since future performance may be impacted
by, among other things, general economic conditions and economic conditions in
the geographical areas in which the Obligors reside including, for example,
unemployment rates, the servicing by CITSF of the Receivables and the lack of
force-placed insurance on uninsured Financed Boats.
The Certificates represent the equity in the Trust. The Notes and the
Certificates will be transferred to the Sellers by the Trust in exchange for the
Receivables pursuant to the Sale and Servicing Agreement.
The Trust property will include a pool (the 'RECEIVABLES POOL') comprised
of marine retail installment sales contracts and purchase money notes and other
notes secured by Financed Boats ('MARINE LOANS') and, except as described
herein, (i) with respect to Simple Interest Receivables, all monies received
thereunder on and after the Cutoff Date and (ii) with respect to Precomputed
Receivables, all monies due thereunder on or after the Cutoff Date (including
any outstanding Paid-Ahead Amounts) (collectively, the 'RECEIVABLES'). The Trust
property will also include: (i) such amounts as from time to time may be held in
one or more Trust Accounts established and maintained pursuant to the Sale and
Servicing Agreement, as described herein; (ii) security interests in the
Financed Boats; (iii) proceeds from the exercise of the Sellers' recourse rights
against Dealers (as described herein under 'The Receivables Pools--Origination
of Marine Loans'); and (iv) proceeds from claims and other rights to payment on
theft and physical damage, credit life and credit disability insurance policies
covering the Financed Boats or the Obligors, as the case may be, to the extent
that such insurance policies relate to the Receivables. The Sale and Servicing
Agreement sets forth criteria that must be satisfied by each Receivable. See
'Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables' herein. Each Receivable will be identified in one of the schedules
appearing as exhibits to the Sale and Servicing Agreement. The Trust property
will not include any Administrative Fees incurred by the Obligors prior to
August 18, 1997, any forced-placed insurance premiums that are not included in
the Principal Balances of the related Receivables ('EXCLUDED FORCED-PLACED
INSURANCE PREMIUMS') or any scheduled payments due on the Precomputed
Receivables prior to the Cutoff Date ('EXCLUDED PRECOMPUTED AMOUNTS').
If the protection provided to the Noteholders by the subordination of
amounts payable to other Noteholders and the protection provided by the Reserve
Account is insufficient, the Trust will look only to the Obligors on the
Receivables and the proceeds from the repossession and sale of Financed Boats
that secure Liquidated Receivables to make payments on the Notes. In such event,
certain factors, such as the Trust's not having a first priority perfected
security interest in some of the Financed Boats, may affect the Trust's ability
to realize on the collateral securing the Receivables, and thus may reduce the
proceeds to be distributed to Noteholders. See 'Description of the Transfer and
Servicing Agreements--Distributions,' '--Subordination of the Class B Notes and
the Class C Notes; Reserve Account' and 'Certain Legal Aspects of the
Receivables' herein.
The Trust's principal offices are in Delaware at the address listed below
under '--The Owner Trustee.'
17
<PAGE>
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Cutoff Date, exclusive of the Certificates, as if the issuance and sale of the
Notes had taken place on such date:
<TABLE>
<S> <C>
Class A-1 Notes..... $ 41,800,000.00
Class A-2 Notes..... 55,600,000.00
Class A-3 Notes..... 50,600,000.00
Class A-4 Notes..... 37,300,000.00
Class A-5 Notes..... 29,300,000.00
Class A-6 Notes..... 23,700,000.00
Class B Notes....... 10,650,000.00
Class C Notes....... 17,312,029.25
---------------
Total.......... $266,262,029.25
---------------
---------------
</TABLE>
THE OWNER TRUSTEE
Wilmington Trust Company is the Owner Trustee under the Trust Agreement.
Wilmington Trust Company is a Delaware banking corporation and its principal
offices are located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001. Each Seller, the Servicer and their respective
affiliates may maintain normal commercial banking relations with the Owner
Trustee and its affiliates.
18
<PAGE>
THE RECEIVABLES POOL
GENERAL
The Receivables held by the Trust will consist of all of the Marine Loans
owned by the Sellers meeting several criteria as of the Cutoff Date, including
the criteria stated below. Each Receivable:
(i) has a remaining principal balance of not greater than $600,000;
(ii) is not secured by a Financed Boat in repossession status;
(iii) has not been identified on the computer files of the Servicer as
relating to an Obligor who has filed for bankruptcy;
(iv) is not delinquent for 60 or more days; and
(v) was not originated by Chase N.A. or any of its affiliates prior to
the Chase/Chemical Merger.
Approximately 95.49% of the Cutoff Date Pool Balance were Simple Interest
Receivables and approximately 4.51% of the Cutoff Date Pool Balance were
Precomputed Receivables. Approximately 51.17% of the Cutoff Date Pool Balance
related to New Financed Boats, and approximately 48.83% of the Cutoff Date Pool
Balance related to Used Financed Boats. As used herein, a 'NEW FINANCED BOAT'
means a Financed Boat the model year of which was the year of origination of the
related Receivable or a later year, and a 'USED FINANCED BOAT' means a Financed
Boat the model year of which was earlier than the year of origination of the
related Receivable. There can be no assurance that these definitions accurately
identify all Financed Boats which were new or used at the time the related
Receivables were originated.
Approximately 21.55%, 11.15% 10.18%, 8.54% and 4.74% of the Cutoff Date
Pool Balance were Receivables whose Obligors (in the case of Receivables
originated without the involvement of Dealers) or whose Dealers (in the case of
Receivables originated with the involvement of Dealers) had mailing addresses in
the States of New York, Florida, New Jersey, California or Connecticut,
respectively. Approximately 2.70% of the Cutoff Date Pool Balance were
Receivables delinquent between 30 and 59 days as of the Cutoff Date.
All statistical information with respect to the Receivables set forth in
the following tables is given as of the Cutoff Date.
19
<PAGE>
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED AVERAGE
CUTOFF AVERAGE AVERAGE REMAINING
WEIGHTED AVERAGE DATE ORIGINAL ORIGINAL TERM TERM
CONTRACT RATE CUTOFF DATE PRINCIPAL ORIGINAL PRINCIPAL NUMBER OF (RANGE IN (RANGE IN
(RANGE) POOL BALANCE BALANCE POOL BALANCE BALANCE RECEIVABLES MONTHS) MONTHS)
- ----------------- --------------- ---------- --------------- ---------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
9.49% $266,262,029.25 $28,428.57 $365,982,443.52 $39,075.64 9,366 188.44 months 140.36 months
(0.00% to 16.00%) (21 to 245) (1 to 237)
</TABLE>
DISTRIBUTION BY CONTRACT RATE
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
CONTRACT RATE RANGE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
0.00 to 6.99%...... 51 0.54% $ 7,140,077.16 2.68%
7.00 to 7.49%...... 42 0.45 3,261,087.31 1.22
7.50 to 7.99%...... 271 2.89 32,611,870.58 12.25
8.00 to 8.49%...... 240 2.56 24,530,688.75 9.21
8.50 to 8.99%...... 814 8.69 66,144,457.62 24.84
9.00 to 9.49%...... 400 4.27 19,688,425.52 7.39
9.50 to 9.99%...... 1,094 11.68 28,970,651.38 10.88
10.00 to 10.49%.... 644 6.88 10,318,503.36 3.88
10.50 to 10.99%.... 1,532 16.36 24,314,065.95 9.13
11.00 to 11.49%.... 1,006 10.74 14,656,348.76 5.50
11.50 to 11.99%.... 1,259 13.44 16,664,668.27 6.26
12.00 to 12.49%.... 646 6.90 6,322,064.72 2.37
12.50 to 12.99%.... 800 8.54 7,609,423.29 2.86
13.00 to 13.49%.... 302 3.22 2,078,285.27 0.78
13.50 to 13.99%.... 208 2.22 1,520,702.37 0.57
14.00 to 16.50%.... 57 0.61 430,708.94 0.16
----------- --------------- --------------- -------------
Total(1)...... 9,366 100.00% $266,262,029.25 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
20
<PAGE>
GEOGRAPHIC DISTRIBUTION(1)
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
STATE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ----------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Alabama................ 79 0.84% $ 3,025,984.21 1.14%
Arizona................ 67 0.72 2,741,652.28 1.03
Arkansas............... 25 0.27 1,304,625.37 0.49
California............. 350 3.74 22,733,521.44 8.54
Colorado............... 21 0.22 636,227.96 0.24
Connecticut............ 628 6.71 12,630,646.16 4.74
Delaware............... 53 0.57 995,586.35 0.37
District of Columbia... 6 0.06 241,132.83 0.09
Florida................ 806 8.61 29,689,360.80 11.15
Georgia................ 269 2.87 9,893,743.64 3.72
Hawaii................. 3 0.03 43,749.99 0.02
Idaho.................. 3 0.03 44,157.04 0.02
Illinois............... 85 0.91 7,557,010.45 2.84
Indiana................ 24 0.26 1,348,054.69 0.51
Iowa................... 6 0.06 481,660.77 0.18
Kansas................. 15 0.16 1,123,784.77 0.42
Kentucky............... 60 0.64 2,165,210.00 0.81
Louisiana.............. 24 0.26 1,062,435.13 0.40
Maine.................. 42 0.45 569,891.20 0.21
Maryland............... 232 2.48 5,629,922.62 2.11
Massachusetts.......... 273 2.91 9,368,765.01 3.52
Michigan............... 15 0.16 347,100.06 0.13
Minnesota.............. 42 0.45 2,635,860.14 0.99
Mississippi............ 38 0.41 1,849,215.76 0.69
Missouri............... 43 0.46 1,626,713.21 0.61
Montana................ 2 0.02 19,294.70 0.01
Nebraska............... 8 0.09 92,309.92 0.03
Nevada................. 32 0.34 1,049,392.35 0.39
New Hampshire.......... 68 0.73 1,882,587.85 0.71
New Jersey............. 1,183 12.63 27,118,106.44 10.18
New Mexico............. 12 0.13 346,583.50 0.13
New York............... 2,790 29.79 57,367,842.52 21.55
North Carolina......... 442 4.72 7,165,536.75 2.69
North Dakota........... 1 0.01 12,602.96 0.00
Ohio................... 57 0.61 3,333,178.97 1.25
Oklahoma............... 28 0.30 1,848,413.46 0.69
Oregon................. 18 0.19 1,861,470.65 0.70
Pennsylvania........... 387 4.13 9,823,132.95 3.69
Puerto Rico............ 1 0.01 7,456.10 0.00
Rhode Island........... 105 1.12 2,502,583.58 0.94
South Carolina......... 104 1.11 2,236,926.80 0.84
South Dakota........... 1 0.01 15,725.41 0.01
Tennessee.............. 179 1.91 8,227,915.10 3.09
Texas.................. 355 3.79 8,141,014.42 3.06
Utah................... 11 0.12 859,631.33 0.32
Vermont................ 24 0.26 294,788.52 0.11
Virginia............... 264 2.82 6,929,782.44 2.60
Washington............. 24 0.26 2,535,299.39 0.95
West Virginia.......... 30 0.32 394,782.53 0.15
Wisconsin.............. 27 0.29 2,379,487.95 0.89
Other.................. 4 0.04 70,170.78 0.03
----------- ------- --------------- -------------
Total(2)........... 9,366 100.00% $266,262,029.25 100.00%
----------- ------- --------------- -------------
----------- ------- --------------- -------------
</TABLE>
- ------------------
(1) Based on the mailing address of the related Obligor (in the case of
Receivables originated without involvement of Dealers) or the Dealer who
originated the Receivable (in the case of Receivables originated with
involvement of Dealers).
(2) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
21
<PAGE>
DISTRIBUTION BY ORIGINAL TERM(1)
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
ORIGINAL TERM RANGE (MONTHS) RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ---------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
13 to 24.................. 1 0.01% $ 2,332.74 0.00%
25 to 36.................. 13 0.14 67,587.42 0.03
37 to 48.................. 39 0.42 123,760.45 0.05
49 to 60.................. 209 2.23 1,750,920.17 0.66
61 to 72.................. 90 0.96 522,268.96 0.20
73 to 84.................. 389 4.15 2,804,524.89 1.05
85 to 96.................. 248 2.65 1,830,292.86 0.69
97 to 108.................. 108 1.15 704,910.99 0.26
109 to 120.................. 2,245 23.97 20,531,344.37 7.71
121 to 132.................. 139 1.48 1,119,058.28 0.42
133 to 144.................. 1,567 16.73 19,601,655.60 7.36
145 to 156.................. 129 1.38 1,395,370.55 0.52
157 to 168.................. 90 0.96 1,802,489.36 0.68
169 to 180.................. 3,324 35.49 125,878,264.55 47.28
181 to 192.................. 131 1.40 2,802,663.10 1.05
193 to 204.................. 2 0.02 98,877.75 0.04
205 to 216.................. 3 0.03 175,106.71 0.07
217 to 228.................. 7 0.07 849,225.20 0.32
229 to 240.................. 625 6.67 83,327,134.61 31.30
Over 240.................... 7 0.07 874,240.69 0.33
----------- --------------- --------------- -------------
Total(2)............... 9,366 100.00% $266,262,029.25 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) 'Original Term' with respect to any Receivable is such Receivable's original
term as of its date of origination.
(2) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
22
<PAGE>
DISTRIBUTION BY REMAINING TERM(1)
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
REMAINING TERM RANGE NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
(MONTHS) RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ---------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
1 to 12.................. 909 9.71% $ 1,468,967.72 0.55%
13 to 24.................. 944 10.08 4,043,922.50 1.52
25 to 36.................. 831 8.87 5,697,860.20 2.14
37 to 48.................. 736 7.86 7,801,710.23 2.93
49 to 60.................. 987 10.54 13,358,136.73 5.02
61 to 72.................. 973 10.39 16,429,320.22 6.17
73 to 84.................. 773 8.25 14,751,451.24 5.54
85 to 96.................. 709 7.57 18,569,744.86 6.97
97 to 108.................. 424 4.53 12,819,115.40 4.81
109 to 120.................. 289 3.09 8,931,543.59 3.35
121 to 132.................. 290 3.10 12,537,219.88 4.71
133 to 144.................. 297 3.17 14,937,718.74 5.61
145 to 156.................. 348 3.72 24,918,928.76 9.36
157 to 168.................. 208 2.22 20,649,129.20 7.76
169 to 180.................. 69 0.74 8,095,077.23 3.04
181 to 192.................. 45 0.48 4,321,973.66 1.62
193 to 204.................. 85 0.91 9,447,116.72 3.55
205 to 216.................. 176 1.88 23,172,722.97 8.70
217 to 228.................. 227 2.42 37,228,275.63 13.98
229 to 240.................. 46 0.49 7,082,093.77 2.66
----------- --------------- --------------- -------------
Total(2)............... 9,366 100.00% $266,262,029.25 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) The 'Remaining Term' with respect to any Receivable is such Receivable's
remaining term as of the Cutoff Date.
(2) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
23
<PAGE>
DISTRIBUTION BY ORIGINAL PRINCIPAL BALANCE(1)
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
ORIGINAL RECEIVABLE NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
PRINCIPAL BALANCE RANGE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- --------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
$ 1 to less than $ 10,000... 447 4.77% $ 1,381,443.51 0.52%
$ 10,000 to less than $ 20,000... 3,480 37.16 23,059,375.44 8.66
$ 20,000 to less than $ 30,000... 2,223 23.73 32,311,388.15 12.14
$ 30,000 to less than $ 40,000... 992 10.59 21,318,257.41 8.01
$ 40,000 to less than $ 50,000... 456 4.87 13,495,935.30 5.07
$ 50,000 to less than $ 60,000... 315 3.36 12,012,640.81 4.51
$ 60,000 to less than $ 70,000... 247 2.64 11,931,533.82 4.48
$ 70,000 to less than $ 80,000... 169 1.80 9,531,598.27 3.58
$ 80,000 to less than $ 90,000... 127 1.36 8,481,733.58 3.19
$ 90,000 to less than $100,000... 110 1.17 8,899,532.31 3.34
$100,000 to less than $120,000... 237 2.53 21,909,827.73 8.23
$120,000 to less than $140,000... 143 1.53 16,097,969.63 6.05
$140,000 to less than $160,000... 128 1.37 17,315,170.07 6.50
$160,000 to less than $180,000... 70 0.75 10,645,147.66 4.00
$180,000 to less than $200,000... 45 0.48 7,712,883.66 2.90
$200,000 to less than $220,000... 40 0.43 7,391,590.84 2.78
$220,000 to less than $240,000... 16 0.17 3,182,166.85 1.20
$240,000 to less than $260,000... 24 0.26 5,555,970.68 2.09
$260,000 to less than $280,000... 15 0.16 3,810,281.15 1.43
$280,000 to less than $300,000... 10 0.11 2,686,465.32 1.01
$300,000 to less than $320,000... 12 0.13 3,458,783.83 1.30
$320,000 to less than $340,000... 4 0.04 1,259,387.52 0.47
$340,000 to less than $360,000... 13 0.14 4,261,803.74 1.60
$360,000 to less than $380,000... 7 0.07 2,423,774.95 0.91
$380,000 to less than $400,000... 5 0.05 1,863,074.59 0.70
$400,000 to less than $450,000... 13 0.14 4,935,018.37 1.85
$450,000 to less than $500,000... 1 0.01 437,626.69 0.16
$500,000 to less than $550,000... 9 0.10 4,490,900.97 1.69
$550,000 to less than $610,000... 8 0.09 4,400,746.40 1.65
----------- --------------- --------------- -------------
Total(2)......................... 9,366 100.00% $266,262,029.25 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) The 'Original Principal Balance' with respect to any Receivable is its
Principal Balance as of its date of origination.
(2) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
24
<PAGE>
DISTRIBUTION BY CUTOFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
CUTOFF DATE NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
PRINCIPAL BALANCE RANGE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- --------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
$ 1 to less than $ 10,000... 3,681 39.30% $ 17,528,568.19 6.58%
$ 10,000 to less than $ 20,000... 2,576 27.50 37,116,666.23 13.94
$ 20,000 to less than $ 30,000... 1,111 11.86 26,627,289.91 10.00
$ 30,000 to less than $ 40,000... 443 4.73 15,334,107.32 5.76
$ 40,000 to less than $ 50,000... 249 2.66 11,111,416.55 4.17
$ 50,000 to less than $ 60,000... 190 2.03 10,399,964.28 3.91
$ 60,000 to less than $ 70,000... 145 1.55 9,424,670.05 3.54
$ 70,000 to less than $ 80,000... 123 1.31 9,148,406.99 3.44
$ 80,000 to less than $ 90,000... 106 1.13 8,926,028.79 3.35
$ 90,000 to less than $100,000... 132 1.41 12,541,002.07 4.71
$100,000 to less than $120,000... 160 1.71 17,658,566.40 6.63
$120,000 to less than $140,000... 116 1.24 15,103,437.22 5.67
$140,000 to less than $160,000... 96 1.02 14,254,619.09 5.35
$160,000 to less than $180,000... 57 0.61 9,612,738.19 3.61
$180,000 to less than $200,000... 42 0.45 7,964,771.40 2.99
$200,000 to less than $220,000... 18 0.19 3,732,949.37 1.40
$220,000 to less than $240,000... 12 0.13 2,754,062.42 1.03
$240,000 to less than $260,000... 25 0.27 6,197,407.45 2.33
$260,000 to less than $280,000... 13 0.14 3,492,343.27 1.31
$280,000 to less than $300,000... 11 0.12 3,187,861.84 1.20
$300,000 to less than $320,000... 6 0.06 1,867,226.76 0.70
$320,000 to less than $340,000... 10 0.11 3,289,132.21 1.24
$340,000 to less than $360,000... 11 0.12 3,840,621.28 1.44
$360,000 to less than $380,000... 5 0.05 1,858,745.31 0.70
$380,000 to less than $400,000... 7 0.07 2,719,653.89 1.02
$400,000 to less than $450,000... 4 0.04 1,678,125.40 0.63
$450,000 to less than $500,000... 6 0.06 2,926,639.57 1.10
$500,000 to less than $550,000... 8 0.09 4,215,053.82 1.58
$550,000 to less than $590,000... 3 0.03 1,749,953.98 0.66
----------- --------------- --------------- -------------
Total(1).................... 9,366 100.00% $266,262,029.25 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------------
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
25
<PAGE>
DISTRIBUTION BY AGE
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
MONTHS SINCE ORIGINATION RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ------------------------ ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
0 to 12.............. 204 2.18% $ 22,064,239.96 8.29%
13 to 24.............. 626 6.68 65,408,233.82 24.57
25 to 36.............. 820 8.76 48,659,174.95 18.27
37 to 48.............. 953 10.18 29,970,558.92 11.26
49 to 60.............. 908 9.69 20,712,748.61 7.78
61 to 72.............. 695 7.42 11,995,453.08 4.51
73 to 84.............. 738 7.88 12,142,019.80 4.56
85 to 96.............. 1,133 12.10 19,209,962.66 7.21
97 to 108.............. 1,100 11.74 12,515,463.58 4.70
109 to 120.............. 1,276 13.62 12,275,977.83 4.61
121 to 132.............. 621 6.63 8,207,728.71 3.08
133 to 144.............. 202 2.16 2,042,199.64 0.77
145 to 156.............. 54 0.58 818,841.90 0.31
157 to 168.............. 28 0.30 211,981.76 0.08
169 to 180.............. 8 0.09 27,444.03 0.01
----------- --------------- --------------- -------------
Total(1)........... 9,366 100.00% $266,262,029.25 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------------
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
26
<PAGE>
DISTRIBUTION BY YEAR OF ORIGINATION
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
ORIGINATION YEAR RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ---------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
1982............ 2 0.02% $ 5,731.32 0.00%
1983............ 8 0.09 37,437.37 0.01
1984............ 22 0.23 312,976.29 0.12
1985............ 53 0.57 579,893.08 0.22
1986............ 275 2.94 3,210,660.15 1.21
1987............ 690 7.37 8,852,920.77 3.32
1988............ 1283 13.70 12,743,430.25 4.79
1989............ 1079 11.52 12,546,339.95 4.71
1990............ 1069 11.41 18,802,221.82 7.06
1991............ 717 7.66 11,413,360.66 4.29
1992............ 691 7.38 12,273,285.38 4.61
1993............ 955 10.20 22,005,777.94 8.26
1994............ 1070 11.42 40,086,777.79 15.06
1995............ 787 8.40 50,966,609.74 19.14
1996............ 575 6.14 64,970,123.83 24.40
1997............ 90 0.96 7,454,482.91 2.80
----------- --------------- --------------- -------------
Total(1)... 9,366 100.00% $266,262,029.25 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
DELINQUENCIES AND NET LOSSES
The following tables set forth information with respect to delinquencies,
loan losses and recoveries for the Chase Marine Finance Portfolio as of the
dates indicated and for each of the one-year periods ended December 31, 1996,
1995, 1994 and 1993 and for each of the six-month periods ended June 30, 1997
and June 30, 1996. The data presented in the following tables are for
illustrative purposes only.
Although steps were taken and will continue to be taken to ensure an
orderly and efficient transfer of the servicing of the Receivables to CITSF in
accordance with the Servicing Transfer, the Sellers anticipate a temporary
increase in the number of delinquent Receivables during the first few months
following such transfer.
The delinquency and loan loss data presented in the following tables
include data with respect to Marine Loans serviced by CFMC and for which, if
necessary, force-placed insurance had been obtained. Since CITSF will not be
obtaining force-placed insurance on the Financed Boats, charge-offs on the
Receivables in future periods may be greater than those experienced by the Chase
Marine Finance Portfolio and reflected in the tables below.
There can be no assurance that the loss and delinquency experience of the
Receivables will be comparable to that of the Chase Marine Finance Portfolio,
particularly since the performance of the Receivables will reflect to a large
extent CITSF's loss and delinquency policies which are different from those of
Chase Marine Finance. See 'The CIT Group/Sales Financing, Inc., Servicer--
CITSF's Servicing Procedures.' In addition, under certain circumstances, CITSF
may be replaced as Servicer. See 'The CIT Group/Sales Financing, Inc.,
Servicer.' Accordingly, the information presented in the tables below should not
be considered as a basis for assessing the likelihood, amount or severity of
delinquency or losses on the Receivables in the future, and no assurances can be
given that the delinquency and loss experience presented in the tables below
will be indicative of such experience of the Receivables.
27
<PAGE>
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AS OF JUNE 30,
---------------------------------------------
1997 1996
--------------------- ---------------------
NUMBER NUMBER
OF OF
DOLLARS LOANS DOLLARS LOANS
------------ ------ ------------ ------
<S> <C> <C> <C> <C>
Outstanding Principal
Amount(1) $297,397,000 10,922 $364,235,003 14,221
Delinquencies ($)(2)(3)
30-59 Days $ 6,884,655 404 $ 5,924,694 442
60-89 Days 1,805,666 143 1,605,766 134
90 Days or More 2,427,019 152 1,539,917 94
------------ ------ ------------ ------
TOTAL Delinquencies $ 11,117,340 699 $ 9,070,377 670
Repossession Inventory(4) 1,698,905 46 1,917,895 47
------------ ------ ------------ ------
TOTAL Delinquencies and
Repossession Inventory $ 12,816,245 745 $ 10,988,272 717
------------ ------ ------------ ------
------------ ------ ------------ ------
Delinquencies (%)(2)(3)(5)
30-59 Days 2.31% 3.70 % 1.63% 3.11%
60-89 Days 0.61% 1.31 % 0.44% 0.94%
90 Days or More 0.82% 1.39 % 0.42% 0.66%
------------ ------ ------------ ------
TOTAL Delinquencies(6) 3.74% 6.40 % 2.49% 4.71%
Repossession Inventory(4) 0.57% 0.42 % 0.53% 0.33%
------------ ------ ------------ ------
TOTAL Delinquencies and
Repossession Inventory(4)(6) 4.31% 6.82 % 3.02% 5.04%
------------ ------ ------------ ------
------------ ------ ------------ ------
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------------------------------------------
1996 1995 1994 1993
--------------------- --------------------- --------------------- --------------------
NUMBER NUMBER NUMBER NUMBER
OF OF OF OF
DOLLARS LOANS DOLLARS LOANS DOLLARS LOANS DOLLARS LOANS
------------ ------ ------------ ------ ------------ ------ ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding Principal
Amount(1) $352,222,000 12,826 $371,133,000 16,188 $374,663,000 19,711 $409,788,000 N/A*
Delinquencies ($)(2)(3)
30-59 Days $ 6,947,158 431 $ 7,980,000 541 $ 6,790,000 576 $ 9,246,000 N/A
60-89 Days 2,301,274 149 1,646,000 123 2,474,000 153 2,597,000 N/A
90 Days or More 2,121,179 135 2,627,000 151 3,101,000 168 4,111,000 N/A
------------ ------ ------------ ------ ------------ ------ ------------ ------
TOTAL Delinquencies $ 11,369,611 715 $ 12,253,000 815 $ 12,365,000 897 $ 15,954,000 N/A
Repossession Inventory(4) 2,888,451 61 3,071,166 92 3,759,237 103 N/A N/A
------------ ------ ------------ ------ ------------ ------ ------------ ------
TOTAL Delinquencies and
Repossession Inventory $ 14,258,062 776 $ 15,324,166 907 $ 16,124,237 1,000 $ 15,954,000 N/A
------------ ------ ------------ ------ ------------ ------ ------------ ------
------------ ------ ------------ ------ ------------ ------ ------------ ------
Delinquencies (%)(2)(3)(5)
30-59 Days 1.97% 3.36 % 2.15% 3.34 % 1.81% 2.92 % 2.26% N/A
60-89 Days 0.65% 1.16 % 0.44% 0.76 % 0.66% 0.78 % 0.63% N/A
90 Days or More 0.60% 1.05 % 0.71% 0.93 % 0.83% 0.85 % 1.00% N/A
------------ ------ ------------ ------ ------------ ------ ------------ ------
TOTAL Delinquencies(6) 3.23% 5.57 % 3.30% 5.03 % 3.30% 4.55 % 3.89% N/A
Repossession Inventory(4) 0.82% 0.48 % 0.83% 0.57 % 1.00% 0.52 % N/A N/A
------------ ------ ------------ ------ ------------ ------ ------------ ------
TOTAL Delinquencies and
Repossession Inventory(4)(6) 4.05% 6.05 % 4.13% 5.60 % 4.30% 5.07 % 3.89% N/A
------------ ------ ------------ ------ ------------ ------ ------------ ------
------------ ------ ------------ ------ ------------ ------ ------------ ------
</TABLE>
- ------------------
(1) 'Outstanding Principal Amount' is (i) the sum of all amounts scheduled to be
paid under precomputed Marine Loans, less the unearned finance charges on
such Marine Loans, plus (ii) the sum of the unpaid principal balances on
simple interest Marine Loans (in each case, excluding Marine Loans in
repossession).
(2) The period of delinquency is calculated on a 'Fed' basis, which means that
delinquencies are not reported until the end of the month following 30 days
after a payment is contractually due.
(3) Delinquencies include principal amounts only.
(4) Amounts shown in Repossession Inventory represent the principal balances of
Marine Loans whose related financed boats have been repossessed but have not
been sold.
(5) Historically, Delinquencies as a percent of the Outstanding Principal Amount
as of year-end have been higher than those at the end of any prior quarter
during the related year principally due to year-end seasonal factors.
(6) Percentages representing components of TOTAL Delinquencies and Repossession
Inventory may not add to the totals thereof due to rounding.
*N/A: Data is not available.
28
<PAGE>
LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
-------------------------- ------------------------------------------------------
JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Number of Loans Outstanding (1) 10,922 14,221 12,826 16,188 19,711 N/A*
Portfolio Growth Rate(2) (31.13%) (3.72%) (5.10%) (0.94%) (8.57%) N/A
Period End Outstanding Principal Amount (3) $297,397,000 $364,235,003 $352,222,000 $371,133,000 $374,663,000 $409,788,000
Average Outstanding Principal Amount (4) $327,503,833 $364,388,167 $361,542,000 $370,309,250 $381,636,417 $443,055,750
Number of Repossessions 94 173 282 376 426 N/A
Number of Repossessions as a % of Period
End Number of Loans Outstanding (2) 1.72% 2.43% 2.20% 2.32% 2.16% N/A
Gross Charge-Offs (5) $ 2,664,440 $ 2,350,189 $ 5,373,806 $ 5,985,834 $ 6,662,030 $ 9,599,784
Gross Charge-Offs as a % of Period End
Outstanding Principal Amount (2) 1.79% 1.29% 1.53% 1.61% 1.78% 2.34%
Gross Charge-Offs as a % of Average
Outstanding Principal Amount (2) 1.63% 1.29% 1.49% 1.62% 1.75% 2.17%
Recoveries (6) $ (774,011) $ (1,111,434) $ (1,950,305) $ (1,282,130) $ (1,518,020) $ (1,159,394)
Net Charge-Offs $ 1,890,429 $ 1,238,755 $ 3,423,501 $ 4,703,704 $ 5,144,010 $ 8,440,390
Net Charge-Offs as a % of Period End
Outstanding Principal Amount (2) 1.27% 0.68% 0.97% 1.27% 1.37% 2.06%
Net Charge-Offs as a % of Average
Outstanding Principal Amount (2) 1.15% 0.68% 0.95% 1.27% 1.35% 1.91%
</TABLE>
- ------------------
(1) Number of loans at period end.
(2) Percentages for the six-month periods ending June 30, 1996 and June 30,
1997 are annualized.
(3) 'Outstanding Principal Amount' is (i) the sum of all amounts scheduled to
be paid under precomputed Marine Loans, less the unearned finance charges
on such Marine Loans, plus (ii) the sum of the unpaid principal balances on
simple interest Marine Loans (in each case, excluding Marine Loans in
repossession).
(4) Averages were computed by taking a simple average of month-end Outstanding
Principal Amounts for each period presented.
(5) Amount charged-off includes amounts charged to losses at the time of
repossession of the related financed boat or when the loan is otherwise
deemed to be uncollectible plus or minus any subsequent loss or gain,
respectively, recognized at the time of disposition of the related financed
boat. Such amounts exclude related repossession and other liquidation
expenses and amounts subsequently recovered from the obligor.
(6) Recoveries represent any deficiency amounts recovered from obligors,
including proceeds realized in connection with accounts previously
charged-off without repossessing the related financed boat.
*N/A: Data is not available.
29
<PAGE>
THE FINANCED BOATS
The Financed Boats consist of cruisers, sailboats, houseboats, boat
trailers, outboard boats and runabouts (together with boat motors and boat
trailers). Cruisers are motor boats that typically range from 25 to 50 feet in
length, and include sleeping and galley accommodations. Sailboats are multi-
person, wind-powered craft that typically range from 27 to 50 feet in length.
Houseboats typically range from 40 to 70 feet in length. Outboard boats
typically range from 12 to 27 feet in length and are equipped primarily for
fishing. Runabouts typically range from 14 to 24 feet in length and are family
pleasure or ski boats.
PAYMENTS ON MARINE LOANS
'SIMPLE INTEREST RECEIVABLES' provide for the allocation of payments made
thereunder to principal and interest in accordance with the 'simple interest'
method. As payments are received under a Simple Interest Receivable, the finance
charges accrued to date are paid first, the unpaid amount financed (to the
extent of the remaining monthly scheduled payment) is paid second and the
remaining payment is applied to the unpaid late charges. Accordingly, if an
Obligor pays the fixed monthly installment in advance of the date on which a
payment is due (the 'DUE DATE'), the portion of the payment allocable to finance
charges for the period since the preceding payment will be less than it would be
if the payment were made on the Due Date, and the portion of the payment
allocable to reduce the amount financed will be correspondingly greater.
Conversely, if the Obligor pays the fixed monthly installment after its Due
Date, the portion of the payment allocable to finance charges for the period
since the last payment will be greater than it would be if the payment were made
on the Due Date, and the portion of the payment allocable to reduce the amount
financed will be correspondingly smaller. When necessary, an adjustment is made
at the maturity of the loan to the scheduled final payment to reflect the larger
or smaller, as the case may be, allocations of payments to the amount financed
under a Simple Interest Receivable as a result of early or late payments, as the
case may be. See 'Weighted Average Life of the Notes--Paid-Ahead Simple Interest
Receivables.'
'PRECOMPUTED RECEIVABLES' consist of Actuarial Receivables and Rule of 78's
Receivables. 'ACTUARIAL RECEIVABLES' provide for amortization of the loan over a
series of fixed level payment monthly installments. Each monthly installment,
including the monthly installment representing the final payment on the
Receivable, consists of an amount of interest equal to 1/12th of the related
Contract Rate multiplied by the unpaid principal balance of the Receivable, and
an amount of principal equal to the remainder of the monthly payment. 'RULE OF
78'S RECEIVABLES' provide for the payment by the related Obligor of a specified
total amount of payments, payable in equal monthly installments on each Due
Date, which total represents the principal amount financed and add-on interest
in an amount calculated based on the Contract Rate for the term of the
Receivable. The rate at which such amount of add-on interest is earned and,
correspondingly, the amount of each fixed monthly payment allocated to reduction
of the outstanding principal are calculated in accordance with the 'RULE OF
78'S.' Substantially all of the Precomputed Receivables are Actuarial
Receivables.
If a Simple Interest Receivable is prepaid, rather than receive a rebate,
the Obligor is required to pay interest only to the date of prepayment. If an
Actuarial Receivable is prepaid in full, with minor variations based upon state
law, the Actuarial Receivable requires that the rebate be calculated on the
basis of a constant interest rate. For purposes of making the calculations
required by the Sale and Servicing Agreement, the Servicer will calculate the
amount of interest paid on a Rule of 78's Receivable in the same manner that it
calculates such amounts on Actuarial Receivables.
CHASE MARINE FINANCE
Prior to the Servicing Transfer, Chase and Chase USA, together with several
of their affiliates, were engaged in the marine product financing and marine
loan servicing business. As used herein, the term Chase Marine Finance refers to
such business of the Sellers, their respective predecessors and their
affiliates. Prior to the Servicing Transfer, marine loan servicing by Chase
Marine Finance was performed by CFMC.
30
<PAGE>
Marine Loans originated by Chase Marine Finance prior to mid-1990 were
originated by several affiliates of CFAC and subsequently transferred to CFAC.
On April 1, 1995, those Marine Loans owned by CFAC which at the time were
considered 'low quality assets' under Section 23 of the Federal Reserve Act were
transferred to CFHI. Prior to the Closing Date, 6.26% of the Receivables by
Cutoff Date Pool Balance were sold by CFAC to Chase USA and 0.02% of the
Receivables by Cutoff Date Pool Balance were sold by CFHI to Chase USA.
Since mid-1990, most Marine Loans in the form of retail installment sales
contracts purchased from Dealers ('INDIRECT RECEIVABLES') were originated by
Chase. Commencing on November 1, 1990, most Marine Loans in the form of purchase
money loans or other loans made directly to obligors (including transactions
involving a Dealer) ('DIRECT RECEIVABLES') were originated by Chase USA or its
predecessor. CFAC originated all Receivables whose Obligors (in the case of
Receivables originated without the involvement of Dealers) or Dealers (in the
case of Receivables originated with the involvement of Dealers) were located in
California, all Receivables originated under a particular vendor financing
program and all Receivables having an original principal balance of $25,000 or
less.
In July 1996, Chase N.A. and Chemical Bank, both wholly-owned subsidiaries
of the Corporation, merged, with Chemical Bank, a New York banking corporation,
continuing as the surviving entity under the name 'The Chase Manhattan Bank'
(the 'CHASE/CHEMICAL MERGER'). As survivor of the Chase/Chemical Merger, Chase
succeeded to all right, title and interest in the portfolio of Marine Loans
owned by Chemical Bank.
In connection with the Chase/Chemical Merger, Chemical Bank, N.A. changed
its name to Chase Manhattan Bank USA, N.A. and, on December 1, 1996, merged with
Chase USA, with Chase USA continuing as the surviving entity. As survivor of
this merger, Chase USA succeeded to all right, title and interest in the
portfolio of Marine Loans owned by Chemical Bank, N.A.
The term 'ORIGINATOR' refers to the affiliates of CFAC who originated
Marine Loans prior to mid-1990, CFAC, Chase, Chase USA, and their respective
predecessors.
On June 3, 1997, the right to service or subservice the Marine Loans then
serviced by CFMC was sold to CITSF. CITSF began servicing such Marine Loans on
August 18, 1997. CITSF also agreed to service any Marine Loans retained or
repurchased by either of the Sellers and to serve as Servicer under the Sale and
Servicing Agreement. Following the Servicing Transfer, none of the Sellers or
their affiliates (other than CIT and its affiliates) is financing or servicing
Marine Loans. Pursuant to the Servicing Transfer Agreements, CITSF and its
affiliate, The CIT Group/Consumer Finance, Inc. (NY) '(CITCF-NY'), have agreed
to acquire from the Sellers all Marine Loans which did not satisfy the criteria
for inclusion in the Trust described herein under 'The Receivables Pool--
General.'
ORIGINATION OF MARINE LOANS
In accordance with Chase Marine Finance's underwriting criteria, the
Originators purchased marine retail installment sales contracts relating to new
and used boats and motors and trailers for boats from boat dealers who regularly
originated and sold such contracts to the Originators pursuant to the terms of
approved Dealer Agreements and made purchase money loans secured by financed
boats directly to obligors or pursuant to arrangements with Dealers in
accordance with approved Dealer Agreements. The dealers who arranged the Marine
Loans, unless otherwise specified, are collectively referred to herein as
'DEALERS.' The agreements with the Dealers and the assignments of the Marine
Loans by the Dealers are collectively referred to herein as 'DEALER AGREEMENTS.'
Dealer Agreements were entered into with Dealers based upon a financial review
of each Dealer, and in some cases, the reputation and prior experience of Chase
Marine Finance with such Dealer and its key management. The Dealer network was
serviced by several account executives who initiated and managed the Dealer
relationships.
Almost all of the Receivables are Indirect Receivables and Direct
Receivables originated in accordance with Chase Marine Finance's underwriting
criteria.
The Originators made or purchased the Receivables throughout the United
States. Each Dealer made representations and warranties to the Originator with
respect to those Receivables made with the involvement of such Dealer, the
Obligors on such Receivables and the security interests in the
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Financed Boats relating thereto, which representations and warranties typically
included, among others, that (i) each Obligor was of legal age and competent to
execute a binding contract at the time of such execution; (ii) the documentation
submitted by the Dealer evidenced a bona fide loan contract actually executed by
the Obligor; (iii) the property securing the loan had not been previously titled
if described as new; (iv) the property securing the loan as described in the
security agreement either had been or promptly was delivered to the purchaser;
(v) the amount represented by the Dealer as having been received from the
Obligor as a down payment was actually received in cash or by property received
in trade and valued at no more than its actual cash value; (vi) the Dealer had
not granted an extension of credit for any portion of the down payment; (vii) no
recoupments, counterclaims, or setoffs existed on the part of the Obligor
against the Dealer; (viii) the Dealer had complied with each and every
applicable federal, state and local law and administrative regulation in
connection with the transaction; (ix) the Dealer had fully performed the terms
of any purchase agreement with the Obligor at the time the Originator funded the
loan; and (x) application had been made for a certificate of title or other
ownership documents in the name of the Obligor with the security interest of the
Originator noted as a lien thereon, to the extent applicable.
Upon breach of any representation or warranty with respect to a Receivable
made by a Dealer, the Trust (or its assignee) will have a right of recourse
against such Dealer to require it to purchase or repurchase such Receivable.
Historically, in determining whether to exercise any right of recourse, Chase
Marine Finance considered the prior performance of the Dealer and other business
and commercial factors. The Servicer will be obligated to enforce such rights
under the Dealer Agreements relating to the Receivables in accordance with its
customary practices, and the right to any proceeds received upon such
enforcement will be conveyed to the Trust pursuant to the Sale and Servicing
Agreement. In accordance with its customary practices in determining whether to
exercise any right of recourse, the Servicer considers the prior performance of
the related Dealer and other business and commercial factors, including its own
commercial relationship with such Dealer. The Sellers will make no
representations as to the financial condition of any Dealer to which any Seller
may have recourse, and there can be no assurance as to the ability of any such
Dealer to perform its obligations under a Dealer Agreement.
As described herein, certain of the Receivables were originated without the
involvement of Dealers. Since there were no Dealers involved in the origination
of these Receivables, no Dealer representations and warranties were made with
respect to them.
In substantially all cases, no Direct Receivable was entered into by the
Originator, and no Indirect Receivable was purchased from a Dealer by the
Originator, until a completed customer file, including the credit application of
the customer, was submitted to the Originator and was reviewed and approved by
one of the Originator's marine finance specialists in accordance with Chase
Marine Finance's underwriting procedures.
Until October 1996, certain aspects of Dealer liaison, Dealer sales, credit
underwriting and documentation reviews with respect to the Receivables
originated with the involvement of Dealers took place at several regional
support offices ('REGIONAL CENTERS'). At August 1995, there were eight Regional
Centers. The Regional Centers were consolidated over time until November 1996,
when all of such activities were centralized at the Regional Center in Mission
Viejo, California (except for some underwriting support functions which took
place in the Regional Center in Tampa, Florida). All origination and
underwriting functions with respect to the Receivables originated without the
involvement of Dealers (except for title and lien processing) were performed by
Chase Marine Finance on a centralized basis in Cleveland, Ohio, including the
funding of the Marine Loans, customer service, document file keeping,
computerized account record keeping and title processing. Several third-party
service providers selected by Chase Marine Finance processed titles and liens
with respect to the Marine Loans (including Preferred Mortgages, when
applicable) on behalf of the Obligors.
UNDERWRITING OF MARINE LOANS
Chase Marine Finance's underwriting procedures were intended to assess the
applicant's ability to repay the amounts due on the Receivable and the adequacy
of the financed boat as collateral. The application, which listed the
liabilities, income and credit and employment history of the applicant, was
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reviewed by Chase Marine Finance for completeness and compliance with Chase
Marine Finance's guidelines. Chase Marine Finance's guidelines were intended to
provide a basis for lending decisions, but were not meant to supersede the
credit judgment of the marine finance specialist overseeing the application. As
a result, certain Receivables may not comply with all of Chase Marine Finance's
stated guidelines. The discretion granted to a marine finance specialist varied
depending on the proposed loan amount and the applicant's credit. Chase Marine
Finance also reviewed a credit report issued by an independent credit reporting
agency and, where deemed necessary, substantiated information regarding the
applicant's employment. The ability of the applicant to repay the amount
financed was evaluated by applying Chase Marine Finance's then current credit
underwriting criteria, which were intended to provide a general indication based
on the information available to Chase Marine Finance of the relative likelihood
of repayment of such amount. Among the criteria considered in evaluating the
individual applications were (i) stability of the obligor with specific regard
to the obligor's length of residence in the area, occupation, length of
employment and whether the obligor rents or owns his or her home; (ii) the
obligor's payment history with respect to present and past debt based on
information known directly by Chase Marine Finance or as provided by various
credit reporting agencies; (iii) a debt service to gross monthly income ratio
test (Chase Marine Finance's general policy was to reject applications for
Marine Loans whose applicants' debt service to gross monthly income ratios
exceeded 45%, although ratios of up to 55% were allowed if approved at senior
levels); (iv) a loan to value ratio test taking into account the age, type and
market value of the financed boat; and (v) a credit bureau score. Each
application was coded with the relevant marine finance specialist's name, and
Chase Marine Finance tracked the historical performance of the Marine Loans
approved by each marine finance specialist.
Prior to 1994 Chase Marine Finance sought to make Marine Loans secured by a
broad spectrum of marine products. Commencing in 1994, Chase Marine Finance
through its pricing policies targeted obligors purchasing higher priced boats.
See '--The Financed Boats' herein.
Each Receivable arose from a credit sale, refinancing or casual sale of a
new or used boat. In most cases, Chase Marine Finance would not finance a Marine
Loan relating to a new boat if the amount financed under the loan exceeded the
sum of (a) 110% of the manufacturer's invoice price of the boat to the Dealer
(or 115% if the Marine Loan was originated under the vendor financing program
with Genmar Industries, Inc. ('GENMAR') and the amount financed was less than
$25,000), (b) the cost to the Dealer of any options and (c) the cost to the
customer of any warranties, taxes, fees and credit life and disability insurance
and title and license fees (other than federal excise tax). In the case of new
boats, Chase Marine Finance generally required an obligor to make a down payment
of at least 15% of the total purchase price if the amount financed was over
$25,000 and 10% if the amount financed was less than $25,000.
With respect to Marine Loans relating to used boats, while Chase Marine
Finance generally reviewed the sale price of a used boat to determine whether it
was within guidelines acceptable to Chase Marine Finance, the prices of used
boats vary significantly based upon the individual circumstances of the sale.
There can be no assurance that a ready resale market exists for any used boat.
Chase Marine Finance used various national publications, including the National
Automotive Dealers Association ('NADA') Marine Appraisal Guide and the BUC
Guidebook, and individual appraisals to assess the value of a used boat and to
determine whether it met Chase Marine Finance's underwriting criteria. Marine
appraisal surveys were required for Marine Loans relating to used boats where
the amount financed was in excess of $50,000. Generally, Chase Marine Finance
would not finance a Marine Loan relating to a used boat unless the amount
financed under the contract was consistent with such national publications or
Chase Marine Finance's appraisal and, in any case, unless such amount was equal
to or less than 80% of the wholesale value indicated in such national
publications or the appraised value (or 85% if the Marine Loan was originated
under the vendor financing program with Genmar). In the case of used boats,
Chase Marine Finance generally financed Marine Loans on which an Obligor made a
down payment of at least 20% of the amount financed (or 15% if the Marine Loan
was originated under the vendor financing program with Genmar).
In addition, whether a financed boat was new or used, Chase Marine Finance
also financed credit life/accident/health insurance and service warranties under
a Marine Loan.
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INSURANCE PROCEDURES
Each Receivable requires the Obligor to obtain insurance against loss by
fire, theft, comprehensive and collision or full boat damage with respect to the
related Financed Boat. The Dealer Agreements include a representation and
warranty that each Financed Boat had such insurance at the time of origination
of the Receivable. Since Obligors may choose their own insurers to provide the
required coverage, the specific terms and conditions of their policies vary.
Prior to August 18, 1997, in the event an obligor under a Marine Loan did not
maintain the required insurance coverage with respect to the related financed
boat and the outstanding balance and months remaining to maturity on such Marine
Loan were greater than $5,000 and 15 months, respectively, CFMC purchased a
collateral protection insurance policy on behalf of such obligor. The Principal
Balance of a small percentage of the Receivables will include the outstanding
amount of premiums for collateral protection insurance purchased by CFMC on
behalf of the related Obligors prior to the Cutoff Date. In addition, the
Obligors with respect to a small percentage of the Receivables will be obligated
to make premium payments in respect of collateral protection insurance purchased
by CFMC. Such premium payment obligations will not be included in the Principal
Balance of the related Receivables and will not be the property of the Trust.
Although insurance will continue to be required pursuant to the terms of the
Receivables, none of the Sellers or CITSF as Servicer will purchase collateral
protection insurance on behalf of any Obligor, verify if such insurance is being
maintained by any Obligor or be obligated to pursue any remedies under any
Receivable or applicable law as a result of the failure of any Obligor to
maintain insurance. See 'Description of Transfer and Servicing
Agreements--Servicing and Insurance Procedures' herein.
CHASE AND CHASE USA
Chase, a wholly-owned banking subsidiary of the Corporation, is a New York
banking corporation, a member of the Federal Reserve System and is subject to
the primary supervision of the New York State Department of Banking. Chase's
activities are primarily related to retail and commercial banking. The principal
executive office of Chase is located at 270 Park Avenue, New York, New York
10017 (telephone (212) 270-3000).
At June 30, 1997, Chase's total assets were approximately $278.7 billion,
total liabilities were approximately $261.6 billion and total stockholders'
equity was approximately $17.1 billion.
Chase USA, a wholly-owned subsidiary of the Corporation, is a national
banking association, a member of the Federal Reserve System and is subject to
the primary supervision of the Office of the Comptroller of the Currency. Chase
USA's activities are primarily related to general consumer lending. The
principal executive office of Chase USA is located at 802 Delaware Avenue,
Wilmington, Delaware 19801 (telephone (302) 575-5000).
At June 30, 1997, Chase USA's total assets were approximately $26.6
billion, total liabilities were approximately $23.8 billion and total
stockholders' equity was approximately $2.8 billion.
Neither Chase nor Chase USA is currently originating Marine Loans.
THE CIT GROUP/SALES FINANCING, INC., SERVICER
GENERAL
CITSF, a Delaware corporation, is a wholly-owned subsidiary of CIT. It has
its principal executive office at 650 CIT Drive, Livingston, New Jersey 07039,
and its telephone number is (201) 740-5000.
CITSF originates, purchases, sells and services conditional sales contracts
for marine products, manufactured housing, recreational vehicles and other
consumer goods throughout the United States (except that CITCF-NY purchases the
contracts originated in New York State). CITSF has a centralized asset service
facility (the 'ASSET SERVICE CENTER') in Oklahoma City, Oklahoma. Working
through dealers and manufacturers, CITSF currently offers retail installment
credit. Working through brokers, CITSF makes direct marine loans to obligors.
CITSF began originating and servicing retail installment sales contracts for
marine products in January 1993.
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As of June 30, 1997, CITSF serviced approximately 231,500 contracts for
itself and others (consisting primarily of recreational vehicle, home equity,
marine and manufactured housing contracts), representing an outstanding
principal balance of approximately $5.9 billion. Of this portfolio,
approximately 19,900 contracts (representing an outstanding balance of
approximately $500 million) consisted of marine contracts. The foregoing
statistics on CITSF's servicing portfolio do not include the Marine Loans and
other loans serviced by CITSF pursuant to the Servicing Transfer Agreements.
CITSF's extensive experience in servicing consumer financing contracts for
manufactured housing and other types of products may not be in all respects
directly applicable to the servicing of marine contracts and the Receivables in
particular.
The Asset Service Center of CITSF services consumer credit transactions in
50 states and the District of Columbia. It provides full servicing for
recreational vehicle, home equity, marine products and manufactured housing
retail installment contracts and direct loans. The Asset Service Center is
supplemented by outside collectors and field remarketers located throughout the
United States.
CIT, a Delaware corporation, is a leading diversified finance organization
offering secured commercial and consumer financing primarily in the United
States to smaller, middle-market and larger businesses and to individuals
through a nationwide distribution network. CIT's predecessor commenced
operations in 1908. CIT has developed a broad array of franchise and strategic
business units that focus on specific industries, asset types and markets
which are balanced by client, industry and geographic diversification.
The Dai-Ichi Kangyo Bank, Limited ('DKB') owns eighty percent (80%) of the
issued and outstanding shares of common stock of CIT. DKB purchased a sixty
percent (60%) common stock interest in CIT from Manufacturers Hanover
Corporation ('MHC') (a predecessor of the Corporation) at year-end 1989 and
acquired an additional twenty percent (20%) common stock interest in CIT on
December 15, 1995 from CBC Holding (Delaware) Inc., a wholly-owned subsidiary of
the Corporation (formerly known as MHC Holdings (Delaware) Inc.) ('CBC
HOLDING'). DKB has an option, expiring December 15, 2000, to purchase the
remaining twenty percent (20%) common stock interest in CIT from CBC Holding.
On September 26, 1997, CIT changed its name to The CIT Group, Inc. and
filed a registration statement with the Commission for an initial public
offering of 20% of its common stock. The proceeds of that offering will be used
to fund CIT's acquisition of DKB's option to purchase CBC Holding's 20% common
stock interest in CIT and the exercise of such option. Following consummation of
such offering, DKB will continue to hold its present investment in CIT.
In accordance with a stockholders agreement among DKB, the Corporation, as
direct successor to CBC and indirect successor to MHC, and CIT, dated as of
December 29, 1989, as amended by an Amendment to Stockholders' Agreement, dated
December 15, 1995 (as amended, the 'STOCKHOLDERS AGREEMENT'), one nominee of the
Board of Directors of CIT is designated by the Corporation. The Stockholders
Agreement also contains restrictions with respect to the transfer of the stock
of CIT to third parties.
ASSET SERVICE CENTER
Through its Asset Service Center, CITSF services marine, recreational
vehicle, manufactured housing, home equity, and other consumer loans. CITSF
services all of the marine loans it and CITCF-NY originates or purchases (except
those sold to third parties on a servicing released basis). CITSF is actively
seeking arrangements pursuant to which it will service marine loans held by
other entities, such as the Receivables. Generally, such servicing
responsibilities are, and would be, also carried out through the Asset Service
Center. Servicing responsibilities include collecting principal and interest
payments, taxes, insurance premiums, where applicable, and other payments from
obligors
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and remitting principal and interest payments to the holders of such loans to
the extent such holders are entitled thereto. Collections procedures include
repossession and resale of boats securing defaulted loans and, if deemed
advisable by CITSF, entering into workout arrangements with obligors under
certain defaulted loans. Although decisions as to whether to repossess any boat
are made on an individual discretionary basis, CITSF's general policy is to
institute repossession procedures promptly after Asset Service Center personnel
determine that it is unlikely that a defaulted loan will be brought current or
that the related financed boat is at risk, and thereafter to diligently pursue
the resale of such boat if the market is favorable.
CITSF'S SERVICING PROCEDURES
Collection activities with respect to delinquent Receivables will be
performed by the Servicer or its affiliates consistent with the Servicer's
servicing policies and practices in effect from time to time with respect to
marine loans that it services for its own account (except as set forth in the
Servicing Transfer Agreements and described herein). CITSF may change such
policies and practices, provided, that any such change applicable to the
Receivables that would have a material effect on the collectibility of the
Receivables may not be made without CFMC's consent. Collection activities
include prompt investigation and evaluation of the causes of any delinquency. An
obligor is deemed current if an amount equal to no more than $65 of a scheduled
monthly payment remains unpaid.
An automated collection system, together with manual collectors, are
utilized to assist in collection efforts. The automated collection system
provides relevant obligor information (for example, current addresses, phone
numbers and loan information), records of all contacts with obligors and, in
some cases, performs automated dialing. The system also records an obligor's
promise to pay and allows supervisor review of collection personnel activity,
permits supervisors to modify priorities as to which obligors should be
contacted and provides extensive reports concerning marine loan delinquencies.
The Servicer may attempt to collect delinquent payments by sending letters or
making continued phone calls to obligors. In the event that contact by telephone
can not be made within 10 days of the due date of a payment, a manual review of
the marine loan is made to determine the appropriate course of action, which may
be continued phone calls and/or sending of letters. Pursuant to the Servicing
Transfer Agreements, CITSF has agreed to attempt to make such contacts with
Obligors of delinquent Receivables at specified time intervals. See 'Description
of the Transfer and Servicing Agreements--Servicing and Insurance Procedures'
herein. Generally, after a marine loan continues to be delinquent for more than
30 days (regardless of whether contact had been made), such marine loan is
assigned to a specific 'late stage' collector until resolution. A field visit
may be scheduled at this time. The Servicer has agreed to employ the same means
to cure delinquencies on the Receivables as it does for marine loans it services
for itself, including deferments and reschedulings, except as set forth in the
Servicing Transfer Agreements. CITSF may change such means in accordance with
its business judgment; provided, that any such change applicable to the
Receivables that would have a material effect on the collectibility of the
Receivables may not be made without CFMC's consent.
Chase Marine Finance's collection procedures were substantially the same as
those of CITSF, although CITSF's individual collectors have more discretion than
Chase Marine Finance's individual collectors had in determining what actions are
appropriate at different stages of delinquency. In addition, Chase Marine
Finance's collection procedures at the initial stages of delinquency used a
combination of automatic dialing and letters and Chase Marine Finance
customarily assigned a delinquent account to a specific late stage collector at
26 days delinquent (with field visits scheduled if appropriate at 60 days
delinquent).
CITSF implements repossession procedures when it is evident to it that the
obligor can no longer make payment on the marine loan or if the related financed
boat is at risk. Repossessions are generally conducted by third parties who are
engaged in the business of repossessing boats for secured parties. After
repossession, the obligor generally has 10 to 30 days to redeem the boat before
the boat is resold. CITSF uses site auctions, pool auctions, individual bids,
brokers, retail sale outlets, newspaper advertisements and telemarketing for
asset remarketing. Decisions on the remarketing
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method are made by an internal remarketer based upon recommendations from field
personnel. CITSF will typically send a boat to auction before attempting a
retail sale.
Losses may occur in connection with delinquent marine loans and can arise
in several ways, including the inability to locate the boat or the obligor,
because of a discharge of the obligor in a bankruptcy proceeding, or because of
depreciation of the related financed boat. The Sale and Servicing Agreement will
provide that a Receivable will be deemed to be a Liquidated Receivable upon the
earlier of becoming 120 days past due and the Servicer's determination to
charge-off such Receivable. Charged-off receivables are routed to a recovery
collector who, as appropriate, may assign the loan to a collection agency or an
attorney, and any deficiency remaining will be pursued to the extent deemed
practical and to the extent permitted by law and the Servicing Transfer
Agreements. The loss recognition and collection policies and practices of the
Servicer may change over time in accordance with CITSF's business judgment;
provided, that any such change applicable to the Receivables that would have a
material effect on the collectibility of the Receivables may not be made without
CFMC's consent. Under Chase Marine Finance's loss recognition policies, losses
on Marine Loans were recognized upon repossession of the related financed boat
and all Marine Loans were required to be charged off no later than when 240 days
past due.
CITSF may, on a case-by-case basis, permit extensions with respect to the
Due Dates of payments on Receivables and other modifications of Receivables in
accordance with its normal and customary servicing practices and procedures, as
described more fully in 'Description of the Transfer and Servicing Agreements--
Modification of Receivables' herein. The extension policies of CITSF may be
changed over time in accordance with CITSF's business judgment, provided, that
any such change applicable to the Receivables that would have a material effect
on the collectibility of the Receivables may not be made without CFMC's consent.
USE OF PROCEEDS
As consideration for the transfer of the Receivables to the Trust, the
Trust will issue the Notes and the Certificates to the Sellers, with (i) Chase
receiving 49.40% of the original principal amount of each class of Notes and the
original Certificate Interest and (ii) Chase USA receiving 50.60% of the
original principal amount of each class of Notes and the original Certificate
Interest. After the deposit of the Reserve Account Initial Deposit and the
deduction of estimated expenses, the net proceeds to be received by the Sellers
from the sale of the Notes will be added to their respective general funds.
WEIGHTED AVERAGE LIFE OF THE NOTES
GENERAL
The weighted average life of the Notes will generally be influenced by the
rate at which the principal balances of the Receivables are paid, which payment
may be in the form of scheduled amortization or prepayments. For this purpose,
the term 'PREPAYMENTS' includes prepayments in full, partial prepayments,
liquidations due to default, as well as receipts of proceeds from theft and
physical damage, credit life and credit disability insurance policies covering
the Financed Boats and amounts received in connection with certain other
Receivables repurchased by a Seller or purchased by the Servicer for
administrative reasons. The Receivables are prepayable by the Obligors at any
time.
The rate of prepayments on the Receivables may be influenced by a variety
of economic, social and other factors, including the fact that an Obligor may
not sell or transfer the Financed Boat securing a Receivable without the
Servicer's consent. The rate of prepayment of the Receivables may also be
influenced by programs offered by lenders (including the Sellers, the Servicer
and their respective affiliates) that solicit or make available credit that may
be used by Obligors to prepay the Receivables. Such credit includes but is not
limited to home equity lines of credit, consumer installment credit and credit
cards offered by lenders (including the Sellers, the Servicer and their
respective affiliates). The Sellers, the Servicer and their respective
affiliates may, in the ordinary course of business, offer general or targeted
solicitations for such extensions of credit, and such solicitations may be sent,
to
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Obligors. In addition, the Sale and Servicing Agreement permits the Servicer to
refinance an existing Receivable for an Obligor, so long as the proceeds of such
refinanced loan would be used to prepay such existing Receivable in full and any
such refinanced loan is evidenced by a new promissory note. Any such loan thus
created by a refinancing would not be the property of the Trust. See
'Description of the Transfer and Servicing Agreements--Termination' herein
regarding the Servicer's option to purchase the Receivables from the Trust. In
addition, each Seller will be obligated to repurchase any Receivable secured by
a Designated Preferred Mortgage transferred by such Seller to the Trust if, by
the 120th day after the Closing Date, the Trust does not have a perfected
preferred mortgage lien on the Financed Boat securing such Receivable, such
failure has a material adverse effect on the interest of the Trust in such
Receivable and such failure continues for 30 days after such Seller discovers or
receives written notice of such failure. See 'Certain Legal Aspects--Security
Interests in Financed Boats.'
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Notes on each Distribution Date
since such amount will depend, in part, on the amount of principal collected on
the Receivables Pool during the applicable Collection Period. Any reinvestment
risks resulting from a faster or slower incidence of prepayment of Receivables
will be borne entirely by the Noteholders.
No principal payments will be made on any class of Class A Notes until all
Class A Notes with preceding class designations have been paid in full. For
example, no principal payments will be made on the Class A-2 Notes until the
Class A-1 Notes have been paid in full, and no principal payments will be made
on the Class A-3 Notes until the Class A-2 Notes have been paid in full. In
addition, no principal payments will be made on the Class B Notes until the
Class A Notes have been paid in full, and no principal payments will be made on
the Class C Notes until the Class B Notes have been paid in full. See
'Description of the Notes--Payments of Principal' herein. As the rate of payment
of principal of each class of Notes depends primarily on the rate of payment
(including prepayments) of the Principal Balances of the Receivables, final
payment of any class of the Notes could occur significantly earlier than their
respective Final Scheduled Distribution Dates. It is expected that final payment
of the Notes of each class will occur on or prior to the related Final Scheduled
Distribution Date. However, if sufficient funds are not available to pay the
Notes of any class in full on or prior to the related Final Scheduled
Distribution Date, final payment of such Notes could occur later than such date.
Noteholders will bear the risk of being able to reinvest principal payments of
the Notes at yields at least equal to the related Interest Rate.
With respect to the Receivables that are Simple Interest Receivables and,
to the extent that payments of the fixed monthly installments thereunder are
received prior to the scheduled due dates for such installments, the portions of
such installments allocable to interest will be less that they would be if the
payments were received as scheduled. If the Reserve Account is exhausted and
losses on the Receivables occur, the amount of interest distributed to the
Noteholders may be less than described above.
If an Event of Default occurs and the Notes are accelerated, (i) payments
of interest on and principal of the Class B Notes and the Class C Notes will not
be paid until the Class A Notes have been paid in full and (ii) payments of
interest on and principal of the Class C Notes will not be paid until the Class
B Notes have been paid in full.
Subject to the conditions set forth herein under the heading 'Description
of the Transfer and Servicing Agreements--Servicing and Insurance Procedures,'
the Servicer may reschedule the Due Date of any scheduled payment. Any such
deferrals will have the effect of increasing the weighted average life of the
Notes. However, the Servicer will not be permitted to grant any such deferral or
extension if, as a result, the final scheduled payment on a Receivable would
fall after the Final Scheduled Maturity Date, unless the Servicer purchases such
Receivable.
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PAID-AHEAD RECEIVABLES
If an Obligor with respect to any Simple Interest Receivable, in addition
to making his or her regularly scheduled payment, makes one or more additional
scheduled payments in any Collection Period (for example, because the Obligor
intends to be on vacation the following month), the additional scheduled
payments made in such Collection Period will be treated as a principal
prepayment and applied to reduce the principal balance of the related Receivable
in such Collection Period and, unless otherwise requested by the Obligor, the
Obligor will not be required to make any scheduled payment in respect of such
Receivable (a 'PAID-AHEAD SIMPLE INTEREST RECEIVABLE') for the number of Due
Dates corresponding to the number of such additional scheduled payments (the
'PAID-AHEAD PERIOD'). During the Paid-Ahead Period, interest will continue to
accrue on the Principal Balance of such Paid-Ahead Simple Interest Receivable,
as reduced by the application of the additional scheduled payments made in the
Collection Period in which such Receivable was paid-ahead. The Obligor's
Receivable will not be considered delinquent during the Paid-Ahead Period. A
Payment Shortfall with respect to a Paid-Ahead Simple Interest Receivable will
exist during each Collection Period occurring during the Paid-Ahead Period, and
the Servicer may be required to make a Monthly Advance in respect of such
Payment Shortfall, as described under 'Description of the Transfer and Servicing
Agreements--Monthly Advances' herein; provided, that no Monthly Advances will be
made in respect of principal of a Paid-Ahead Simple Interest Receivable.
When the Obligor resumes his required payments following the Paid-Ahead
Period, the payments so paid may be insufficient to cover the interest that has
accrued since the last payment by the Obligor. Notwithstanding such
insufficiency, the Obligor's Paid-Ahead Simple Interest Receivable would be
considered current. This situation will continue until the regularly scheduled
payments are once again sufficient to cover all accrued interest and to reduce
the Principal Balance of the Paid-Ahead Simple Interest Receivable. Depending on
the Principal Balance and the Contract Rate of the related Receivable, and on
the number of payments that were paid-ahead, there may be extended periods of
time during which Receivables that are current are not amortizing.
Paid-Ahead Simple Interest Receivables will affect the weighted average
life of the Notes. The distribution of the paid-ahead amount on the Distribution
Date following the Collection Period in which such amount was received will
generally shorten the weighted average life of the Notes. In addition, to the
extent the Servicer makes Monthly Advances with respect to a Paid-Ahead Simple
Interest Receivable which subsequently goes into default, because liquidation
proceeds with respect to such Receivable will be applied first to reimburse the
Servicer for such Monthly Advances, the loss with respect to such Receivable may
be larger than would have been the case had such Monthly Advances not been made.
As of the Cutoff Date, approximately 28% of the number of Receivables were
Paid-Ahead Simple Interest Receivables with at least one scheduled monthly
payment having been paid-ahead. The Chase Marine Finance Portfolio has
historically included Marine Loans which have been paid-ahead by one or more
scheduled monthly payments. There can be no assurance as to the number of
Receivables which may become Paid-Ahead Simple Interest Receivables or the
number or the principal amount of the scheduled payments which may be
paid-ahead.
If an Obligor with respect to any Precomputed Receivable, in addition to
making his or her regularly scheduled payment, makes one or more additional
scheduled payments in any Collection Period for similar reasons (such Receivable
being a 'PAID-AHEAD PRECOMPUTED RECEIVABLE'), the Paid-Ahead Amounts will be
deposited into an account in the name of the Indenture Trustee (the 'PAID-AHEAD
ACCOUNT') or the Collection Account and applied on subsequent Deposit Dates as
described herein under 'Description of the Transfer and Servicing
Agreements-Paid-Ahead Precomputed Receivables.' Because Paid-Ahead Amounts on
Paid-Ahead Precomputed Receivables are not deposited into the Collection Account
and distributed to Noteholders until the Deposit Date and Distribution Date,
respectively, related to the Collection Period during which any such scheduled
payment was due, no shortfalls of interest or principal will result therefrom.
Chase Marine Finance maintains certain records of the historical prepayment
experience of the Chase Marine Finance Portfolio. The Sellers believe that such
records are not adequate to provide
39
<PAGE>
meaningful information with respect to the Receivables. In any event, no
assurance can be given that prepayments on the Receivables would conform to any
historical experience, and no prediction can be made as to the actual prepayment
experience to be expected with respect to the Receivables.
CPR TABLES
Prepayments on Marine Loans can be measured relative to a prepayment
standard or model. The model used in this Prospectus is based on a constant
prepayment rate ('CPR'). CPR is determined by the percentage of principal
outstanding at the beginning of a period that prepays during that period, stated
as an annualized rate. The CPR prepayment model, like any prepayment model, does
not purport to be either an historical description of prepayment experience or a
prediction of the anticipated rate of prepayment.
The tables captioned 'Percent of Initial Note Principal Balance at Various
CPR Percentages' (each, a 'CPR TABLE') have been prepared on the basis of the
characteristics of the Receivables. Each CPR Table assumes that (a) the
Receivables prepay in full at the specified monthly CPR, with no defaults,
losses or repurchases, (b) each scheduled monthly payment on the Receivables is
made on the last day of each month and each month has 30 days, (c) payments on
the Notes are made on each Distribution Date (and each such date is assumed to
be the 15th day of each applicable month), (d) the balance in the Reserve
Account on each Distribution Date is equal to the Specified Reserve Account
Balance, and (e) the Servicer does not exercise its option to purchase the
Receivables. The Receivables Pool has an assumed cutoff date of the Cutoff Date.
The CPR Tables indicate the projected weighted average life of each class of
Notes and set forth the percent of the initial principal amount of each class of
Notes that is projected to be outstanding after each of the Distribution Dates
or each October 15, as indicated, at various CPR percentages.
The tables also assume that the Receivables have been aggregated into five
hypothetical pools with all of the Receivables within each such pool having the
following characteristics:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
AGGREGATE WEIGHTED ORIGINAL AVERAGE
PRINCIPAL AVERAGE TERM IN REMAINING
POOL BALANCE CONTRACT RATE MONTHS TERM IN MONTHS
- ------ --------------- ------------- -------- --------------
<S> <C> <C> <C> <C>
1..... $ 63,551,368.84 11.08% 147 57
2..... $ 52,857,623.73 10.13% 167 106
3..... $ 60,505,776.70 8.80% 181 152
4..... $ 45,036,890.58 8.73% 230 200
5..... $ 44,310,369.40 8.18% 240 224
---------------
$266,262,029.25
</TABLE>
The information included in the following tables represents forward-looking
statements and involves risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements. The actual
characteristics and performance of the Receivables will differ from the
assumptions used in constructing each CPR Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of prepayment until maturity or that all of the Receivables will prepay at
the same level of CPR. Moreover, the diverse terms of the Receivables within
each of the five hypothetical pools could produce slower or faster principal
distributions than indicated in each CPR Table at the various constant
percentages of CPR specified, even if the original and remaining terms to
maturity of the Receivables are as assumed. Any difference between such
assumptions and the actual characteristics and performance of the Receivables,
or actual prepayment experience, will affect the percentages of initial balances
outstanding over time and the weighted average lives of each class of Notes.
40
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-1 NOTES
--------------------------------------------------
ASSUMED CPR PERCENTAGE
--------------------------------------------------
0% 12% 18% 21% 24% 30%
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100
October 15, 1998................... 53 0 0 0 0 0
October 15, 1999................... 1 0 0 0 0 0
October 15, 2000................... 0 0 0 0 0 0
October 15, 2001................... 0 0 0 0 0 0
October 15, 2002................... 0 0 0 0 0 0
October 15, 2003................... 0 0 0 0 0 0
October 15, 2004................... 0 0 0 0 0 0
October 15, 2005................... 0 0 0 0 0 0
October 15, 2006................... 0 0 0 0 0 0
October 15, 2007................... 0 0 0 0 0 0
October 15, 2008................... 0 0 0 0 0 0
October 15, 2009................... 0 0 0 0 0 0
October 15, 2010................... 0 0 0 0 0 0
October 15, 2011................... 0 0 0 0 0 0
October 15, 2012................... 0 0 0 0 0 0
October 15, 2013................... 0 0 0 0 0 0
October 15, 2014................... 0 0 0 0 0 0
October 15, 2015................... 0 0 0 0 0 0
October 15, 2016................... 0 0 0 0 0 0
Weighted Average Life (years)(1)... 1.06 0.43 0.33 0.29 0.26 0.21
</TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-2 NOTES
--------------------------------------------------
ASSUMED CPR PERCENTAGE
--------------------------------------------------
0% 12% 18% 21% 24% 30%
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100
October 15, 1998................... 100 87 60 47 33 7
October 15, 1999................... 100 9 0 0 0 0
October 15, 2000................... 57 0 0 0 0 0
October 15, 2001................... 9 0 0 0 0 0
October 15, 2002................... 0 0 0 0 0 0
October 15, 2003................... 0 0 0 0 0 0
October 15, 2004................... 0 0 0 0 0 0
October 15, 2005................... 0 0 0 0 0 0
October 15, 2006................... 0 0 0 0 0 0
October 15, 2007................... 0 0 0 0 0 0
October 15, 2008................... 0 0 0 0 0 0
October 15, 2009................... 0 0 0 0 0 0
October 15, 2010................... 0 0 0 0 0 0
October 15, 2011................... 0 0 0 0 0 0
October 15, 2012................... 0 0 0 0 0 0
October 15, 2013................... 0 0 0 0 0 0
October 15, 2014................... 0 0 0 0 0 0
October 15, 2015................... 0 0 0 0 0 0
October 15, 2016................... 0 0 0 0 0 0
Weighted Average Life (years)(1)... 3.15 1.49 1.13 1.00 0.89 0.73
</TABLE>
- ------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from the
date of the issuance of such Note to the related Distribution Date, (ii) adding
the results and (iii) dividing the sum by the related initial principal amount
of such Note.
THE CPR TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
41
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-3 NOTES
--------------------------------------------------
ASSUMED CPR PERCENTAGE
--------------------------------------------------
0% 12% 18% 21% 24% 30%
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100
October 15, 1998................... 100 100 100 100 100 100
October 15, 1999................... 100 100 65 43 23 0
October 15, 2000................... 100 36 0 0 0 0
October 15, 2001................... 100 0 0 0 0 0
October 15, 2002................... 60 0 0 0 0 0
October 15, 2003................... 32 0 0 0 0 0
October 15, 2004................... 1 0 0 0 0 0
October 15, 2005................... 0 0 0 0 0 0
October 15, 2006................... 0 0 0 0 0 0
October 15, 2007................... 0 0 0 0 0 0
October 15, 2008................... 0 0 0 0 0 0
October 15, 2009................... 0 0 0 0 0 0
October 15, 2010................... 0 0 0 0 0 0
October 15, 2011................... 0 0 0 0 0 0
October 15, 2012................... 0 0 0 0 0 0
October 15, 2013................... 0 0 0 0 0 0
October 15, 2014................... 0 0 0 0 0 0
October 15, 2015................... 0 0 0 0 0 0
October 15, 2016................... 0 0 0 0 0 0
Weighted Average Life (years)(1)... 5.46 2.84 2.20 1.96 1.76 1.44
</TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-4 NOTES
--------------------------------------------------
ASSUMED CPR PERCENTAGE
--------------------------------------------------
0% 12% 18% 21% 24% 30%
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100
October 15, 1998................... 100 100 100 100 100 100
October 15, 1999................... 100 100 100 100 100 78
October 15, 2000................... 100 100 79 48 19 0
October 15, 2001................... 100 62 0 0 0 0
October 15, 2002................... 100 0 0 0 0 0
October 15, 2003................... 100 0 0 0 0 0
October 15, 2004................... 100 0 0 0 0 0
October 15, 2005................... 55 0 0 0 0 0
October 15, 2006................... 9 0 0 0 0 0
October 15, 2007................... 0 0 0 0 0 0
October 15, 2008................... 0 0 0 0 0 0
October 15, 2009................... 0 0 0 0 0 0
October 15, 2010................... 0 0 0 0 0 0
October 15, 2011................... 0 0 0 0 0 0
October 15, 2012................... 0 0 0 0 0 0
October 15, 2013................... 0 0 0 0 0 0
October 15, 2014................... 0 0 0 0 0 0
October 15, 2015................... 0 0 0 0 0 0
October 15, 2016................... 0 0 0 0 0 0
Weighted Average Life (years)(1)... 8.13 4.18 3.35 3.01 2.72 2.25
</TABLE>
- ------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from the
date of the issuance of such Note to the related Distribution Date, (ii) adding
the results and (iii) dividing the sum by the related initial principal amount
of such Note.
THE CPR TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
42
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-5 NOTES
--------------------------------------------------
ASSUMED CPR PERCENTAGE
--------------------------------------------------
0% 12% 18% 21% 24% 30%
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100
October 15, 1998................... 100 100 100 100 100 100
October 15, 1999................... 100 100 100 100 100 100
October 15, 2000................... 100 100 100 100 100 58
October 15, 2001................... 100 100 92 55 22 0
October 15, 2002................... 100 91 12 0 0 0
October 15, 2003................... 100 37 0 0 0 0
October 15, 2004................... 100 0 0 0 0 0
October 15, 2005................... 100 0 0 0 0 0
October 15, 2006................... 100 0 0 0 0 0
October 15, 2007................... 74 0 0 0 0 0
October 15, 2008................... 34 0 0 0 0 0
October 15, 2009................... 0 0 0 0 0 0
October 15, 2010................... 0 0 0 0 0 0
October 15, 2011................... 0 0 0 0 0 0
October 15, 2012................... 0 0 0 0 0 0
October 15, 2013................... 0 0 0 0 0 0
October 15, 2014................... 0 0 0 0 0 0
October 15, 2015................... 0 0 0 0 0 0
October 15, 2016................... 0 0 0 0 0 0
Weighted Average Life (years)(1)... 10.61 5.78 4.51 4.09 3.72 3.11
</TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-6 NOTES
--------------------------------------------------
ASSUMED CPR PERCENTAGE
--------------------------------------------------
0% 12% 18% 21% 24% 30%
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100
October 15, 1998................... 100 100 100 100 100 100
October 15, 1999................... 100 100 100 100 100 100
October 15, 2000................... 100 100 100 100 100 100
October 15, 2001................... 100 100 100 100 100 58
October 15, 2002................... 100 100 100 75 41 0
October 15, 2003................... 100 100 54 20 0 0
October 15, 2004................... 100 87 7 0 0 0
October 15, 2005................... 100 36 0 0 0 0
October 15, 2006................... 100 0 0 0 0 0
October 15, 2007................... 100 0 0 0 0 0
October 15, 2008................... 100 0 0 0 0 0
October 15, 2009................... 87 0 0 0 0 0
October 15, 2010................... 38 0 0 0 0 0
October 15, 2011................... 9 0 0 0 0 0
October 15, 2012................... 0 0 0 0 0 0
October 15, 2013................... 0 0 0 0 0 0
October 15, 2014................... 0 0 0 0 0 0
October 15, 2015................... 0 0 0 0 0 0
October 15, 2016................... 0 0 0 0 0 0
Weighted Average Life (years)(1)... 12.85 7.76 6.14 5.48 4.94 4.13
</TABLE>
- ------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from the
date of the issuance of such Note to the related Distribution Date, (ii) adding
the results and (iii) dividing the sum by the related initial principal amount
of such Note.
THE CPR TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
43
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
CLASS B NOTES
--------------------------------------------------
ASSUMED CPR PERCENTAGE
--------------------------------------------------
0% 12% 18% 21% 24% 30%
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100
October 15, 1998................... 100 100 100 100 100 100
October 15, 1999................... 100 100 100 100 100 100
October 15, 2000................... 100 100 100 100 100 100
October 15, 2001................... 100 100 100 100 100 100
October 15, 2002................... 100 100 100 100 100 72
October 15, 2003................... 100 100 100 100 80 0
October 15, 2004................... 100 100 100 51 1 0
October 15, 2005................... 100 100 32 0 0 0
October 15, 2006................... 100 88 0 0 0 0
October 15, 2007................... 100 29 0 0 0 0
October 15, 2008................... 100 0 0 0 0 0
October 15, 2009................... 100 0 0 0 0 0
October 15, 2010................... 100 0 0 0 0 0
October 15, 2011................... 100 0 0 0 0 0
October 15, 2012................... 50 0 0 0 0 0
October 15, 2013................... 0 0 0 0 0 0
October 15, 2014................... 0 0 0 0 0 0
October 15, 2015................... 0 0 0 0 0 0
October 15, 2016................... 0 0 0 0 0 0
Weighted Average Life (years)(1)... 15.01 9.67 7.80 7.06 6.38 5.26
</TABLE>
PERCENT OF INITIAL CERTIFICATE PRINCIPAL BALANCE AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
CLASS C NOTES
--------------------------------------------------
ASSUMED CPR PERCENTAGE
--------------------------------------------------
0% 12% 18% 21% 24% 30%
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Closing Date....................... 100 100 100 100 100 100
October 15, 1998................... 100 100 100 100 100 100
October 15, 1999................... 100 100 100 100 100 100
October 15, 2000................... 100 100 100 100 100 100
October 15, 2001................... 100 100 100 100 100 100
October 15, 2002................... 100 100 100 100 100 100
October 15, 2003................... 100 100 100 100 100 91
October 15, 2004................... 100 100 100 100 100 56
October 15, 2005................... 100 100 100 89 65 34
October 15, 2006................... 100 100 82 58 41 20
October 15, 2007................... 100 100 58 40 27 12
October 15, 2008................... 100 87 40 27 17 7
October 15, 2009................... 100 60 26 17 10 4
October 15, 2010................... 100 41 16 10 6 2
October 15, 2011................... 100 29 11 6 4 1
October 15, 2012................... 100 19 7 4 2 1
October 15, 2013................... 83 11 3 2 1 *
October 15, 2014................... 42 5 1 1 * *
October 15, 2015................... 17 2 * * * *
October 15, 2016................... 0 0 0 0 0 0
Weighted Average Life (years)(1)... 16.94 13.06 10.98 10.07 9.24 7.80
</TABLE>
- ------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from the
date of the issuance of such Note to the related Distribution Date, (ii) adding
the results and (iii) dividing the sum by the related initial principal amount
of such Note.
(2) An asterisk '*' means a percent of initial Note principal balance of more
than zero and less than 0.5%.
THE CPR TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
44
<PAGE>
NOTE POOL FACTORS AND TRADING INFORMATION
The 'NOTE POOL FACTOR' for each class of Notes will be an eight-digit
decimal that the Servicer will compute prior to each distribution with respect
to such class of Notes expressing the remaining outstanding principal balance of
such class of Notes, as of the applicable Distribution Date (after giving effect
to payments to be made on such Distribution Date), as a fraction of the initial
outstanding principal balance of such class of Notes. Each Note Pool Factor will
be 1.00000000 as of the Cutoff Date and thereafter will decline to reflect
reductions in the outstanding principal balance of the applicable class of
Notes. A Noteholder's portion of the aggregate outstanding principal balance of
the related class of Notes is the product of (i) the original denomination of
such Noteholder's Note and (ii) the applicable Note Pool Factor.
The Paying Agent will send to Noteholders monthly reports concerning
payments received on the Receivables, the Pool Balance, or each Note Pool Factor
and various other items of information specified herein. In addition, the
Indenture Trustee or the Paying Agent will furnish to Noteholders of record
during any calendar year any information for tax reporting purposes as required
by law not later than the latest date permitted by law. See 'Certain Information
Regarding the Notes--Reports to Noteholders' herein.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will consist of eight classes: the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class
A-6 Notes, the Class B Notes and the Class C Notes. The Notes will be issued
pursuant to the terms of the Indenture substantially in the form of the
Indenture filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The following, as well as other pertinent information
included elsewhere herein, summarizes the material terms of the Notes and the
Indenture. The summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the Notes
and the Indenture. Norwest Bank Minnesota, National Association, a national
banking corporation with its corporate trust offices located at Norwest Center,
Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479-0070, will be
the Indenture Trustee under the Indenture. In the ordinary course of its
business, the Indenture Trustee and its affiliates have engaged and may in the
future engage in commercial banking or financial advisory transactions with the
Sellers, the Servicer and their respective affiliates.
PAYMENTS OF INTEREST
Interest on the outstanding principal amount of each class of Notes will
accrue at the applicable Interest Rate specified on the cover page hereof and
will be payable to the Noteholders of record monthly on each Distribution Date,
commencing November 17, 1997. Interest on the outstanding principal amount of
each class of Notes will accrue at the applicable Interest Rate for each
Interest Accrual Period and shall be calculated on the basis of a 360-day year
of twelve 30-day months. Interest payments on the Notes will generally be
derived from the Available Amount after payment of the Servicer Payment and from
amounts, if any, on deposit in the Reserve Account. Interest on the Class B
Notes will not be paid on any Distribution Date until all accrued and unpaid
interest on the Class A Notes has been paid in full, and interest on the Class C
Notes will not be paid on any Distribution Date until all accrued and unpaid
interest on the Class B Notes has been paid in full. In addition, if an Event of
Default occurs and the Notes are accelerated, (i) the Class B Noteholders will
not be entitled to receive any payments until the Class A Notes have been paid
in full and (ii) the Class C Noteholders will not be entitled to receive any
payments until the Class B Notes have been paid in full. See 'Description of the
Transfer and Servicing Agreements--Distributions' and '-- Subordination of the
Class B Notes and the Class C Notes; Reserve Account' herein.
Interest payments to all classes of Class A Noteholders will have the same
priority. Under certain circumstances, the amount available for interest
payments on the Class A Notes could be less than the amount of interest payable
on the Class A Notes on any Distribution Date, in which case each class of Class
A Noteholders will receive their ratable share (based upon the aggregate amount
of interest due
45
<PAGE>
to such class of Class A Noteholders) of the aggregate amount available to be
distributed in respect of interest on the Class A Notes.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each Distribution
Date in an amount generally equal to the Noteholders' Principal Distributable
Amount. Principal payments on the Notes will generally be derived from the
remaining Available Amount after payment of the Servicing Payment and the
deposit of the Noteholders' Interest Distributable Amount into the Note
Distribution Account, and from amounts, if any, on deposit in the Reserve
Account.
On each Distribution Date, principal payments on the Notes, to the extent
of the Noteholders' Principal Distributable Amount, will be applied in the
following order of priority: (i) to the principal balance of the Class A-1 Notes
until the principal balance of the Class A-1 Notes is reduced to zero; (ii) to
the principal balance of the Class A-2 Notes until the principal balance of the
Class A-2 Notes is reduced to zero; (iii) to the principal balance of the Class
A-3 Notes until the principal balance of the Class A-3 Notes is reduced to zero;
(iv) to the principal balance of the Class A-4 Notes until the principal balance
of the Class A-4 Notes is reduced to zero; (v) to the principal balance of the
Class A-5 Notes until the principal balance of the Class A-5 Notes is reduced to
zero; (vi) to the principal balance of the Class A-6 Notes until the principal
balance of the Class A-6 Notes is reduced to zero; (vii) to the principal
balance of the Class B Notes until the principal balance of the Class B Notes is
reduced to zero; and (viii) to the principal balance of the Class C Notes until
the principal balance of the Class C Notes is reduced to zero.
Notwithstanding the foregoing, if an Event of Default occurs and the Notes
are accelerated, the Noteholders' Principal Distributable Amount will be applied
to the repayment of principal on each class of Class A Notes pro rata on the
basis of their respective unpaid principal amounts.
The principal balance of each class of Notes, to the extent not previously
paid, will be due on the Final Scheduled Distribution Date with respect to such
class specified on the cover page hereof. The actual date on which the aggregate
outstanding principal amount of any class of Notes is paid may be earlier than
the applicable Final Scheduled Distribution Date based on a variety of factors,
including those described under 'Weighted Average Life of the Notes' herein.
OPTIONAL REDEMPTION
On any Distribution Date after the Class A Notes and the Class B Notes have
been paid in full, the Class C Notes will be redeemed in whole, but not in part,
if the Servicer exercises its option to purchase the Receivables. The Servicer
may purchase the Receivables after the last day of a Collection Period as to
which the Pool Balance shall have declined to 5% or less of the Cutoff Date Pool
Balance, as described herein under 'Description of the Transfer and Servicing
Agreements--Termination.' The redemption price will be equal to the unpaid
principal amount of the Class C Notes plus accrued and unpaid interest thereon.
THE INDENTURE
Modification of Indenture. The Trust and the Indenture Trustee may, with
the consent of the Noteholders representing not less than a majority of the
aggregate principal amount of the Notes then outstanding, execute a supplemental
indenture to add provisions to, change in any manner or eliminate any provisions
of, the Indenture, or modify (except as provided below) in any manner the rights
of the Noteholders.
Without the consent of the holder of each outstanding Note affected
thereby, no supplemental indenture will: (i) change the date of payment of any
installment of principal of or interest on any such Note or reduce the principal
amount thereof, the Interest Rate specified thereon or the redemption price with
respect thereto or change any place of payment where, or the coin or currency in
which, any such Note or any interest thereon is payable; (ii) impair the right
to institute suit for the enforcement of certain provisions of the Indenture
regarding payment; (iii) reduce the percentage of the aggregate principal amount
of the outstanding Notes, the consent of the Noteholders of which is required
(a) for any such supplemental indenture or (b) for any waiver of compliance with
certain provisions of the
46
<PAGE>
Indenture or of certain defaults thereunder and their consequences as provided
for in the Indenture; (iv) modify or alter the provisions of the Indenture
regarding the voting of Notes held by the Trust, any other obligor on such
Notes, the Sellers or an affiliate of any of them; (v) reduce the percentage of
the aggregate outstanding principal amount of such Notes required to direct the
Indenture Trustee to sell or liquidate the Receivables, the consent of the
Noteholders of which is required if the proceeds of such sale or liquidation
would be insufficient to pay the principal amount and accrued but unpaid
interest on the outstanding Notes; (vi) decrease the percentage of the aggregate
principal amount of the Notes required to amend the sections of the Indenture
that specify the applicable percentage of aggregate principal amount of the
Notes necessary to amend the Indenture or certain other related agreements;
(vii) modify any provisions of the Indenture in such a manner as to affect the
calculation of the amount of any payment of interest or principal due on any
Note on any Distribution Date (including the calculation of any of the
individual components of such calculation); or (viii) permit the creation of any
lien ranking prior to or on a parity with the lien of the Indenture with respect
to any of the collateral for the Notes or, except as otherwise permitted or
contemplated in the Indenture, terminate the lien of the Indenture on any such
collateral or deprive the holder of any Note of the security afforded by the
lien of the Indenture.
The Trust and the Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders, for the purpose
of, among other things, adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or modifying in any manner
the rights of the Noteholders; provided that such action will not materially
adversely affect the interest of any such Noteholder.
In addition to the foregoing limitations on executing supplemental
indentures, the Trust will covenant in the Sale and Servicing Agreement not to
execute any supplemental indentures without the prior written consent of CITSF,
as Administrator.
Events of Default; Rights Upon Event of Default. With respect to the
Notes, 'EVENTS OF DEFAULT' under the Indenture will consist of: (i) a default in
the payment of any interest on any such Note for a period of 5 days; (ii) a
default in the payment of the principal of or any installment of the principal
of any such Note when the same becomes due and payable; (iii) a default in the
observance or performance of any covenant or agreement of the Trust made in the
Indenture, which default materially adversely affects the rights of the
Noteholders and which default continues for a period of 30 days after written
notice thereof is given to the Trust by the Indenture Trustee or to the Trust
and the Indenture Trustee by the Noteholders representing not less than 25% of
the aggregate principal amount of the Controlling Notes then outstanding (or for
such longer period, not in excess of 90 days, as may be reasonably necessary to
remedy such default; provided that such default is capable of remedy within 90
days or less); or (iv) certain events of bankruptcy, insolvency, receivership or
liquidation of the Trust. However, the amount of principal required to be paid
to Noteholders under the Indenture will generally be limited to the Principal
Distributable Amount (absent acceleration of the Notes). Therefore, the failure
to pay principal on a class of Notes on any Distribution Date generally will not
result in the occurrence of an Event of Default until the Final Scheduled
Distribution Date for such class of Notes.
If an Event of Default occurs and is continuing with respect to the Notes,
the Indenture Trustee or the Noteholders representing not less than a majority
of the aggregate principal amount of the Controlling Notes then outstanding may
declare the principal of the Notes to be immediately due and payable. Such
declaration may, under certain circumstances, be rescinded by the Noteholders
representing not less than a majority of the aggregate principal amount of such
Controlling Notes then outstanding.
As used herein, 'CONTROLLING NOTES' means (i) all classes of Class A Notes
voting together as a single class until the Class A Notes have been paid in
full, (ii) from and after the payment in full of the Class A Notes, the Class B
Notes and (iii) from and after the payment in full of the Class B Notes, the
Class C Notes.
If the Notes are declared to be due and payable following an Event of
Default with respect thereto, the Indenture Trustee may institute proceedings to
collect amounts due or foreclose on the Trust property, exercise remedies as a
secured party, sell the Receivables or elect to have the Trust
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maintain possession of the Receivables and continue to apply collections on the
Receivables as if there had been no declaration of acceleration. However, the
Indenture Trustee is prohibited from selling the Receivables following an Event
of Default, unless (i) Noteholders representing 100% of the aggregate principal
amount of the Notes then outstanding consent to such sale, (ii) the proceeds of
such sale are sufficient to pay in full the principal of and the accrued
interest on the outstanding Notes at the date of such sale, or (iii) there has
been an Event of Default arising from a failure to make a required payment of
principal of or interest on any Notes, and the Indenture Trustee determines that
the proceeds of Receivables would not be sufficient on an ongoing basis to make
all payments on the Notes as such payments would have become due if such
obligations had not been declared due and payable, and the Indenture Trustee
obtains the consent of Noteholders representing not less than 66-2/3% of the
aggregate principal amount of the Controlling Notes then outstanding.
If an Event of Default occurs and is continuing with respect to the Notes,
the Indenture Trustee will be under no obligation to exercise any of the rights
or powers under the Indenture at the request or direction of any of the
Noteholders if the Indenture Trustee reasonably believes it will not be
adequately indemnified against the costs, expenses and liabilities that might be
incurred by it in complying with such request. Subject to the provisions for
indemnification and certain limitations contained in the Indenture, Noteholders
representing not less than a majority of the aggregate principal amount of the
Controlling Notes then outstanding will have the right to direct the time,
method and place of conducting any proceeding or any remedy available to the
Indenture Trustee, and Noteholders representing not less than a majority of the
aggregate principal amount of the Controlling Notes then outstanding may, in
certain cases, waive any default with respect thereto, except a default in the
payment of principal or interest or a default in respect of a covenant or
provision of the Indenture that cannot be modified without the waiver or consent
of Noteholders representing 100% of the aggregate principal amount of the Notes
then outstanding.
No Noteholders will have the right to institute any proceeding with respect
to the Indenture unless (i) such holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default, (ii) Noteholders
representing not less than 25% of the aggregate principal amount of the
Controlling Notes then outstanding have made written request to the Indenture
Trustee to institute such proceeding in its own name as Indenture Trustee, (iii)
such Noteholder or Noteholders have offered the Indenture Trustee indemnity
reasonably satisfactory to it against the costs, expenses and liabilities to be
incurred in complying with such request, (iv) the Indenture Trustee has for 60
days after receipt of such notice, request and offer of indemnity failed to
institute such proceeding, and (v) no direction inconsistent with such written
request has been given to the Indenture Trustee during such 60-day period by
Noteholders representing not less than a majority of the aggregate principal
amount of the Controlling Notes then outstanding.
In addition, the Indenture Trustee and the Noteholders, by accepting the
Notes, will covenant that they will not at any time institute against the Trust
any bankruptcy, reorganization or other proceeding under any federal or state
bankruptcy or similar law.
With respect to the Trust, neither the Indenture Trustee nor the Owner
Trustee in its individual capacity, nor any Certificateholder, nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
affiliates, successors or assigns will, in the absence of an express agreement
to the contrary, be personally liable for the payment of the principal of or
interest on the Notes or for the agreements of the Trust contained in the
Indenture.
CERTAIN COVENANTS
The Indenture will provide that the Trust may not consolidate with or merge
into any other entity, unless (i) the entity formed by or surviving such
consolidation or merger is organized under the laws of the United States, any
state of the United States or the District of Columbia, (ii) such entity
expressly assumes the Trust's obligation to make due and punctual payments of
principal of and interest on the Notes and the performance or observance of
every agreement and covenant of the Trust under the Indenture, (iii) no Event of
Default shall have occurred and be continuing immediately after such merger or
consolidation, (iv) the Trust has been advised that no rating then in effect of
the Notes by any Rating Agency would be downgraded or withdrawn as a result of
such merger or consolidation,
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(v) such action as was necessary to maintain the lien and security interest
created by the Indenture shall have been taken and (vi) the Trust has received
an opinion of counsel to the effect that such consolidation or merger would have
no material adverse tax consequence to the Trust or to any Noteholder.
The Trust will not, among other things, (i) except as expressly permitted
by the Indenture or the Sale and Servicing Agreement, sell, transfer, exchange
or otherwise dispose of any of the properties or assets of the Trust, (ii) claim
any credit on or make any deduction from the principal or interest payable in
respect of the Notes (other than amounts withheld under the Code or applicable
state law) or assert any claim against any present or former holder of such
Notes because of the payment of taxes levied or assessed upon the Trust, (iii)
permit the validity or effectiveness of the Indenture to be impaired, or permit
the lien of the Indenture to be amended, hypothecated, subordinated, terminated
or discharged or permit any person to be released from any covenants or
obligations with respect to the Notes under the Indenture except as may be
expressly permitted thereby, (iv) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance to be created on or extend to
or otherwise arise upon or burden the assets of the Trust or any party thereof,
or any interest therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of law, in each case on
a Financed Boat and arising solely as a result of an action or omission of the
related Obligor) or (v) permit any lien of the Indenture not to constitute a
valid first priority security interest in the Trust (other than with respect to
any such tax, mechanics or other lien).
The Trust may not engage in any activity other than as specified herein.
The Trust will not incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the Notes and the Indenture or otherwise in
accordance with the Indenture or the Sale and Servicing Agreement.
Annual Compliance Statement. The Trust will be required to file annually
with the Indenture Trustee a written statement as to the fulfillment of its
obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee will be required
to mail each year to all Noteholders a brief report relating to its eligibility
and qualification to continue as Indenture Trustee under the Indenture, any
amounts advanced by it under the Indenture, the amount, interest rate and
maturity date of certain indebtedness owing by the Trust to the Indenture
Trustee in its individual capacity, the property and funds physically held by
the Indenture Trustee as such and any action taken by it that materially affects
the Notes and that has not been previously reported.
Satisfaction and Discharge of Indenture. The Indenture will be discharged
with respect to the Notes upon the delivery to the Indenture Trustee for
cancellation of all the Notes or, with certain limitations, upon deposit with
the Indenture Trustee of funds sufficient for the payment in full of all the
Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee may resign at any time by notifying the Issuer and
the Noteholders, in which event the Issuer will be obligated to appoint a
successor indenture trustee. The Issuer may remove the Indenture Trustee if the
Indenture Trustee ceases to be eligible to continue as such under the Indenture
or if the Indenture Trustee becomes insolvent. Noteholders representing not less
than a majority of the aggregate principal amount of the Notes then outstanding
may also remove the Indenture Trustee by so notifying the Indenture Trustee. In
such circumstances, the Issuer will be obligated to appoint a successor
indenture trustee. Any resignation or removal of the Indenture Trustee and
appointment of a successor indenture trustee will not become effective until
acceptance of the appointment by the successor indenture trustee.
Pursuant to the Trust Indenture Act of 1939, as amended, the Indenture
Trustee will be deemed to have a conflict of interest and be required to resign
as trustee for at least two of the Class A Notes, the Class B Notes and the
Class C Notes (each, a 'CLASS') if an Event of Default occurs under the
Indenture. In these circumstances, the Indenture will require that, within 90
days of ascertaining that an Event of Default has occurred, the Indenture
Trustee will resign as Indenture Trustee for at least two of the Classes of
Notes and provide for indenture trustees to be appointed for such Classes. The
indenture trustee for the Controlling Notes will have the right to exercise
remedies under the Indenture
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(but the Noteholders of any other Classes will be entitled to their share of any
proceeds of enforcement, subject to the subordination described herein), and
only the Noteholders of the Controlling Notes will have the right to direct or
consent to any action to be taken, including sale of the Receivables. Any
resignation of the original Indenture Trustee as described above with respect to
any Class of Notes will become effective only upon the appointment of a
successor trustee for such Class of Notes and such successor's acceptance of
such appointment.
In addition, the Indenture Trustee will agree that if for any reason it
shall not qualify as an assignee of a Preferred Mortgage under the Ship Mortgage
Statutes, it shall immediately give notice thereof to the Servicer and the
Noteholders and shall cause a successor indenture trustee to be appointed. Any
such successor indenture trustee must qualify as such an assignee under the Ship
Mortgage Statutes.
CERTAIN INFORMATION REGARDING THE NOTES
BOOK-ENTRY REGISTRATION
Noteholders may hold their Notes through DTC (in the United States) or
Cedel or Euroclear (in Europe), which in turn hold through DTC, if they are
participants of such systems, or indirectly through organizations that are
participants in such systems.
The Sellers have been informed by DTC that DTC's nominee will be Cede.
Accordingly, such nominee is expected to be the holder of record of any
Book-Entry Notes. Unless and until Definitive Notes are issued under the limited
circumstances described herein, no Noteholder will be entitled to receive a
physical certificate representing its interest in such Note. All references
herein to actions by Noteholders refer to actions taken by DTC upon instructions
from its Participants and all references herein to distributions, notices,
reports and statements to Noteholders of Book-Entry Notes refer to
distributions, notices, reports and statements to DTC or its nominee, as the
registered holder of the Notes, for distribution to Noteholders in accordance
with DTC's procedures with respect thereto. See '--Definitive Notes' herein.
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively, the 'DEPOSITARIES'), which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a 'CLEARING
CORPORATION' within the meaning of the New York Uniform Commercial Code and a
'CLEARING AGENCY' registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its Participants and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers (who may
include any Underwriter), banks, trust companies and clearing corporations and
may include certain other organizations, including Cedel and Euroclear. Indirect
access to the DTC system also is available to Indirect Participants such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Cedel Participants or Euroclear Participants, on the other, will be
effected in DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on
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its behalf by delivering or receiving securities in DTC, and making or receiving
payment in accordance with normal procedures for same-day funds settlement
applicable to DTC. Cedel Participants and Euroclear Participants may not deliver
instructions directly to the Depositaries.
Because of time-zone differences, credits or securities in Cedel or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participant or Euroclear Participant on such business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or Euroclear Participant to a Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
A 'NOTEHOLDER,' as used herein, shall mean a holder of a beneficial
interest in a Book-Entry Note. Noteholders that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of or
other interest in Notes may do so only through Participants and Indirect
Participants. In addition, Noteholders will receive all distributions of
principal of and interest on Notes from the Indenture Trustee, through the
Participants, who in turn will receive them from DTC. Under a book-entry format,
Noteholders may experience some delay in their receipt of payments, since such
payments will be forwarded by the Indenture Trustee to Cede, as nominee for DTC.
DTC will forward such payments to its Participants which thereafter will forward
them to Indirect Participants or Noteholders. It is anticipated that the only
'CLASS A NOTEHOLDER,' 'CLASS B NOTEHOLDER' and 'CLASS C NOTEHOLDER' will be
Cede, as nominee of DTC. Noteholders will not be recognized by the Indenture
Trustee as Noteholders, as such term is used in the Indenture, as applicable,
and Noteholders will only be permitted to exercise the rights of Noteholders
indirectly through DTC, Cedel or Euroclear and their respective participants or
organizations.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the 'RULES'), DTC is required to make book-entry transfers of
Notes among Participants on whose behalf it acts with respect to the Notes and
to receive and transmit distributions of principal of, and interest on, the
Notes. Participants and Indirect Participants with which Noteholders have
accounts with respect to the Notes similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their respective
Noteholders. Accordingly, although Noteholders will not physically possess
Notes, the Rules provide a mechanism by which Participants will receive payments
and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Noteholder
to pledge Notes to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Notes, may be limited due to
the lack of physical certificates for such Notes.
DTC has advised the Sellers that it will take any action permitted to be
taken by a Noteholder under the Indenture only at the direction of one or more
Participants to whose accounts with DTC the applicable Notes are credited. DTC
may take conflicting actions with respect to other undivided interests to the
extent that such actions are taken on behalf of Participants whose holdings
include such undivided interests.
Cedel Bank, societe anonyme ('CEDEL') is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ('CEDEL PARTICIPANTS') and facilitates the clearance
and settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled by Cedel in any of 28 currencies, including United States dollars. Cedel
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulations by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and
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certain other organizations and may include any Underwriter. Indirect access to
Cedel is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
The Euroclear System ('EUROCLEAR') was created in 1968 to hold securities
for participants of Euroclear ('EUROCLEAR PARTICIPANTS') and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 27 currencies,
including United States dollars. Euroclear includes various other services,
including securities lending and borrowing and interfaces with domestic markets
in several countries generally similar to the arrangement for cross-market
transfers with DTC described above. Euroclear is operated by Morgan Guaranty
Trust Company of New York, Brussels, Belgium office (the 'EUROCLEAR OPERATOR'),
under contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation (the 'COOPERATIVE'). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include any Underwriter. Indirect access to Euroclear is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of Euroclear and applicable Belgian law
(collectively, the 'TERMS AND CONDITIONS'). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawal of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
Euroclear acts under the Terms and Conditions only on behalf of Euroclear
Participants and has no record of or relationship with persons holding through
Euroclear Participants.
Distributions with respect to Notes held through Cedel or Euroclear will be
credited to the cash accounts of Cedel Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by its Depositary. Such distributions will be subject to tax reporting
in accordance with relevant United States tax laws and regulations. Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a Noteholder under the Indenture or the Trust Agreement, as
applicable, on behalf of a Cedel Participant or a Euroclear Participant only in
accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Notes among participants of DTC, Cedel and
Euroclear, they are under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time.
Except as required by law, the Indenture Trustee will not have any
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the Notes held by DTC, Cedel or Euroclear
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
DEFINITIVE NOTES
The Notes of any class issued in book-entry form will be issued in fully
registered, certificated form ('DEFINITIVE NOTES') to Noteholders or their
respective nominees, rather than to DTC or its nominee, only if (i) the Sellers
advise the Indenture Trustee in writing that DTC is no longer willing or able to
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discharge properly its responsibilities as depository with respect to the Notes
and the Indenture Trustee is unable to locate a qualified successor depository,
(ii) the Sellers, at their option, elect to terminate the book-entry system
through DTC or (iii) after the occurrence of an Event of Default or an Event of
Servicing Termination, holders representing not less than a majority of the
outstanding principal amount of the Notes of such class advise DTC through
Participants in writing (with instructions to notify the Indenture Trustee in
writing) that the continuation of a book-entry system through DTC (or a
successor thereto) with respect to such Notes is no longer in the best interest
of the holders of such Notes.
Upon the occurrence of any event described in the immediately preceding
paragraph, DTC will be required to notify all applicable Noteholders through
Participants of the availability of Definitive Notes. Upon surrender by DTC of
the definitive certificates representing the corresponding Notes and receipt of
instructions for re-registration, the Indenture Trustee will reissue such Notes
as Definitive Notes to such Noteholders.
Distributions of principal with respect to, and interest on, such
Definitive Notes will thereafter be made in accordance with the procedures set
forth in the Indenture, directly to holders of Definitive Notes in whose names
the Definitive Notes were registered at the close of business on the Record
Date. Such distributions will be made by check mailed to the address of such
holder as it appears on the register maintained by the Indenture Trustee. The
final payment on any such Definitive Notes (whether a Definitive Note or the
Notes registered in the name of Cede representing the Notes), however, will be
made only upon presentation and surrender of such Definitive Note at the office
or agency specified in the notice of final distribution to the applicable
Noteholders.
Definitive Notes will be transferable and exchangeable at the offices of
the transfer agent and registrar, which shall initially be the corporate trust
department of Chase (in such capacity, the 'TRANSFER AGENT AND REGISTRAR'). No
service charge will be imposed for any registration of transfer or exchange, but
the Indenture Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge imposed in connection therewith.
LIST OF NOTEHOLDERS
Three or more Noteholders (each of whom has owned a Note for at least six
months) may, by written request to the Indenture Trustee, obtain access to the
list of all Noteholders maintained by the Indenture Trustee for the purpose of
communicating with other Noteholders with respect to their rights under the
Indenture or the Notes. The Indenture Trustee may elect not to afford the
requesting Noteholders access to the list of such Noteholders if it agrees to
mail the desired communication or proxy, on behalf and at the expense of the
requesting Noteholders, to all Noteholders of record. Unless Definitive Notes
have been issued, the only Noteholder appearing on the list maintained by the
Indenture Trustee will be Cede, as nominee for DTC. In such circumstances, any
beneficial owner of a Note wishing to communicate with other beneficial owners
of Notes will not be able to identify those beneficial owners through the
Indenture Trustee and instead will have to attempt to identify them through DTC
and its Participants or such other means as such beneficial owner may find
available.
REPORTS
On each Distribution Date, the Paying Agent will include with each
distribution to each Noteholder a statement prepared by the Servicer. Each such
statement to be delivered to Noteholders will include, among other things, the
following information as to the Trust and the Notes with respect to such
Distribution Date or the period since the previous Distribution Date, as
applicable:
(i) the amount of the distribution allocable to interest with respect
to each class of Notes and the derivation of such amounts;
(ii) the amount of the distribution allocable to principal on or with
respect to each class of Notes;
(iii) the amount of the Servicing Fee paid and the amount of Monthly
Advances being reimbursed to the Servicer in respect of the related
Collection Period, and the total Servicer Payment;
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(iv) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(v) the aggregate outstanding principal balance and the Note Pool
Factor for each class of Notes after giving effect to all payments reported
under clause (ii) above on such date;
(vi) the amount of the Aggregate Net Losses, if any, for the preceding
Collection Period and the derivation of such amount, and the amount of
Aggregate Losses on all Liquidated Receivables for the year to date;
(vii) the Class A Noteholders' Interest Carryover Shortfall, the Class
A Noteholders' Principal Carryover Shortfall, the Class B Noteholders'
Interest Carryover Shortfall, the Class B Noteholders' Principal Carryover
Shortfall, the Class C Noteholders' Interest Carryover Shortfall and the
Class C Noteholders' Principal Carryover Shortfall, if any, and the change
in such amounts from the preceding statement;
(viii) the aggregate Repurchase Amounts with respect to the
Receivables, if any, that were repurchased by either Seller or purchased by
the Servicer in such Collection Period;
(ix) the balance of the Reserve Account as of such date, after giving
effect to changes therein on such date, the Specified Reserve Account
Balance on such date and the components of calculating any such required
balance;
(x) the amount of Monthly Advances included in the Available Amount;
and
(xi) the balance of the Paid-Ahead Account as of such date, after
giving effect to any changes therein on such date.
Each amount set forth pursuant to subclauses (i) and (ii) with respect to
each class of Notes will be expressed as a dollar amount per $1,000 of the
initial principal balance of such class of Notes.
The statements for each Collection Period will be delivered to DTC for
further distribution to Noteholders in accordance with DTC procedures. See
'Certain Information Regarding the Notes--Book-Entry Registration' herein.
Chase, as Administrator, will file with the Commission such periodic reports
with respect to the Trust as required under the Exchange Act and the rules and
regulations of the Commission thereunder.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Trust, the Indenture Trustee or
the Paying Agent will furnish to each person who at any time during such
calendar year has been a Noteholder and received any payment thereon a statement
containing certain information for the purposes of such Noteholder's preparation
of federal income tax returns. See 'Certain Federal Income Tax Consequences'
herein.
DESCRIPTION OF THE CERTIFICATES
On the Closing Date, the Trust will issue the Certificates to the Sellers.
The Certificates will not bear interest but will evidence the right on each
Distribution Date to receive monies in the Reserve Account in excess of the
Specified Reserve Account Balance and, after the payment of all principal and
interest on the Notes, to receive any amounts remaining on deposit in the
Reserve Account. The Certificates will represent fractional undivided beneficial
equity interests in the Trust and will be issued pursuant to the Trust
Agreement. The Certificates are not being offered and sold hereby.
On the Closing Date, Chase will retain 49.40% of the Certificate Interest
and Chase USA will retain 50.60% of the Certificate Interest. The Sellers may
subsequently transfer the Certificates, provided the Owner Trustee and Indenture
Trustee receive an opinion of counsel that such transfer will not cause the
Trust to become a taxable entity and confirmation from each Rating Agency that
such transfer will not adversely affect any rating by such Rating Agency of a
Note.
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following, as well as other information included elsewhere herein,
summarizes the material terms of the Sale and Servicing Agreement, the Trust
Agreement and the Administration Agreements (collectively, the 'TRANSFER AND
SERVICING AGREEMENTS'). Each of the Transfer and Servicing Agreements is in
substantially the form of the corresponding agreement filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The summary does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Transfer and Servicing Agreements. The
following summary supplements the description of the general terms and
provisions of the Transfer and Servicing Agreements set forth herein, to which
description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Pursuant to the Sale and Servicing Agreement, on or before the Closing
Date, the Sellers will transfer and assign to the Trust in consideration of the
receipt of the Notes and Certificates, without recourse, their entire interest
in the Receivables, certain related property and the proceeds thereof,
including, among other things, their respective security interests in the
related Financed Boats. Each Receivable will be identified in a schedule
appearing as an exhibit to the Sale and Servicing Agreement (a 'SCHEDULE OF
RECEIVABLES'). The Sellers will sell the Notes to the Underwriters. See
'Underwriting' herein. The Certificates are not being offered or sold hereby and
will initially be retained by the Sellers. See 'Description of the Certificates'
herein.
In the Sale and Servicing Agreement, each Seller will make representations
and warranties with respect to its Receivables and the security interests in the
Financed Boats related thereto, which representations and warranties will
include, among others, the following: (i) each Receivable (A) was originated by
a Dealer and acquired by an Originator from such Dealer in the ordinary course
of business or (B) was originated by an Originator directly; (ii) each
Receivable is secured by a Financed Boat; (iii) each Receivable was originated
in the form of a retail installment sales contract with a Dealer or a purchase
money loan from an Originator through a Dealer located in one of the states of
the United States (or the District of Columbia) or without the involvement of a
Dealer for the financing of a Financed Boat, and in each case was fully and
properly executed by the parties thereto; (iv) (A) in the case of a Receivable
originated with the involvement of a Dealer, if in the form of a retail
installment sales contract, such Receivable was purchased by an Originator from
the originating Dealer and was validly assigned by such Dealer to such
Originator and (B) in the case of a Chase Financial Receivable, such Receivable
was purchased by Chase USA from CFAC or CFHI, and was validly assigned by CFAC
or CFHI, as applicable, to Chase USA; (v) no provision of a Receivable has been
waived, altered or modified in any respect, except by instruments or documents
contained in the related Receivables file; (vi) each Receivable is a legal,
valid and binding obligation of the related Obligor and is enforceable in
accordance with its terms (except as may be limited by laws affecting creditors'
rights generally); (vii) as of the Cutoff Date, such Seller had no knowledge of
any facts which would give rise to any right of rescission, setoff, counterclaim
or defense or of the same being asserted or threatened with respect to any
Receivable; (viii) the Obligor on each Receivable is required to maintain
physical damage insurance covering the related Financed Boat in accordance with
its terms; (ix) no Receivable was originated in or is subject to the laws of any
jurisdiction whose laws would prohibit (A) the transfer of the Receivable to the
Trust pursuant to the Sale and Servicing Agreement, (B) the ownership of the
Receivable by the Trust or (C) the pledge by the Trust of such Receivable to the
Indenture Trustee; (x) each Receivable complies with all requirements of law in
all material respects; (xi) no Receivable has been satisfied, subordinated in
whole or in part or rescinded, and no Financed Boat has been released from the
security interest of the related Receivable in whole or in part; (xii) each
Receivable creates a valid and enforceable first priority security interest in
favor of the originator of such Receivable in the Financed Boat covered thereby,
such security interest is assignable to the Trust (by such originator to such
Seller, if such originator is not such Seller, and by such Seller to the Trust),
and all necessary action with respect to such Receivable has been taken to
perfect the security interest in the related Financed Boat in favor of such
originator; (xiii) all parties to each Receivable had capacity to execute such
Receivable; (xiv) no Receivable has been sold,
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assigned or pledged by such Seller to any person other than the Trust and, prior
to the transfer of the Receivables by such Seller to the Trust, such Seller had
good and marketable title to such Receivable, free and clear of any lien,
encumbrance, equity, loan, pledge, charge, claim or security interest, and such
Seller was the sole owner and had full right to transfer such Receivable to the
Trust; (xv) as of the Cutoff Date, such Seller had no knowledge that a default,
breach, violation or event permitting acceleration under any Receivable existed;
such Seller had no knowledge of any event which with notice and the expiration
of any grace or cure period would constitute a default, breach, violation or
event permitting acceleration under such Receivable (except for payment
delinquencies permitted as described herein), and such Seller has not waived any
of the foregoing (except for payment delinquencies permitted); (xvi) as of the
Cutoff Date, such Seller had no knowledge of any liens or claims which have been
filed for work, labor or materials affecting a Financed Boat securing a
Receivable, which are or may be liens prior to or equal or coordinate with the
security interest of the Receivable; (xvii) each Receivable is a fully
amortizing loan with interest at a fixed rate (the 'CONTRACT RATE'), provides
for level payments over the term of such Receivable and is either a Simple
Interest Receivable or a Precomputed Receivable; (xviii) each Receivable
contains customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for realization against the related
collateral (except as may be limited by creditors' rights generally); (xix) the
description of each Receivable set forth in the Schedule of Receivables is true
and correct as of its date; (xx) no Obligor is the United States of America or
any state or any agency, department, instrumentality or political subdivision
thereof; (xxi) if the Obligor is in the military (including an Obligor who is a
member of the National Guard or is in the reserves) and the Receivable is
subject to the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
'SOLDIERS' AND SAILORS' CIVIL RELIEF ACT'), or the California Military Reservist
Relief Act of 1991 (the 'MILITARY RESERVIST RELIEF ACT'), such Obligor has not
made a claim to a Seller or the Servicer that (A) the amount of interest on the
Receivable should be limited to 6% pursuant to the Soldiers' and Sailors' Civil
Relief Act during the period of such Obligor's active duty status or (B)
payments on the Receivable should be delayed pursuant to the Military Reservist
Relief Act, in either case unless a court has ordered otherwise upon application
of a Seller (in either case 'RELIEF ACT REDUCTION'); (xxii) there is only one
original executed copy of each Receivable, which, prior to the execution of the
Sale and Servicing Agreement, was transferred to the Servicer on behalf of the
Trust; (xxiii) the Receivable is 'chattel paper' as defined in the New York and
Ohio Uniform Commercial Codes; (xxiv) each Receivable satisfies the other
criteria specified above under 'The Receivables Pool' herein; and (xxv) each
Receivable was originated in the United States of America. The representations
and warranties will be for the benefit of the Trust and, with respect to any
Receivable purchased by the Servicer, the Servicer.
As of the last day of the month following the date (or, if the related
Seller elects, the last day of the month including such date) on which the
related Seller discovers or receives written notice from the Owner Trustee or
the Indenture Trustee that a Receivable did not meet any of the criteria set
forth in the Sale and Servicing Agreement as of the Closing Date or the Cutoff
Date, as applicable, and such failure materially adversely affects the interests
of the Trust in such Receivable (regardless of whether such Seller had actual
knowledge of such failure as of the Cutoff Date), such Seller, unless it has
cured the failed criterion, will repurchase such Receivable from the Trust at a
price equal to the Actual Principal Balance owed by the Obligor thereof plus
accrued and unpaid interest thereon at the respective Contract Rate through such
last day (the 'REPURCHASE AMOUNT').
In addition, the Sellers will be obligated to file assignments of record of
the Designated Preferred Mortgages to reflect the ultimate assignments of such
Preferred Mortgages to the Trust within 120 days of the Closing Date, and each
Seller will be obligated to repurchase any Receivable sold by it to the Trust
secured by any such Preferred Mortgage for an amount equal to the Repurchase
Amount thereof if, after such 120-day period, the Trust does not have a
perfected preferred mortgage lien on the Financed Boat securing such
Receivable, such failure has a material adverse effect on the interest of the
Trust in such Receivable and such failure continues for 30 days after such
Seller discovers or receives written notice of such failure. For
administrative convenience, if Chase is obligated pursuant to the Sale and
Servicing Agreement to repurchase a Receivable from the Trust, Chase USA, at
its option, may satisfy Chase's obligation by repurchasing such Receivable on
the same terms. The repurchase obligation
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will constitute the sole remedy available to the Owner Trustee, the Noteholders
or the Indenture Trustee for the failure of a Receivable to meet any of the
criteria set forth in the Sale and Servicing Agreement. 'ACTUAL PRINCIPAL
BALANCE' means, as of the close of business on the last day of any month, (a)
with respect to a Precomputed Receivable, the sum of (i) the Principal Balance
thereof as of such day and (ii) the portion of all scheduled payments on such
Receivable due and unpaid on or prior to such day allocable to principal using
the actuarial method and (b) with respect to a Simple Interest Receivable, the
Principal Balance thereof as of such day.
The Owner Trustee will agree that if for any reason it shall not qualify as
an assignee of a Preferred Mortgage under the Ship Mortgage Statutes, it shall
immediately give notice thereof to the Sellers and the Sellers shall cause a
successor owner trustee to be appointed. Any such successor owner trustee must
be such a qualified assignee under the Ship Mortgage Statutes.
CUSTODY OF RECEIVABLES
Pursuant to the Sale and Servicing Agreement, to assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Owner Trustee
on behalf of the Trust and the Indenture Trustee will appoint the Servicer as
initial custodian of the Receivables files. Receivables will not be stamped or
otherwise marked to reflect the transfer of the Receivables to the Trust and
will not be segregated from the other marine loans owned or serviced by the
Servicer, CFMC or any of their respective affiliates. Custody of the Receivables
files may be held by the Servicer or a third party custodian together with files
for marine loans or other loans owned by Chase Marine Finance or CITSF. The
Obligors under the Receivables will not be notified of the transfer of the
Receivables to the Trust, but each Seller's accounting records and computer
systems will be purged of all references to the Receivables to reflect the sale
and assignment of the Receivables to the Trust. See 'Certain Legal Aspects of
the Receivables' herein.
ACCOUNTS
The Sellers will establish the Collection Account, the Reserve Account, the
Paid-Ahead Account and the Note Distribution Account in the name of the
Indenture Trustee on behalf of the Noteholders. The Collection Account, the
Paid-Ahead Account, the Reserve Account and the Note Distribution Account are
collectively referred to herein as the 'TRUST ACCOUNTS.' Each Trust Account
(other than the Reserve Account) will be established initially with the trust
department of Chase, and the Reserve Account will be established initially with
the trust department of Norwest Bank Minnesota, National Association. Chase, in
its capacity as the initial paying agent (the 'PAYING AGENT'), will have the
revocable right, at the direction of the Servicer, to withdraw funds from each
Trust Account (other than the Reserve Account) for the purpose of making
distributions to Noteholders in the manner provided in the Transfer and
Servicing Agreements. See '--Subordination of the Class B Notes and the Class C
Notes; Reserve Account' below.
The Trust Accounts will be maintained as Eligible Deposit Accounts. An
'ELIGIBLE DEPOSIT ACCOUNT' shall be either (a) a separately identifiable deposit
account established in the deposit taking department of a Qualified Institution
or (b) a segregated identifiable trust account established in the trust
department of a Qualified Trust Institution. A 'QUALIFIED INSTITUTION' shall be
a depository institution (including Chase) organized under the laws of the
United States or any state thereof or incorporated under the laws of a foreign
jurisdiction with a branch or agency located in the United States or any state
thereof and subject to supervision and examination by federal or state banking
authorities, having a short-term certificate of deposit rating and a long-term
unsecured debt rating confirmed by each Rating Agency as being consistent with
the ratings of the Notes and, in the case of any such institution (including
Chase) organized under the laws of the United States, the deposits of which are
insured by the FDIC. A 'QUALIFIED TRUST INSTITUTION' shall be an institution
organized under the laws of the United States or any state thereof or
incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States and subject to supervision and examination by
federal or state banking authorities with the authority to act under such laws
as a trustee or in any other fiduciary capacity, having not less than $1 billion
in assets under fiduciary management and a long-term deposit rating confirmed by
each Rating Agency as being consistent with the ratings of the Notes.
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Should Chase, Norwest Bank Minnesota, National Association or any other
depositary of a Trust Account cease to be a Qualified Institution or Qualified
Trust Institution, such Trust Account shall be moved to a Qualified Institution
or Qualified Trust Institution, provided that such Trust Account may remain at
such depositary if the Indenture Trustee receives written confirmation from each
related Rating Agency to the effect that the ratings of the Notes will not be
adversely affected.
Funds in the Trust Accounts will be invested as provided in the Sale and
Servicing Agreement in Permitted Investments. 'PERMITTED INVESTMENTS' are
generally limited to investments confirmed by the related Rating Agencies as
being consistent with the ratings of the Notes. Permitted Investments may
include securities issued by either Seller or its affiliates or trusts
originated by either Seller or its affiliates, and may also include certain
money market mutual funds for which Chase or any of its affiliates serves as an
investment advisor, administrator, shareholder servicing agent and/or custodian
or subcustodian (for which it collects fees and expenses). Permitted Investments
are limited to obligations or securities that mature on or before the Business
Day preceding the next Distribution Date (each such preceding day, a 'DEPOSIT
DATE'). Investment earnings on funds deposited in the Trust Accounts (other than
the Reserve Account), net of losses and investment expenses (collectively,
'INVESTMENT EARNINGS'), shall be paid to the Certificateholders.
PAID-AHEAD PRECOMPUTED RECEIVABLES
So long as CITSF is the Servicer and provided that (i) there exists no
Event of Servicing Termination and (ii) each other condition to holding
Paid-Ahead Amounts as may be required by the Sale and Servicing Agreement is
satisfied, Paid-Ahead Amounts received during any Collection Period will be
retained by the Servicer until the related Deposit Date. As provided in the
Servicing Transfer Agreements, pending deposit into the Paid-Ahead Account,
Paid-Ahead Amounts will be transferred by the Servicer to CFMC and held by CFMC
on behalf of the Servicer until the Business Day prior to such Deposit Date. If
any of the above-described conditions to retaining Paid-Ahead Amounts is not
satisfied, Paid-Ahead Amounts will be deposited into the Paid-Ahead Account
within two business days of receipt thereof and retained therein until such time
as the paid-ahead payment falls due. As of the Cutoff Date, there was
$594,187.70 of Paid-Ahead Amounts with respect to the Receivables. Until such
time as Paid-Ahead Amounts are transferred from the Paid-Ahead Account to the
Collection Account, they will not constitute collected interest or collected
principal and will not be available for distribution to the Noteholders.
SERVICING COMPENSATION
The Servicer will be entitled to receive, out of collections on the
Receivables, a Servicing Fee for each Collection Period, payable on the
following Distribution Date, equal to the sum of (i) one-twelfth of the product
of the Servicing Fee Rate and the Pool Balance as of the related Settlement Date
(or, in the case of the first Distribution Date, the Cutoff Date Pool Balance)
and (ii) any Administrative Fees paid by the Obligors during the related
Collection Period. 'ADMINISTRATIVE FEES' shall mean late payment fees, extension
fees and transfer of equity and assumption fees with respect to the Receivables.
In addition, the Servicing Transfer Agreements provide that CFMC may be
required to pay to CITSF a fee, or, in the alternative, CITSF may be required to
pay CFMC a fee, in each case, based on the performance of the Receivables. If
the ratio (expressed as a percentage) of (x) the Aggregate Losses on the
Receivables for any calendar year or partial calendar year over (y) the average
monthly Pool Balance with respect to such calendar year or partial calendar year
is less than 1.00%, CFMC will be required to pay to CITSF an additional fee of
up to 0.80% per annum of such average monthly Pool Balance (based on the actual
level of Aggregate Losses), and if such ratio exceeds 1.00%, CITSF will be
required to refund to CFMC an amount up to 0.20% per annum of such average
monthly Pool Balance (based on the actual level of Aggregate Losses). Neither
the Trust nor any successor Servicer under the Sale and Servicing Agreement will
be entitled to receive from CFMC or will be required to refund to CFMC any of
the foregoing amounts. 'AGGREGATE LOSSES' means, with respect to any calendar
year or partial calendar year, an amount equal to (x) the sum of the Losses on
Receivables in default for such calendar year or partial calendar year, less (y)
any recoveries (including, but not limited to, sales proceeds and insurance
credits) received during such calendar year or partial
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calendar year in respect of Receivables in default in, and included in the
calculation of Aggregate Losses with respect to, any prior calendar year or
partial calendar year. A 'LOSS' on a Receivable in default is equal to the sum
of its principal balance, accrued interest thereon, collection and insurance
expenses, repossession and liquidation expenses and forbearance expenses related
to such Receivable, net of any liquidation proceeds, insurance proceeds,
collections, and any recoveries on such Receivable. For purposes of calculating
Aggregate Losses, a Receivable will be deemed to be in default when CITSF has
received all amounts that it expects to recover upon disposition or sale of the
related Financed Boat.
Payments to the Servicer of such amounts will compensate the Servicer for
performing the functions of a third party servicer of Marine Loans as an agent
for the Trust, including collecting and posting all payments, responding to
inquiries of Obligors, investigating delinquencies, reporting federal income tax
information to Obligors, monitoring the Financed Boats in cases of Obligor
default and handling the foreclosure or other liquidation of the Financed Boat
in appropriate instances (subject to reimbursement of its expenses incurred in
connection with such foreclosure, liquidation or other realization on the
Receivables to the extent described herein). The Servicing Fee will also
compensate the Servicer for serving as an Administrator under its related
Administration Agreement. The Servicer will also be responsible for compensating
Chase for serving as an Administrator under its related Administration
Agreement. The Servicer shall be responsible for all of its own expenses and
costs incurred in carrying out its obligations under the Sale and Servicing
Agreement, except that, in accordance with the Servicing Transfer Agreements,
CFMC has agreed to reimburse the Servicer for customary or necessary
repossession and other expenses incurred in connection with the repair, care and
custody of repossessed Financed Boats in an amount up to $1,000 per defaulted
Receivable, legal fees in an amount up to $1,000 per defaulted Receivable, or
such higher amounts as CFMC shall agree to from time to time, and funds advanced
by the Servicer to pay taxes or satisfy tax liens in respect of Financed Boats.
The Servicer is not required to take any action which would cause it to incur
expenses in excess of such amounts nor is CFMC required to reimburse any such
expenses in excess of such amounts. CFMC has also agreed to pay the Servicer
reasonable compensation and reimburse it for its expenses if, at the request of
CFMC, the Servicer takes action beyond its agreed-upon scope in servicing the
Receivables.
The Servicing Fee also will compensate the Servicer for administering the
Receivables, including reimbursing the Servicer for accounting for collections,
furnishing monthly and annual statements to the Owner Trustee and Indenture
Trustee with respect to distributions and providing certain federal income tax
information to the Paying Agent. The Servicing Fee also will compensate the
Servicer for accounting fees, outside auditor fees, data processing costs and
other costs incurred in connection with administering and servicing the
Receivables.
The Servicer Payment is equal on each Distribution Date to the sum of the
reimbursement then due to the Servicer for outstanding Monthly Advances and the
Servicing Fee (including any unpaid Servicing Fees for past Distribution Dates).
SERVICING AND INSURANCE PROCEDURES
The Servicer will make reasonable efforts, consistent with the customary
servicing practices and procedures employed by the Servicer with respect to
marine loans owned by it (except as set forth in the Servicing Transfer
Agreements and described herein), to collect all payments due with respect to
the Receivables and, in a manner consistent with the Transfer and Servicing
Agreements, will continue such normal collection practices and procedures as it
follows with respect to comparable marine loans that it services for itself
(except as set forth in the Servicing Transfer Agreements and described herein).
The Servicer will follow such normal collection practices and procedures as it
deems necessary or advisable to realize upon any Receivable with respect to
which it determines that eventual payment in full is unlikely or to realize upon
any defaulted Receivable. The Servicer may sell the related Financed Boat
securing such Receivable at a public or private sale in accordance with the
Servicing Transfer Agreements, or take any other action permitted by applicable
law. See 'Certain Legal Aspects of the Receivables.' The proceeds of any such
realization will be deposited in the Collection Account. CITSF's customary
servicing practices and procedures with respect to marine
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loans may be changed in accordance with CITSF's business judgment; provided,
that any such change relating to the Receivables that would have a material
effect on the collectibility of the Receivables may not be made without CFMC's
consent.
In accordance with the Servicing Transfer Agreements, CITSF has agreed to
several limitations on how it services the Receivables. In addition, CFMC has
retained the right to direct CITSF with respect to loss mitigation strategies,
to require CITSF to initiate repossession actions or to direct CITSF to refrain
from repossessing Financed Boats, in each case based upon reasonable criteria
communicated in writing to CITSF from time to time. Such limitations and
instructions may result in the Servicer's taking actions from time to time
different from actions it otherwise would take in accordance with its customary
servicing policies and procedures at such time.
The Servicer has agreed that, with respect to defaulted Receivables having
Principal Balances in excess of $30,000, the Servicer may not enter into a
repossession sale or short sale/settlement which would result in a loss
exceeding 60% of such Principal Balance without the approval of CFMC. Pursuant
to the Servicing Transfer Agreements, the Servicer has agreed to attempt to
contact by telephone Obligors whose Receivables have become more than ten days
delinquent, and in the event contact by telephone is not made on or before the
21st day of delinquency, to perform a manual review of the Receivable to
determine the appropriate course of action, which may be continued phone calls
and/or the sending of letters.
In accordance with the Servicing Transfer Agreements, the Servicer is not
permitted to initiate litigation with respect to any Receivable without CFMC's
consent except for actions to recover possession or to foreclose upon a Financed
Boat, collection suits or actions to recover deficiencies (subject to
limitations on reimbursement of the Servicer's expenses as described under
'--Servicing Compensation' herein). The Servicing Transfer Agreements also
require that the Servicer, before commencing any litigation to collect amounts
owing with respect to a Receivable, review the related files to determine if
there exist facts which might constitute a defense or counterclaim in any such
litigation. If such review indicates the existence of facts which might
constitute a defense or counterclaim, the Servicer is not permitted to initiate
any litigation with respect to such Receivable without the prior written consent
of CFMC.
The Servicer shall, at its own cost and expense, keep in force throughout
the term of the Transfer and Servicing Agreements a fidelity bond. Such fidelity
bond shall protect against losses, including forgery, theft, embezzlement and
fraud and shall have such deductibles, and be in such form and amount as is
generally customary among persons which service a portfolio of marine loans
having an aggregate principal amount of $100 million or more and which are
generally regarded as servicers acceptable to institutional investors, but in no
case shall such fidelity bond be less than $5,000,000.
PURCHASE BY THE SERVICER
Under the Sale and Servicing Agreement, the Servicer will agree not to,
except as expressly provided therein, (i) release the Financed Boat securing
each Receivable from the security interest granted by such Receivable except in
accordance with the terms of such Receivable and applicable law, (ii) impair the
rights of the Trust in the Receivables or take any action inconsistent with the
Trust's ownership of the Receivables, (iii) increase the number of payments
under a Receivable, or increase the principal amount of a Receivable which is
used to finance the purchase price of the related Financed Boat, or extend or
forgive payments on a Receivable, or (iv) fail to file and process claims under
any insurance policy covering a Receivable, if the failure to file and process
such claims would impair the protection or benefit to be afforded by such
insurance policy. A breach of any of the above described covenants that
materially adversely affects the Trust's interest in any Receivable will require
the Servicer to purchase such Receivable from the Trust for the Repurchase
Amount, unless such breach is cured by the last day of the Collection Period
following the Collection Period in which such discovery occurred. The purchase
obligation will constitute the sole remedy available to the Owner Trustee and
the Noteholders or the Indenture Trustee for a breach of any of the above
covenants.
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MODIFICATION OF RECEIVABLES
Consistent with its customary servicing procedures in effect from time to
time (except as described herein), the Servicer may, in its discretion, arrange
with an Obligor to defer, reschedule, extend or modify the payment schedule on a
Receivable or otherwise to modify the terms of a Receivable, provided that (i)
the maturity of such Receivable would not extend beyond the Final Scheduled
Maturity Date and (ii) if any such modification constitutes a refinancing, the
proceeds of such refinancing are used to pay the related Receivable in full.
CITSF may change such servicing procedures in accordance with its business
judgment, provided, that any such change relating to the Receivables that would
have a material effect on the collectibility of the Receivables may not be made
without CFMC's consent. Notwithstanding the foregoing, in connection with the
settlement by the Servicer of a defaulted Receivable, the Servicer may forgive a
portion of such Receivable, if in its discretion it believes that the acceptance
of the settlement proceeds from the related Obligor would result in the Trust's
receiving a greater amount of collections than the Net Liquidation Proceeds that
would result from repossessing and liquidating the related Financed Boat.
REMOVAL OF RECEIVABLES
Except as otherwise specified herein, none of the Sellers or the Servicer
will have the right to remove any Receivables from the Trust after the Closing
Date. In certain circumstances, a Seller may have the obligation to repurchase,
the Servicer may have the obligation to purchase or the Servicer may have the
option to purchase, a Receivable from the Trust, but all such repurchases or
purchases (except for the Servicer's optional purchase) will be made at the
Repurchase Amount.
COLLECTIONS
The Servicer may deposit all payments on or with respect to the Receivables
during each Collection Period (including Paid-Ahead Amounts) into the Collection
Account (or the Paid-Ahead Account, in the case of Paid-Ahead Amounts) monthly
on the Deposit Date following the last day of such Collection Period, provided
that (i) (A) CITSF or any of its affiliates is the Servicer and (B) the Servicer
or the direct or indirect parent of the Servicer has and maintains a short-term
debt rating of at least A-1 by Standard & Poor's and at least 'D-1' by Duff &
Phelps (if rated by Duff & Phelps) and either a short-term debt rating of P-1 or
a long-term debt rating of at least A2 by Moody's, or (ii) the Sellers or the
Servicer obtain a letter of credit, surety bond or insurance policy as set forth
in the Sale and Servicing Agreement, under which demands for payment may be made
to secure timely remittance of monthly collections to the Collection Account (or
the Paid-Ahead Account, in the case of Paid-Ahead Amounts) and, in the case of
clause (ii), the Indenture Trustee is provided with a letter from each Rating
Agency to the effect that the utilization of such alternative remittance
schedule will not result in a qualification, reduction or withdrawal of any of
its then-current ratings of the Notes. As of the date of this Prospectus, CITSF,
as Servicer, will be permitted to remit collections to the Collection Account
(or the Paid-Ahead Account, in the case of Paid-Ahead Amounts) on a monthly
basis by virtue of clause (i) above. In the event that the Servicer is permitted
to make remittances of collections to the Collection Account (or the Paid-Ahead
Account, in the case of Paid-Ahead Amounts) on a monthly basis pursuant to
satisfaction of clause (ii) above, the Sale and Servicing Agreement will be
modified, to the extent necessary, without the consent of any Noteholder.
Pending such a monthly deposit into the Collection Account (or the Paid-Ahead
Account, in the case of Paid-Ahead Amounts), the Servicing Transfer Agreements
require that collections be transferred by the Servicer to CFMC and held by CFMC
until the Business Day prior to the Deposit Date. See 'Risk Factors--Risk of
Commingling.' If the Servicer is not permitted to remit collections to the
Collection Account (or the Paid-Ahead Account, in the case of Paid-Ahead
Amounts) on a monthly basis, the Servicer will be obligated to deposit all
payments on or with respect to the Receivables and all proceeds of Receivables
collected on or with respect to the Receivables during each Collection Period
into the Collection Account (or the Paid-Ahead Account, in the case of
Paid-Ahead Amounts) not later than two Business Days after receipt.
A Seller or the Servicer, as the case may be, will remit the aggregate
Repurchase Amount of any Receivables to be purchased from the Trust into the
Collection Account on or before the next succeeding Deposit Date.
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The Servicer will not be required to deposit in the Collection Account
amounts relating to the Receivables attributable to the following: (a) amounts
received with respect to each Receivable (or property acquired in respect
thereof) which has been repurchased by a Seller or purchased by the Servicer,
respectively, pursuant to the Sale and Servicing Agreement, (b) Investment
Earnings on funds deposited in the Collection Account or the Paid-Ahead Account,
(c) amounts to be reimbursed to the Servicer in respect of nonrecoverable
Monthly Advances, (d) Net Liquidation Proceeds of any Liquidated Receivable to
the extent such proceeds exceed its Principal Balance, (e) Administrative Fees
incurred by the Obligors prior to August 18, 1997, (f) any Excluded
Forced-Placed Insurance Premiums and (g) any Excluded Precomputed Amounts.
MONTHLY ADVANCES
With respect to each Receivable as to which there has been a Payment
Shortfall during the related Collection Period (other than a Payment Shortfall
arising from a Receivable which has been prepaid in full or which has been
subject to a Relief Act Reduction during the related Collection Period), on each
Deposit Date the Servicer will be obligated to make a Monthly Advance but only
to the extent that the Servicer, in its good faith judgment, expects to recover
such Monthly Advance from subsequent collections on such Receivable made by or
on behalf of the Obligor (but only to the extent of expected interest
collections in the case of a Simple Interest Receivable) or from Net Liquidation
Proceeds or insurance proceeds with respect to such Receivable. The Servicer
shall be reimbursed for any Monthly Advance from subsequent collections with
respect to such Receivable. If the Servicer determines in its good faith
judgment that an unreimbursed Monthly Advance shall not ultimately be
recoverable from subsequent collections or that the related Receivable will be
sold pursuant to the Sale and Servicing Agreement, the Servicer shall be
reimbursed for such Monthly Advance from collections on all Receivables in
accordance with the priority of distributions described herein. In determining
whether a Monthly Advance is or will be nonrecoverable, the Servicer need not
take into account that it might receive any amounts in a deficiency judgment
against an Obligor. The Servicer will not make a Monthly Advance in respect of
(i) the principal component of any scheduled payment on a Simple Interest
Receivable or (ii) a Payment Shortfall arising from a Receivable which has been
prepaid in full or which has been subject to a Relief Act Reduction during the
related Collection Period.
NET DEPOSITS
As an administrative convenience, the Servicer will be permitted to make
deposits of collections, Monthly Advances, and the aggregate Repurchase Amount
of Receivables purchased by the Servicer for, or with respect to, a Collection
Period net of distributions to be made to the Sellers or the Certificateholders
(to the extent of Investment Earnings and amounts received with respect to
Excluded Forced-Placed Insurance Premiums and Excluded Precomputed Amounts) or
to the Servicer (including, without limitation, the Servicer Payment, amounts
received with respect to Administrative Fees incurred by Obligors prior to
August 18, 1997, and amounts to be deducted in the definition of 'Available
Amount' and paid to the Servicer set forth under '--Distributions' below). The
Servicer, however, will account to the Owner Trustee and the Indenture Trustee
and to the Noteholders as if all such deposits and distributions were made on an
aggregate basis for each type of payment or deposit. On each Distribution Date,
the Servicer will pay directly to the Certificateholders any Investment
Earnings on funds deposited in the Collection Account or the Paid-Ahead
Account and any other amounts the Sellers are entitled to (such as
amounts received with respect to Excluded Forced-Placed Insurance
Premiums and Excluded Precomputed Amounts).
DISTRIBUTIONS
Deposits to Collection Account. On or before the third Business Day prior
to a Distribution Date, the Servicer will inform the Indenture Trustee and the
Paying Agent of the following amounts: (i) the Available Amount and the
Principal Distributable Amount for the next succeeding Distribution Date; (ii)
the aggregate Repurchase Amount, if any, of Receivables to be repurchased by the
Sellers or purchased by the Servicer with respect to the preceding Collection
Period; (iii) the amount to be withdrawn from the Reserve Account on the next
succeeding Deposit Date and deposited into the Collection Account; (iv) the
Noteholders' Interest Distributable Amount; (v) the Servicer Payment;
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(vi) the amount of Paid-Ahead Amounts received during the preceding Collection
Period and any Paid-Ahead Amounts to be deposited into the Collection Account on
the related Deposit Date; (vii) the Monthly Advances to be deposited into the
Collection Account on the related Deposit Date; (viii) the amount to be
deposited in the Reserve Account; and (ix) the amount, if any, to be withdrawn
from the Reserve Account and paid to the Certificateholders on such Distribution
Date.
On or before each Deposit Date, the Servicer will cause all collections and
other amounts constituting the Available Amount for the related Distribution
Date to be deposited into the Collection Account, together with any amounts
withdrawn by the Indenture Trustee from the Reserve Account on such Deposit
Date.
The 'AVAILABLE AMOUNT' on any Distribution Date is equal to the excess of
(A) the sum of (i) all amounts on deposit in the Collection Account attributable
to collections or deposits made in respect of the Receivables in the related
Collection Period (including Net Liquidation Proceeds, any recoveries on
Liquidated Receivables and any applied Paid-Ahead Amounts), (ii) the Repurchase
Amount for any Receivable repurchased by either Seller or purchased by the
Servicer and the price paid by the Servicer, if any, to purchase the assets of
the Trust as described herein under '--Termination' and (iii) any Monthly
Advances made by the Servicer (with respect to (ii) and (iii) above, to the
extent such amounts are paid on or before the Deposit Date immediately preceding
such Distribution Date), over (B) the sum of the following amounts (to the
extent that the Servicer has not already withheld such amounts from collections
on the Receivables): (i) any amounts incorrectly deposited in the Collection
Account, (ii) net investment earnings on the funds in the Collection Account and
the Paid-Ahead Account, (iii) any amounts received with respect to
Administrative Fees incurred by the Obligors prior to August 18, 1997, Excluded
Forced-Placed Insurance Premiums or Excluded Precomputed Amounts and (iv) any
other amounts, if any, permitted to be withdrawn from the Collection Account by
the Servicer (or to be retained by the Servicer from collections on the
Receivables) pursuant to the Sale and Servicing Agreement.
Principal Distributable Amount. The 'PRINCIPAL DISTRIBUTABLE AMOUNT' on
each Distribution Date is equal to the sum of the following amounts with respect
to the related Collection Period, in each case calculated in accordance with the
method specified in each Receivable: (i) (A) all payments of principal
(including all Principal Prepayments applied during the related Collection
Period as described below) made on each Simple Interest Receivable during the
related Collection Period and (B) the portion of the scheduled payment due
during such Collection Period allocable to principal using the actuarial method
with respect to each Precomputed Receivable (or the Principal Balance thereof if
such Precomputed Receivable is prepaid in full during such Collection Period),
(ii) the Principal Balance of each Receivable which, during the related
Collection Period, was repurchased by a Seller or purchased by the Servicer
pursuant to the Sale and Servicing Agreement (a 'REPURCHASED RECEIVABLE') and
(iii) the Principal Balance of each Receivable that became a Liquidated
Receivable during the related Collection Period; provided, however, that (x)
payments of principal (including Principal Prepayments) with respect to a
Repurchased Receivable received after the last day of the Collection Period as
of which the Receivable became a Repurchased Receivable shall not be included in
the Principal Distributable Amount and (y) if a Liquidated Receivable is
purchased by a Seller or the Servicer pursuant to the Sale and Servicing
Agreement on the Deposit Date immediately following the Collection Period in
which it became a Liquidated Receivable, no amount will be included with respect
to such Receivable in the Principal Distributable Amount pursuant to clause
(iii) of the definition thereof.
'PRINCIPAL BALANCE' means, as of the close of business on the last day of a
Collection Period, (a) with respect to a Precomputed Receivable, the amount
originally advanced thereunder minus the sum of (i) that portion of all
scheduled payments due on or prior to such day allocable to principal using the
actuarial method, (ii) any payment of the Repurchase Amount with respect to such
Precomputed Receivable allocable to principal and (iii) any Principal Prepayment
applied to reduce the Principal Balance of such Precomputed Receivable in full
and (b) with respect to a Simple Interest Receivable, the amount originally
advanced thereunder minus the sum of (i) the portion of all payments made by or
on behalf of the related Obligor on or prior to such day and allocable to
principal using the simple interest method and (ii) any payment of the
Repurchase Amount with respect to such Simple
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Interest Receivable allocable to principal, in each case without giving effect
to any adjustments due to bankruptcy or similar proceedings. A 'LIQUIDATED
RECEIVABLE' is a defaulted Receivable (i) as to which the Servicer (A) has
recovered all amounts that it expects to recover either by sale or disposition
of the related Financed Boat or otherwise or (B) has charged-off such Receivable
in accordance with its customary practices as modified by the Servicing Transfer
Agreements or (ii) which is 120 or more days past due, whichever occurs first.
'PRINCIPAL PREPAYMENT' means a payment or other recovery of principal on a
Receivable (including insurance proceeds and Net Liquidation Proceeds applied to
principal on a Receivable) which is received in advance of its Due Date. 'NET
LIQUIDATION PROCEEDS' means the monies collected by the Servicer (from whatever
source) during a Collection Period on a Liquidated Receivable, net of (i) any
payments required by law to be remitted to the Obligor and (ii) other expenses
customarily deducted from sales proceeds by third parties in connection with
sales or other dispositions of boats.
Deposits to the Distribution Accounts. On each Distribution Date, the
Servicer shall instruct the Indenture Trustee or the Paying Agent to make the
following distributions, to the extent of the sum of the Available Amount and
any amounts withdrawn from the Reserve Account then on deposit in the Collection
Account, in the following order of priority (except under the limited
circumstances provided herein):
(i) to the Servicer, the Servicer Payment with respect to such
Distribution Date and all unpaid Servicing Fees with respect to prior
Distribution Dates, to the extent such amounts are not deducted from the
Servicer's remittance to the Collection Account;
(ii) to the Note Distribution Account, the Class A Noteholders'
Interest Distributable Amount;
(iii) to the Note Distribution Account, the Class B Noteholders'
Interest Distributable Amount (unless the Notes have been accelerated as
described herein);
(iv) to the Note Distribution Account, the Class C Noteholders'
Interest Distributable Amount (unless the Notes have been accelerated as
described herein);
(v) to the Note Distribution Account, the Noteholders' Principal
Distributable Amount; and
(vi) to the Reserve Account, any remaining portion of the Available
Amount.
Notwithstanding the foregoing, if an Event of Default occurs and the Notes
are accelerated, the Class B Noteholders and the Class C Noteholders will not be
entitled to receive any payments until the Class A Notes have been paid in full,
and the Class C Noteholders will not be entitled to receive any payments until
the Class A Notes and the Class B Notes have been paid in full.
For purposes hereof, the following terms shall have the following meanings:
'CLASS A NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL' means, for any
Distribution Date, the excess of (i) the Class A Noteholders' Interest
Distributable Amount for the preceding Distribution Date over (ii) the amount in
respect of interest that was actually deposited in the Note Distribution Account
in respect of the Class A Notes on such preceding Distribution Date, plus
interest on the amount of interest due but not paid to the Class A Noteholders
on the preceding Distribution Date, to the extent permitted by law, at the
respective Interest Rates borne by the Class A Notes for the related Interest
Accrual Period.
'CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, the sum of (x) the Class A Noteholders' Monthly Interest
Distributable Amount for all classes of Class A Notes for such Distribution Date
and (y) the Class A Noteholders' Interest Carryover Shortfall for such
Distribution Date.
'CLASS A NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date for each class of Class A Notes, interest accrued during the
related Interest Accrual Period at the Interest Rate borne by such class of
Class A Notes on the outstanding principal balance of the Class A Notes of such
class on such Distribution Date (or, in the case of the first Distribution Date,
on the Closing Date).
'CLASS B NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL' means, for any
Distribution Date, the excess of (i) the Class B Noteholders' Interest
Distributable Amount for the preceding Distribution Date
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over (ii) the amount in respect of interest that was actually deposited into the
Note Distribution Account in respect of the Class B Notes on such preceding
Distribution Date, plus interest on the amount of interest due but not paid to
the Class B Noteholders on the preceding Distribution Date, to the extent
permitted by law, at the Interest Rate borne by the Class B Notes for the
related Interest Accrual Period.
'CLASS B NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, the sum of (x) the Class B Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and (y) the Class B Noteholders'
Interest Carryover Shortfall for such Distribution Date.
'CLASS B NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, interest accrued during the related Interest Accrual Period
at the Interest Rate borne by the Class B Notes on the outstanding principal
balance of the Class B Notes on such Distribution Date (or, in the case of the
first Distribution Date, on the Closing Date).
'CLASS C NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL' means, for any
Distribution Date, the excess of (i) the Class C Noteholders' Interest
Distributable Amount for the preceding Distribution Date over (ii) the amount in
respect of interest that was actually deposited into the Note Distribution
Account in respect of the Class C Notes on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to the Class C
Noteholders on the preceding Distribution Date, to the extent permitted by law,
at the Interest Rate borne by the Class C Notes for the related Interest Accrual
Period.
'CLASS C NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, the sum of (x) the Class C Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and (y) the Class C Noteholders'
Interest Carryover Shortfall for such Distribution Date.
'CLASS C NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, interest accrued during the related Interest Accrual Period
at the Interest Rate borne by the Class C Notes on the outstanding principal
balance of the Class C Notes on such Distribution Date (or, in the case of the
first Distribution Date, on the Closing Date).
'NOTEHOLDERS' DISTRIBUTABLE AMOUNT' means, for any Distribution Date, the
sum of the Noteholders' Principal Distributable Amount and the Noteholders'
Interest Distributable Amount.
'NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT' means, for any Distribution
Date, the sum of (x) the Class A Noteholders' Interest Distributable Amount, (y)
the Class B Noteholders' Interest Distributable Amount and (z) the Class C
Noteholders' Interest Distributable Amount.
'NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL' means, for any Distribution
Date, the excess of (x) the Noteholders' Principal Distributable Amount for the
preceding Distribution Date over (y) the amount in respect of principal that was
actually deposited in the Note Distribution Account on such preceding
Distribution Date.
'NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT' means, for any Distribution
Date, the sum of (i) the Principal Distributable Amount for such Distribution
Date and (ii) the Noteholders' Principal Carryover Shortfall for such
Distribution Date; provided, that the Noteholders' Principal Distributable
Amount shall not exceed the outstanding principal balance of the Notes. In
addition, on the Final Scheduled Distribution Date of each class of Notes, the
principal required to be deposited in the Note Distribution Account will include
the amount necessary (after giving effect to other amounts to be deposited in
the Note Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal balance of the related class of
Notes to zero.
SUBORDINATION OF THE CLASS B NOTES AND CLASS C NOTES; RESERVE ACCOUNT
In the event of defaults and delinquencies on the Receivables, the Class A
Notes will generally be senior in right to payment of interest and principal to
the Class B Notes and the Class C Notes, and the Class B Notes will generally be
senior in right to payment of interest and principal to the Class C Notes. The
protection afforded to the Class A Noteholders through subordination of the
Class B Notes and the Class C Notes will be effected by the preferential right
of the Class A Noteholders to be paid principal, and following the occurrence of
an Event of Default and acceleration of the Notes, interest and
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principal. Subject to the rights of the Class A Noteholders, the protection
afforded to the Class B Noteholders through subordination of the Class C Notes
will be effected by the preferential right of the Class B Noteholders (relative
to the Class C Noteholders) to be paid principal, and following the occurrence
of an Event of Default and acceleration of the Notes (after the Class A Notes
have been paid in full) interest and principal.
The Reserve Account will be funded with an initial deposit by the Sellers
of cash or Permitted Investments having a value of at least the Reserve Account
Initial Deposit. In addition, on each Distribution Date, the Reserve Account
will be augmented by the deposit therein of the Available Amount remaining after
the payment of the Servicer Payment and the deposit of the Noteholders'
Distributable Amount in the Note Distribution Account as described above under
'--Distributions.'
Under the Sale and Servicing Agreement, on each Deposit Date, the Indenture
Trustee is required to demand a withdrawal from the amounts on deposit in the
Reserve Account, up to the Available Reserve Account Amount, in an amount equal
to the excess, if any, of the Noteholders' Distributable Amount for the related
Distribution Date over the Available Amount for such Distribution Date remaining
after the payment of the Servicer Payment for such Distribution Date. Amounts so
withdrawn will be deposited in the Collection Account.
On each Distribution Date, the amount available in the Reserve Account (the
'AVAILABLE RESERVE ACCOUNT AMOUNT') will equal the lesser of (i) the amount on
deposit in the Reserve Account and (ii) the Specified Reserve Account Balance.
The aggregate amount withdrawn from the Reserve Account on any Deposit Date may
not exceed the Available Reserve Account Amount for the related Distribution
Date.
The Specified Reserve Account Balance on any Distribution Date will equal
4.50% of the Pool Balance as of the related Settlement Date, but in any event
will not be less than the lesser of (i) $5,325,240.59 (2.00% of the Cutoff Date
Pool Balance) and (ii) such Pool Balance; provided that the Specified Reserve
Account Balance will be calculated using a percentage of 8.00% on any
Distribution Date (beginning with the January 1998 Distribution Date) for which
(x) the Average Net Loss Ratio exceeds 2.75% or (y) the Average Delinquency
Percentage exceeds 3.00%. If the Specified Reserve Account Balance is increased
pursuant the foregoing proviso, it will revert back to the amount as previously
calculated if, for any three consecutive Distribution Dates, clauses (x) or (y)
is not triggered.
'AGGREGATE NET LOSSES' means, for any Distribution Date, the amount equal
to (i) the aggregate Principal Balance of all Receivables that became Liquidated
Receivables during the related Collection Period minus (ii) the Net Liquidation
Proceeds collected during such Collection Period with respect to any Liquidated
Receivables.
'AVERAGE DELINQUENCY PERCENTAGE' means, for any Distribution Date, the
average of the Delinquency Percentages for such Distribution Date and the
preceding two Distribution Dates.
'AVERAGE NET LOSS RATIO' means, for any Distribution Date, the average of
the Net Loss Ratios for such Distribution Date and the preceding two
Distribution Dates.
'DELINQUENCY PERCENTAGE' means, for any Distribution Date, the sum of the
outstanding Principal Balances of all Receivables which are 60 days or more
delinquent (including Receivables, which are not Liquidated Receivables,
relating to Financed Boats that have been repossessed), as of the close of
business on the last day of the Collection Period immediately preceding such
Distribution Date, determined in accordance with the Servicer's normal
practices, such sum expressed as a percentage of the Pool Balance as of the
close of business on the last day of such Collection Period.
'NET LOSS RATIO' means, for any Distribution Date, an amount expressed as a
percentage, equal to (i) the Aggregate Net Losses for such Distribution Date,
divided by (ii) the average of the Pool Balances on each of the related
Settlement Date and the last day of the related Collection Period.
The Specified Reserve Account Balance may be reduced to a lesser amount as
determined by the the Certificateholders; provided that such reduction may not
adversely affect any rating by a Rating Agency of a Note.
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The availability of funds in the Reserve Account and, in the case of the
Class A Notes, the subordination of the Class B Notes and the Class C Notes,
and, in the case of the Class B Notes, the subordination of the Class C Notes,
are intended to enhance the likelihood of receipt by Noteholders of the full
amount of principal and interest due them, and to decrease the likelihood that
the Noteholders will experience losses. There is no other protection against
losses on the Receivables.
In certain circumstances, the Reserve Account could be depleted. If the
amount required to be withdrawn from the Reserve Account to cover shortfalls in
collections on the Receivables exceeds the amount of available cash in the
Reserve Account, Noteholders could incur losses or a temporary shortfall in the
amounts distributed to the Noteholders could result, which could, in turn,
increase the average life of the Notes. Such shortfalls may result from, among
other things, Aggregate Net Losses on the Receivables or the failure by either
Seller or the Servicer to make any remittance under the Sale and Servicing
Agreement.
On each Distribution Date, if the amount on deposit in the Reserve Account
(after giving effect to all deposits thereto or withdrawals therefrom on the day
preceding such Distribution Date) is greater than the Specified Reserve Account
Balance for such Distribution Date, the Servicer will instruct the Indenture
Trustee to distribute the amount of the excess to the Certificateholders in
accordance with the Sale and Servicing Agreement and the Trust Agreement. Upon
distribution to the Certificateholders of amounts from the Reserve Account, the
Noteholders will not have any rights in, or claims to, such amounts.
ADMINISTRATION AGREEMENTS
Each of CITSF and Chase, as Administrators, will enter into an
Administration Agreement with the Trust and the Indenture Trustee. Pursuant to
each Administration Agreement, the Administrator party thereto will agree on
behalf of the Trust to provide certain notices and to perform certain other
administrative functions required by the Transfer and Servicing Agreements and
the Indenture and specified in such Administration Agreement as being the
responsibility of such Administrator. Compensation for the performance by CITSF
of its obligations under the Administration Agreement to which it is a party
will be included in the Servicing Fee. The Servicer will be responsible for
compensating Chase for the performance of Chase's obligations under the
Administration Agreement to which Chase is a party.
Each Administration Agreement provides that the Administrator party thereto
may act directly or through its agents or attorneys pursuant to agreements
entered into with any of them, and that such Administrator will not be liable
for the conduct or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by such Administrator with due care.
STATEMENTS TO THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
Prior to each Distribution Date, the Servicer will provide to the Owner
Trustee and Indenture Trustee a statement setting forth substantially the same
information for such date and the related Collection Period as is required to be
provided in the periodic reports provided to Noteholders described herein under
'Certain Information Regarding the Notes--Reports.'
EVIDENCE AS TO COMPLIANCE
The Sale and Servicing Agreement will provide that a firm of independent
public accountants will annually furnish to the Sellers, the Owner Trustee and
the Indenture Trustee a statement as to compliance by the Servicer during the
preceding twelve months (or, in the case of the first such certificate, from the
Closing Date) with certain standards relating to the servicing of the
Receivables, or as to the effectiveness of its processing and reporting
procedures and certain other matters.
The Sale and Servicing Agreement will also provide for delivery to the
related firm of independent public accountants referred to in the immediately
preceding paragraph, substantially simultaneously with the delivery of such
accountants' statement referred to above, of a certificate signed by an officer
of the Servicer stating that the Servicer has fulfilled its obligations in all
material respects under the Sale and Servicing Agreement throughout the
preceding twelve months (or, in the case of the first such
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certificate, from the Closing Date) or, if there has been a default in the
fulfillment of any such obligation, describing each such default.
Copies of such statements and certificates may be obtained by Noteholders
by a request in writing addressed to the Servicer.
CERTAIN MATTERS REGARDING THE SERVICER
The Sale and Servicing Agreement will provide that the Servicer may not
resign from its obligations and duties as Servicer thereunder, except upon a
determination that the Servicer's performance of such duties is no longer
permissible under applicable law. Such resignation will not become effective
until a successor Servicer has assumed the Servicer's servicing obligations and
duties under the Transfer and Servicing Agreements.
Pursuant to the Sale and Servicing Agreement, the Sellers will have the
right to terminate all rights and obligations of the Servicer thereunder at any
time after a calendar year, or in the case of 1997, the last three calendar
months of 1997, during which Aggregate Losses on the Receivables exceed 1.20% of
the average of the month-end principal balances of the Receivables for each
month in such calendar year, or such three calendar months, so long as Chase,
Chase USA or another party acceptable to the Rating Agencies assumes the
Servicer's servicing obligations and duties under the Transfer and Servicing
Agreements.
The Sale and Servicing Agreement will provide that neither the Servicer nor
any of its shareholders, affiliates, directors, officers, employees and agents
shall be under any liability to the Owner Trustee, the Indenture Trustee, the
Trust, the Certificateholders or the Noteholders for taking any action or for
refraining from taking any action pursuant to the Transfer and Servicing
Agreements or for errors in judgment; provided, however, that neither the
Servicer nor any such person will be protected against any liability which
otherwise would be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, the Transfer and Servicing
Agreements will provide that the Servicer is under no obligation to appear in,
prosecute or defend any legal action which arises under the Transfer and
Servicing Agreements and that, in its opinion, may cause it to incur any expense
or liability. The Servicer may, however, undertake any reasonable action that it
may deem necessary or desirable in respect of the Transfer and Servicing
Agreements and the rights and duties of the parties thereto and the interests of
the Noteholders thereunder. In the event that the Servicer, in its discretion,
undertakes any action which it deems necessary or desirable in connection with
its rights and duties under the Transfer and Servicing Agreements or the
interests of the Noteholders thereunder, the legal expenses and costs of such
action and any liability resulting therefrom will be expenses, costs and
liabilities of the Trust, and the Servicer will be entitled to be reimbursed
therefor out of amounts otherwise distributable to the Certificateholders from
the Reserve Account.
Any corporation or other entity into which the Servicer may be merged or
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which the Servicer is a party, or any corporation
or other entity succeeding to the business of the Servicer, which corporation or
other entity assumes the obligations of the Servicer, will be the successor of
the Servicer under the Transfer and Servicing Agreements.
EVENTS OF SERVICING TERMINATION
'EVENTS OF SERVICING TERMINATION' under the Sale and Servicing Agreement
will consist of (i) any failure by the Servicer to deliver to the Owner Trustee
or the Indenture Trustee the Servicer's certificate for the related Collection
Period or any failure by the Servicer to deliver to the Owner Trustee or the
Indenture Trustee for deposit in any Trust Account any proceeds or payments
required to be delivered under the terms of the Notes or the Sale and Servicing
Agreement (or, in the case of a payment or deposit to be made not later than the
Deposit Date, the failure to make such payment or deposit on such Deposit Date),
which failure continues unremedied for five Business Days after discovery by the
Servicer or for five Business Days after receipt of written notice to the
Servicer by the Owner Trustee or the Indenture Trustee or to the Indenture
Trustee and the Servicer by Noteholders representing not less than 25% of the
aggregate principal amount of the Controlling Notes then
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outstanding; (ii) any failure by the Servicer to duly observe or perform in any
material respect any other covenant or agreement of the Servicer set forth in
the Sale and Servicing Agreement or Indenture, which failure materially
adversely affects the rights of the Trust or the Noteholders or the
Certificateholders and which continues unremedied for 60 days after receipt of
written notice of such failure to the Servicer by the Owner Trustee or the
Indenture Trustee or to the Indenture Trustee and the Servicer by Noteholders
representing not less than 25% of the aggregate principal amount of the
Controlling Notes; (iii) a court or other governmental authority having
jurisdiction in the premises shall have entered a decree or order for relief in
respect of the Servicer in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Servicer, as the case may be, or for any substantial
liquidation of its affairs, and such order remains undischarged and unstayed for
at least 60 days; or (iv) the Servicer shall have commenced a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall have consented to the entry of an order for relief
in an involuntary case under any such law, or shall have consented to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian or sequestrator (or other similar official) of the Servicer
or for any substantial part of its property, or shall have made any general
assignment for the benefit of its creditors, or shall have failed to, or
admitted in writing its inability to, pay its debts as they become due, or shall
have taken any corporate action in furtherance of the foregoing.
RIGHTS UPON EVENT OF SERVICING TERMINATION
As long as an Event of Servicing Termination under the Sale and Servicing
Agreement remains unremedied, the Indenture Trustee or Noteholders representing
not less than a majority of the aggregate principal amount of the Controlling
Notes then outstanding may terminate all the rights and obligations of the
Servicer under the Sale and Servicing Agreement, whereupon Chase will succeed to
all the responsibilities, duties and liabilities of the Servicer under the Sale
and Servicing Agreement and will be entitled to similar compensation
arrangements. In the event that Chase is unwilling or unable to so act, the
Sellers may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor Servicer to act as successor to the outgoing
Servicer. The Sellers may make such arrangements for compensation to be paid,
which in no event may be greater than the Servicing Fee paid to the Servicer
under the Sale and Servicing Agreement.
WAIVER OF PAST DEFAULTS
The Noteholders representing not less than a majority of the aggregate
principal amount of the Controlling Notes then outstanding may, on behalf of all
the Noteholders, waive any default by the Servicer in the performance of its
obligations under the Sale and Servicing Agreement and its consequences, except
an Event of Servicing Termination in making any required deposits to or payments
from any of the Trust Accounts in accordance with the Sale and Servicing
Agreement. Therefore, the Controlling Noteholders have the ability, as limited
above, to waive defaults by the Servicer that could in certain instances
materially adversely affect the Class B Notes and/or the Class C Notes. No such
waiver will impair such Class B Noteholders' or Class C Noteholders' rights with
respect to subsequent defaults.
AMENDMENT
Each of the Transfer and Servicing Agreements may be amended by the parties
thereto, without prior notice to the Noteholders but with prior consent of the
Owner Trustee and notice to the Rating Agencies (i) to cure any ambiguity, to
correct or supplement any provision therein or in the Notes or the Certificates
that may be inconsistent with any other provision therein, to evidence a
succession to the Servicer or a Seller pursuant to the related Transfer and
Servicing Agreement, or to add any other provisions with respect to matters or
questions arising under such Transfer and Servicing Agreement that are not
inconsistent with the provisions of such Transfer and Servicing Agreement;
provided, however, that such action will not, on the basis of officer's
certificate of the Servicer and the Sellers reasonably acceptable to the Owner
Trustee and the Indenture Trustee, materially adversely affect the interests of
the Trust, any Noteholder or any Certificateholder or (ii) to effect a transfer
or assignment of
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the Trust's or the Servicer's rights, obligations and duties under such Transfer
and Servicing Agreement. The Transfer and Servicing Agreements may also be
amended by the Sellers, the Servicer, the Owner Trustee and the Indenture
Trustee with the consent of the Noteholders representing not less than a
majority of the aggregate principal amount of the Notes then outstanding and
Certificateholders representing a majority of the Certificate Interest for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of such Transfer and Servicing Agreements or of modifying in
any manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Receivables or distributions that are required to be made for the benefit of the
Noteholders or the Certificateholders; or (ii) reduce the aforesaid percentage
of the Noteholders or the Certificateholders that are required to consent to any
such amendment, without the consent of Noteholders representing 100% of the
aggregate principal amount of the Notes then outstanding or Certificateholders
representing 100% of the Certificate Interest, as applicable. In addition to the
foregoing limitations, the Sellers will covenant in the Sale and Servicing
Agreement that they will not amend the Trust Agreement without the prior written
consent of CITSF, as Administrator.
TERMINATION
The obligations of the Servicer, the Sellers, the Owner Trustee and the
Indenture Trustee pursuant to the Transfer and Servicing Agreements will
terminate upon the earlier of (i) the Distribution Date next succeeding the
month that is six months after the maturity or other liquidation of the last
Receivable and the disposition of any amounts received upon liquidation of any
property remaining in the Trust and (ii) the payment to Noteholders of all
amounts required to be paid to them pursuant to the Transfer and Servicing
Agreements.
In order to avoid excessive administrative expense, the Servicer will be
permitted at its option to purchase from the Trust, as of the last day of any
applicable Collection Period, if the outstanding Pool Balance with respect to
the Receivables held by the Trust is 5% or less of the Cutoff Date Pool Balance
as of such last day, all assets of the Trust (other than the Trust Accounts,
except for the Paid-Ahead Account), including the remaining Receivables, any
related Paid-Ahead Amounts and any rights of the Trust to Liquidated
Receivables, at the price specified in the Sale and Servicing Agreement, which
price shall not be less than the amount necessary to redeem the Class C Notes on
the related Distribution Date after paying the Servicer Payment to the Servicer.
The subsequent payment to the Class C Noteholders of all amounts required to be
distributed to them pursuant to the Indenture will effect early redemption of
the Class C Notes.
The Indenture Trustee will give written notice of termination to each Class
C Noteholder of record, which notice will specify the Distribution Date upon
which such Class C Noteholders may surrender their Class C Notes to the Transfer
Agent and Registrar for final payment. The final distribution to any Class C
Noteholder will be made only upon surrender and cancellation of such holder's
Class C Note (whether a Definitive Note or the Notes registered in the name of
Cede representing the Class C Notes) at the office or agency of the Transfer
Agent and Registrar specified in the notice of termination.
Subject to applicable law and after the Indenture Trustee has taken certain
measures to notify Noteholders, any money held by the Indenture Trustee or the
Paying Agent in trust for payment on the Notes that remain unclaimed for two
years shall, upon request of the Trust, be paid to the Trust. Following any such
payment, the Owner Trustee and the Paying Agent shall no longer be liable to any
Noteholder with respect to such unclaimed amount, and any claim with respect to
such amount shall be an unsecured claim against the Trust. Subject to applicable
law, any funds that then remain shall be paid to the Certificateholders.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES TO THE TRUST
The Receivables are 'chattel paper' as defined in the Uniform Commercial
Code (the 'UCC') in effect in the State of New York. Pursuant to the UCC, the
sale of chattel paper is treated in a manner similar to a security interest in
chattel paper. In order to protect the Trust's ownership or security interest in
the Receivables, the Sellers will file UCC-1 financing statements with the
appropriate governmental authorities in the States of New York, Delaware and,
with respect to the Chase Financial Receivables, Ohio, to give notice of Chase
USA's, the Trust's and the Indenture Trustee's ownership of and security
interest in the Receivables and their proceeds. Under the Sale and Servicing
Agreement, the Servicer will be obligated to maintain the perfection of the
Trust's and the Indenture Trustee's interest in the Receivables. It should be
noted, however, that a purchaser of chattel paper who gives new value and takes
possession of it in the ordinary course of such purchaser's business has
priority over a security interest, including an ownership interest, in the
chattel paper that is perfected by filing UCC-1 financing statements and not by
possession of such chattel paper by the original secured party, if such
purchaser acts in good faith without knowledge that the related chattel paper is
subject to a security interest, including an ownership interest. Any such
purchaser would not be deemed to have such knowledge merely because there are
UCC filings and would not learn of the sale of or security interest in the
Receivables from a review of the Receivables files since they would not be
marked to show such sale, although Chase Marine Finance's master computer
records will indicate such sale.
Each of the Sellers intends that the transfer of the Receivables by it to
the Trust under the Sale and Servicing Agreement constitute a sale. In the event
that either Seller were to become insolvent, the FDIA, as amended by FIRREA,
sets forth certain powers that the FDIC may exercise if it were appointed
receiver of such Seller. To the extent that a Seller has granted a security
interest in its related Receivables to the Trust and that interest was validly
perfected before such Seller's insolvency and was not taken in contemplation of
insolvency or with the intent to hinder, delay or defraud such Seller or its
creditors, that security interest would not be subject to avoidance by the FDIC
as receiver of such Seller. Positions taken by the FDIC staff prior to the
passage of FIRREA do not suggest that the FDIC, if appointed receiver of either
Seller, would interfere with the timely transfer to the Trust of payments
collected on the Receivables. If, however, the FDIC were to assert a contrary
position, or were to require the Owner Trustee to establish its rights to those
payments by submitting to and completing the administrative claims procedure
established under the FDIA, or the conservator or receiver were to request a
stay of proceedings with respect to such Seller as provided under the FDIA,
delays in payments on the Notes and possible reductions in the amount of those
payments could occur.
Prior to the Closing Date, the Chase Financial Receivables were sold by
CFAC and CFHI to Chase USA. Each of CFAC, CFHI and Chase USA intends that the
transfers of the Chase Financial Receivables to Chase USA constitute true sales,
rather than pledges to secure indebtedness. CFAC and CFHI will take all actions
that are required to perfect Chase USA's ownership interest in such Receivables
by filing UCC-1 financing statements with the appropriate governmental
authorities in the State of Ohio. Notwithstanding the foregoing, if CFAC or CFHI
were to become a debtor under the Bankruptcy Code and CFAC or CFHI or a creditor
or trustee-in-bankruptcy of CFAC or CFHI were to take the position that the sale
of those Chase Financial Receivables transferred by CFAC or CFHI, as the case
may be, to Chase USA should be recharacterized as a pledge of such Receivables
to secure a borrowing of CFAC or CFHI, then delays in payments of collections of
those Chase Financial Receivables to the Trust could occur or (should the court
rule in favor of any such trustee, debtor or creditor) reductions in the amount
of such payments, or a reduction in the amount of those Chase Financial
Receivables securing such a borrowing, could result.
The U.S. Court of Appeals for the Tenth Circuit issued its opinion in
Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided May
27, 1993) in which it concluded (noting that its position is in contrast to that
taken by another court) that accounts receivable sold by the debtor prior
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to the filing for bankruptcy remain property of the debtor's bankruptcy estate.
Although the Chase Financial Receivables are likely to be viewed as 'chattel
paper,' as defined in the UCC, rather than as accounts, the rationale behind the
Octagon ruling is equally applicable to chattel paper. The circumstances under
which the Octagon ruling would apply are not fully known, and the extent to
which the Octagon decision will be followed in other courts or outside the Tenth
Circuit is not certain. If the holding in the Octagon case were applied in a
bankruptcy of CFAC or CFHI, however, even if the transfers of the Chase
Financial Receivables to Chase USA were treated as sales, the Chase Financial
Receivables transferred by CFAC or CFHI, as the case may be, would be part of
the bankruptcy estate of such debtor and would be subject to claims of certain
creditors and delays and reductions in payments to the Trust and holders of the
Notes, or a reduction in the amount of Receivables supporting the Notes, could
result.
SECURITY INTERESTS IN FINANCED BOATS
The Receivables represent marine retail installment sale contracts,
purchase money notes and other notes that evidence the credit sale or
refinancing of Financed Boats to Obligors. When originated, each Receivable was
secured by a security interest in the Financed Boat financed thereby. Each such
security interest was required to be perfected under applicable state law and,
in the case of certain Financed Boats described below, under applicable federal
law. Generally, security interests in boats may be perfected in one of three
ways: in 'title' states, by notation of the secured party's lien on the
certificate of title issued by an applicable state motor vehicle or wildlife
department or other appropriate state agency; in non-title states, by filing a
UCC-1 financing statement; and in respect of a boat eligible for documentation
under federal law, by filing all documents necessary to create a first preferred
Ship Mortgage (a 'PREFERRED MORTGAGE') under the Ship Mortgage Act of 1920 (1988
Recodification) Section30101 et seq. (the 'SHIP MORTGAGE STATUTES'). Vessels
that meet the federal five net ton standard qualify for documentation under
federal law ('U.S. DOCUMENTABLE BOATS'). However, federal documentation of
vessels used exclusively for recreational purposes is discretionary.
Chase Marine Finance had policies and procedures in place to ensure that
all actions necessary under the laws of the states in which the Financed Boats
were located at the time of origination of the Receivables were taken to perfect
the originators' security interests in the Financed Boats. In addition, it was
Chase Marine Finance's practice to require that all U.S. Documentable Boats of
27 feet or more in length or securing Marine Loans having original principal
balances of $75,000 or more be federally documented and that a Preferred
Mortgage on each such boat be filed. Chase Marine Finance's policy also required
prior perfection of a security interest in any such boat under applicable state
law in order to protect itself prior to completion of federal documentation. If
a security interest in a boat is initially perfected by a UCC-1 filing or
notation on a title under state law and such boat subsequently becomes a
federally documented vessel, the holder of such security interest could lose the
priority of its security interest in such boat under state law to the holder of
a subsequently perfected Preferred Mortgage covering such boat.
In the event that the originator of a Receivable failed to perfect the
security interest in a Financed Boat (for example, by complying with the UCC
rather than the applicable certificate of title statute, or by failing to comply
with applicable state title law, or the Ship Mortgage Statutes or applicable
United States Coast Guard (the 'COAST GUARD') regulations), such originator
would not have a perfected first priority security interest in such Financed
Boat. In this event, if third party liens equal or exceed the value of the
Financed Boat, the only recourse of the Trust would be against the Obligor on an
unsecured basis, if applicable, against a Dealer pursuant to its repurchase
obligation or against the related Seller.
Pursuant to the terms of the Sale and Servicing Agreement, each Seller will
assign its security interest in the Financed Boats to the Trust and the Trust
will pledge its security interest in the Financed Boats to the Indenture
Trustee. However, due to administrative burden and expense, none of the Sellers,
the Servicer or the Trust will amend the certificates of title or file
assignments of the UCC-1 financing statements with respect to the Financed Boats
to identify the Trust or the Indenture Trustee as the new secured party, nor
will any of the Sellers or the Owner Trustee execute or file any transfer
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instruments with the appropriate governmental authorities. In a majority of
states, the assignment of a Receivable together with the related security
interest is, as a matter of state law, an effective conveyance of such security
interest without amendment of any lien noted on the related certificates of
title or of any UCC-1 financing statements or the filing of any transfer
instruments with the appropriate governmental authorities, and the new owner of
the Receivable succeeds to the original secured party's rights as owner of the
Receivable against creditors of the Obligor. In certain title states, in the
absence of such certificate of title amendment or assignment of record to
reflect the successive assignments of the security interest in the Financed
Boat, the related Seller (if not the secured party of record), the Trust and/or
the Indenture Trustee may not have a perfected security interest in the related
Financed Boat. Under the Ship Mortgage Statutes, in the absence of an assignment
of record of a Preferred Mortgage, the assignment of the related Receivable by
itself will not convey the perfected preferred mortgage lien on the Financed
Boat subject to such Preferred Mortgage and neither the related Seller (if not
the secured party of record) nor the Trust will have a perfected security
interest in such Financed Boat.
Pursuant to the Sale and Servicing Agreement, the Sellers have agreed to
cause filings of the assignments of each Preferred Mortgage (each a 'Designated
Preferred Mortgage') relating to a Receivable having an original Principal
Balance of $50,000 or more showing the chain of ownership of such Preferred
Mortgage from the originator of such Receivable to the Trust within 120 days of
the Closing Date. The Sellers believe that the filing of assignments of
Preferred Mortgages relating to all Receivables having an original Principal
Balance of $50,000 or more should result in the assignment to the Trust of
substantially all of the Preferred Mortgages securing the Receivables. However,
due to the administrative burden and expense of determining which Receivables
having an original Principal Balance of less than $50,000 were secured by U.S.
Documentable Boats, assignments will not be made of all Preferred Mortgages
relating to the Receivables. Under the Ship Mortgage Statutes, in the absence of
an assignment of a Preferred Mortgage, or in the event an assignment of a
Preferred Mortgage is not effective, the Trust will not have a perfected
security interest in the related Financed Boat. In such case, if third party
liens equal or exceed the value of such Financed Boat, the only recourse of the
Trust would be against the related Obligor on an unsecured basis or (in the case
of a Receivable having an original Principal Balance of $50,000 or more) against
the related Seller pursuant to its repurchase obligation.
Except as described above, in the absence of fraud or forgery by a boat
owner or administrative error by state recording officials or the Coast Guard,
the notation of the lien of the originator of each Receivable on the certificate
of title with respect to the related Financed Boat, the filing of a UCC-1
financing statement against the Obligor or the filing of an assignment of the
related Preferred Mortgage, if any, as described above will be sufficient to
protect the Trust against the rights of subsequent purchasers of such Financed
Boat or subsequent lenders who take a security interest in such Financed Boat.
If there are any Financed Boats as to which the originator of the related
Receivable has failed to perfect the security interest assigned to the Trust,
(i) such security interest would be subordinate to, among others, holders of
perfected security interests in such Financed Boats and (ii) subsequent
purchasers of such Financed Boats would take possession free and clear of such
security interest. There is also a risk that, in not identifying the Trust as
the new secured party on the certificates of title or executing and filing of
transfer instruments with the Coast Guard or assignments of UCC-1 financing
statements with state officials, the security interest of the Trust or Indenture
Trustee could be released through fraud or negligence.
A security interest perfected by a Preferred Mortgage has a nationwide
scope and no further action is necessary when an obligor moves or the related
boat is relocated. Actions must be taken to maintain the perfection of security
interests in boats perfected under state law if the boat (in the case of a
'title' state) or the Obligor (in the case of a 'UCC' state) moves to a state
other than the state in which such security interest was originally perfected.
Under the laws of most states, a perfected security interest in a Financed Boat
continues for four months after the Financed Boat is relocated in a new state
(from the state in which a financing statement was properly filed initially to
perfect the security interest or in which the certificate of title was issued)
and thereafter until the owner re-registers
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such Financed Boat in the new state. Many 'title' states require surrender of a
certificate of title to re-register a Financed Boat. Accordingly, to allow
re-registration the Servicer must surrender possession if it holds the
certificate of title to a Financed Boat or, in the case of a Financed Boat
registered in a state which provides for notation of liens on certificates of
title but not possession of the certificates of title by the lien holder, the
Servicer would typically receive notice of surrender if the security interest in
the Financed Boat is noted on the certificate of title. Accordingly, in such
cases, the Servicer should have the opportunity to re-perfect the security
interest in the Financed Boat in the state of relocation. In states that do not
issue a certificate of title at registration of a Financed Boat, re-registration
in a different state could defeat perfection. In the ordinary course of
servicing its portfolio of marine loans, the Servicer takes steps to effect such
re-perfection upon receipt of notice of re-registration or information from the
Obligor as to relocation. Similarly, when an Obligor sells a titled Financed
Boat showing a lienholder, unless the Servicer surrenders possession of the
certificate of title, it generally will receive notice as a result of its lien
noted thereon and accordingly will have an opportunity to require satisfaction
of the related Receivable before release of the lien. Under the Sale and
Servicing Agreement, the Servicer is obligated to take such steps, at the
Servicer's expense, as are necessary to maintain perfection of security
interests in the Financed Boats.
Under the laws of many states, certain possessory liens for repairs
performed on a Financed Boat and storage, as well as certain rights in favor of
federal and state governmental authorities arising from the use of a boat in
connection with illegal activities, may take priority over a security interest
perfected under state law. Certain U.S. federal tax liens may also have priority
over the lien of a secured party. Under the Ship Mortgage Statutes, a Preferred
Mortgage supersedes a perfected state law security interest, a state created
lien or forfeiture rights (so long as the secured party is innocent of wrong
doing) but is subordinate to preferred maritime liens. Each Seller will
represent in the Sale and Servicing Agreement that, as of the Cutoff Date, it
has no knowledge of any such liens with respect to any Financed Boat related to
a Receivable transferred by such Seller to the Trust. However, such liens could
arise at any time during the term of a Receivable. No notice will be given to
the Owner Trustee or the Indenture Trustee in the event such a lien arises.
ENFORCEMENT OF SECURITY INTERESTS IN FINANCED BOATS
The Servicer on behalf of the Trust and the Indenture Trustee may take
action to enforce the Trust's security interest by repossession and resale of
the Financed Boats securing the Receivables. The actual repossession may be
contracted out to third party contractors. Under the Uniform Commercial Code and
laws applicable in most states, a creditor can repossess a boat securing a loan
by voluntary surrender, 'self-help' repossession that is 'peaceful' (i.e.,
without breach of the peace) and, in the absence of voluntary surrender and the
ability to repossess without breach of the peace, by judicial process. Some
jurisdictions require that the obligor be notified of the default and be given a
time period within which to cure the default prior to repossession. Generally,
this right of cure may be exercised on a limited number of occasions during the
term of the contract. The Uniform Commercial Code and consumer protection laws
in most states place restrictions on repossession sales, including requiring
prior notice to the debtor and commercial reasonableness in effecting such a
sale. In the event of such repossession and resale of a Financed Boat, the Trust
would be entitled to be paid out of the sale proceeds before such proceeds could
be applied to the payment of the claims of unsecured creditors or the holders of
subsequently perfected security interests or, thereafter, to the debtor. Under
federal law, notice to the owner of a Financed Boat subject to a Preferred
Mortgage, any other lienholders who have filed notice with the Coast Guard and
the Coast Guard is required to pass ownership of such Financed Boat in a
non-judicial sale.
Under the Uniform Commercial Code and laws applicable in most states, a
creditor is entitled to obtain a deficiency judgment from a debtor for any
deficiency on repossession and resale of the boat securing such debtor's loan.
However, many states impose prohibitions or limitations on deficiency judgments.
In general, a defaulting Obligor may not have sufficient assets to make the
pursuit of a deficiency worthwhile.
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Certain other statutory provisions, including federal and state bankruptcy
and insolvency laws, and general equitable principles may limit or delay the
ability of a lender to repossess and resell collateral or enforce a deficiency
judgment. Certain other factors, including the value of a Financed Boat, may
limit the amount realized on the sale of the Financed Boat as collateral to an
amount less than the amount due on the Receivable.
OTHER MATTERS
Numerous federal and state consumer protection laws may impose requirements
applicable to the origination and servicing of the Receivables, including the
Truth in Lending Act, the Fair Credit Reporting Act, the Equal Credit
Opportunity Act, the Magnuson-Moss Warranty Act, the Fair Debt Collection
Practices Act and the Federal Trade Commission Act.
The so-called 'Holder-in-Due-Course' Rule of the Federal Trade Commission
(the 'FTC RULE'), other state statutes or the common law in certain states have
the effect of subjecting a seller (and certain related lenders and their
assignees) in a consumer credit transaction and any assignee of the seller
(which would include the Trust) to all claims and defenses that the obligor in
the transaction could assert against the seller of the goods. Liability of a
subsequent holder under the FTC Rule is limited to the amounts paid by the
obligor under the contract, and a subsequent holder of the contract may also be
unable to collect any balance remaining due thereunder from the obligor. The
Uniform Consumer Credit Code applicable in certain states contains provisions
that generally duplicate this rule.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material United States ('U.S.')
federal income tax consequences that may be relevant to the purchase, ownership
and disposition of the Notes by an investor who purchases the Notes pursuant to
their original issuance at their original issue price. This summary is based
upon the Internal Revenue Code of 1986, as amended (the 'CODE'), the Treasury
regulations promulgated thereunder, administrative rulings or pronouncements and
judicial decisions, all as in effect on the date hereof and all of which are
subject to change, possibly retroactively. The following discussion does not
deal with all aspects of U.S. income taxation, nor does it address U.S. federal
income tax consequences that may be relevant to certain types of investors, such
as banks, insurance companies, dealers in securities, tax-exempt organizations
or persons whose functional currency is not the U.S. dollar, who may be subject
to special treatment under the Code. In addition, the following discussion does
not address the alternative minimum tax consequences of an investment in the
Notes or the consequences of such an investment under state and local tax laws
or foreign tax laws. Accordingly, investors should consult their own tax
advisors to determine the federal, state, local, and other tax consequences that
may be relevant to their purchase, ownership and disposition of the Notes based
upon their particular facts and circumstances. Prospective investors should note
that no rulings have been or will be sought from the Internal Revenue Service
('IRS') with respect to any of the U.S. federal income tax consequences
discussed herein and opinions of counsel are not binding on the IRS or the
courts. Thus, no assurance can be given that the IRS will not take positions
contrary to those described below. The opinions of Simpson Thacher & Bartlett,
special U.S. federal income tax counsel to the Sellers ('FEDERAL TAX COUNSEL'),
described herein will be based upon certain representations and assumptions,
including, but not limited to, the assumption that all relevant parties will
comply with the terms of the Trust Agreement and related documents.
This summary is intended as an explanatory discussion of the tax matters
affecting investors generally, but does not purport to furnish information in
the level of detail or with the attention to the investor's specific tax
circumstances that would be provided by an investor's own tax adviser.
Accordingly, each investor is advised to consult its own advisers with regard to
the tax consequences to it of investing in the Notes. An opinion of Federal Tax
Counsel will be filed as an Exhibit to the Registration Statement.
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For purposes of the following discussion, except as otherwise provided
herein, the term 'NOTEHOLDER' refers to the beneficial owner of a Note. In
addition, the discussion below assumes that Noteholders will hold their Notes as
'capital assets' within the meaning of Section 1221 of the Code.
TRUST TREATED AS PARTNERSHIP
Tax Characterization of the Trust. In the opinion of Federal Tax Counsel,
the Trust will not be classified as an association (or publicly traded
partnership) taxable as a corporation. This opinion is based on, among other
things, certain facts and assumptions contained in such opinion.
TAX CONSEQUENCES
Treatment of the Notes as Indebtedness. The Trust and the Noteholders, by
their purchase of the Notes, agree to treat the Notes as debt for all U.S. tax
purposes. In the opinion of Federal Tax Counsel, the Notes will be characterized
as debt for U.S. federal income tax purposes. The discussion below assumes this
characterization of the Notes is correct.
Interest Income on the Notes. The Notes will not be considered to have
been issued with original issue discount ('OID') in excess of the statutorily
defined de minimis amount (i.e., 1/4% of the principal amount of a Note
multiplied by its weighted average to maturity). Consequently, the stated
interest thereon will be taxable to a Noteholder as ordinary interest income at
the time it is received or accrued in accordance with such Noteholder's method
of tax accounting. Under the applicable Treasury regulations, a holder of a Note
issued with a de minimis amount of OID must include such OID in income, on a pro
rata basis, as principal payments are made on the Note. A purchaser who buys a
Note for more or less than its principal amount generally will be subject,
respectively, to the premium amortization or market discount rules of the Code.
Sale or Other Disposition. If a Noteholder sells or otherwise disposes of
a Note in a taxable transaction, the former Noteholder will recognize gain or
loss in an amount equal to the difference between the amount realized on such
sale or other disposition and the former Noteholder's adjusted tax basis in the
Note. The adjusted tax basis of a Note to a particular Noteholder generally will
equal the holder's cost therefor increased by any market discount previously
included in income by such Noteholder and decreased by the amount of bond
premium (if any) previously amortized and the amount of any payments, other than
payments of stated interest, previously received by such Noteholder with respect
to such Note. Any such gain or loss will be capital gain or loss if the Note was
held as a capital asset, except to the extent such gain represents accrued
interest or accrued market discount not previously included in income. Capital
losses generally may be used only to offset capital gains.
Foreign Noteholders. For purposes of this discussion, the term 'FOREIGN
INVESTOR' means any person other than (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof, (iii) an
estate, the income of which is includible in gross income for U.S. federal
income tax purposes regardless of its source, or (iv) a trust if the primary
supervision over the administration of such trust can be exercised by a U.S.
court and one or more U.S. fiduciaries have the authority to control all
substantial decisions of such trust.
Under present U.S. federal income tax law, and subject to the discussion
below concerning backup withholding:
(a) no withholding of U.S. federal income tax will be required with
respect to the payment by the Trust of principal or interest on a Note
owned by a Foreign Investor, provided that the beneficial owner of the Note
(i) is not actually or constructively a '10 percent shareholder' of the
Trust (including a holder of 10% or more of such Trust's outstanding
Certificates) or either Seller, (ii) is not a 'controlled foreign
corporation' with respect to which the Trust or either Seller is a 'related
person' within the meaning of the Code and (iii) satisfies the statement
requirement (described generally below) set forth in Section 871(h) and
Section 881(c) of the Code and the regulations thereunder; and
76
<PAGE>
(b) no withholding of U.S. federal income tax will be required with
respect to any gain realized by a Foreign Investor upon the sale, exchange
or retirement of a Note provided that, in the case of any gain representing
accrued interest, the conditions described in (a) above are satisfied.
To satisfy the requirement referred to in (a)(iii) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, the U.S.
entity that would otherwise be required to withhold U.S. taxes with a statement
to the effect that the beneficial owner is not a U.S. person. Pursuant to
current temporary Treasury regulations, these requirements will be met if (i)
the beneficial owner provides his name and address, and certifies, under
penalties of perjury that he, she or it is not a 'U.S. person' (which
certification may be made on an IRS Form W-8 or successor form), or (ii) a
financial institution or securities clearing organization holding the Note on
behalf of such beneficial owner certifies, under penalties of perjury, that such
statement has been received by it and furnishes the U.S. entity otherwise
required to withhold U.S. taxes with a copy thereof.
If a Foreign Investor cannot satisfy the requirements of the 'portfolio
interest' exception described in (a) above, payments of premium, if any, and
interest (including OID) made to a Foreign Investor with respect to a Note will
be subject to a 30% U.S. withholding tax unless the beneficial owner of the Note
provides the U.S. entity otherwise required to withhold U.S. taxes with a
properly executed (i) IRS Form 1001 (or successor form) claiming an exemption
from withholding under the benefit of a tax treaty or (ii) IRS Form 4224 (or
successor form) stating that the interest paid on the Note is not subject to
U.S. withholding tax because such interest income is effectively connected with
the beneficial owner's conduct of a trade or business in the United States.
If a Foreign Investor is engaged in a trade or business in the United
States and premium, if any, or interest on the Note is effectively connected
with the conduct of such trade or business, the Foreign Investor, although
exempt from the U.S. withholding tax discussed above, will be subject to U.S.
federal income tax on such premium, if any, and interest on a net income basis
in the same manner as if it were a U.S. person. In addition, if such Foreign
Investor is a foreign corporation, it may be subject to a branch profits tax
equal to 30% of its effectively connected earnings and profits for the taxable
year, subject to adjustments. For this purpose, such premium, if any, and
interest on the Note will be included in such foreign corporation's effectively
connected earnings and profits.
Any gain realized by a Foreign Investor upon the sale, exchange or
retirement of a Note generally will not be subject to U.S. federal income tax
unless (i) such gain or income is effectively connected with a trade or business
conducted by the Foreign Investor in the United States and (ii) in the case of a
Foreign Investor who is an individual, such individual is present in the United
States for 183 days or more in the taxable year of such sale, exchange or
retirement, and certain other conditions are met.
Information Reporting and Backup Withholding. In general, information
reporting requirements generally will apply to payments of principal, interest
and premium, if any, paid on the Notes and to the proceeds from the sale of a
Note paid to U.S. persons, other than certain exempt recipients (such as
corporations). In addition, a 31% U.S. backup withholding tax will apply to such
payments if the Noteholder (i) is a U.S. person who fails to provide a taxpayer
identification number, (ii) fails to certify such Noteholder's foreign or other
exempt status or (iii) fails to report in full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Trust to a Foreign Investor if a statement
described in (a)(iii) above under the caption 'Foreign Noteholders' has been
received by the U.S. entity otherwise required to withhold U.S. taxes and such
entity does not have actual knowledge that the beneficial owner is a U.S.
person.
In addition, backup withholding and information reporting will not apply if
payments of principal, interest and premium (if any) on a Note are paid or
collected by a foreign office of a custodian, nominee or other foreign agent on
behalf of the beneficial owner of such Note, or if a foreign office of a broker
(as defined in applicable Treasury regulations) pays the proceeds from the sale
of a Note to the owner thereof. If, however, such nominee, custodian, agent or
broker is, for U.S. federal income tax purposes, a U.S. person, a controlled
foreign corporation or a foreign person that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States,
77
<PAGE>
such payments will not be subject to backup withholding but will be subject to
information reporting, unless (i) such custodian, nominee, agent or broker has
documentary evidence in its records that the beneficial owner is not a U.S.
person and certain other conditions are met or (ii) the beneficial owner
otherwise establishes an exemption. Temporary Treasury regulations provide that
the Treasury is considering whether backup withholding will apply with respect
to such payments of principal, interest and premium (if any), or to the proceeds
from a sale that are not subject to backup withholding under the current
regulations. Under proposed Treasury regulations, not currently in effect,
backup withholding will not apply to such payments absent actual knowledge that
the payee is a U.S. person.
Payments of principal, interest and premium (if any) on a Note paid to the
beneficial owner of a Note by a United States office of a custodian, nominee or
agent, or the payment by the United States office of a broker of the proceeds
from the sale of a Note, will be subject to both backup withholding and
information reporting unless the beneficial owner (i) provides the statement
referred to in (a)(iii) above and the payor does not have actual knowledge that
the beneficial owner is a U.S. person or (ii) otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's U.S. federal income tax liability,
provided that the required information is furnished to the IRS.
Possible Alternative Classification of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or more
of the Notes did not represent debt for U.S. federal income tax purposes, the
Notes might be treated as equity interests in the Trust. Treatment of the Notes
as equity interests in the Trust could have adverse tax consequences to certain
Noteholders. For example, income to Foreign Investors generally could be subject
to U.S. tax and U.S. tax return filing and withholding requirements and
Noteholders who are individuals might be subject to certain limitations on their
ability to deduct their allocable share of the Trust's expenses.
CERTAIN STATE TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and collecting
the Receivables will take place in Oklahoma. The State of Oklahoma imposes a
state income tax on individuals, nonresident aliens (with respect to Oklahoma
taxable income), corporations, certain foreign corporations, and trusts and
estates with Oklahoma taxable income. No ruling on any of the issues discussed
below will be sought from the Oklahoma Tax Commission.
Because of the variation in each state's or locality's tax laws, it is
impossible to predict the tax consequences to Noteholders or the Trust in all of
the other state and local taxing jurisdictions. Noteholders, particularly
financial institutions, are urged to consult their own tax advisors with respect
to state and local tax consequences arising out of the purchase, ownership and
disposition of the Notes.
TAX CONSEQUENCES WITH RESPECT TO THE NOTES
Crowe & Dunlevy, P.C., Oklahoma tax counsel to the Sellers ('OKLAHOMA TAX
COUNSEL'), will advise the Trust that, assuming the Notes will be treated as
debt for federal income tax purposes, the Notes will be treated as debt for
Oklahoma income tax purposes, and the Noteholders not otherwise subject to
taxation in Oklahoma should not become subject to taxation in Oklahoma solely
because of a holder's ownership of Notes. However, a Noteholder already subject
to Oklahoma's income tax could be required to pay additional Oklahoma tax as a
result of the holder's ownership or disposition of Notes.
78
<PAGE>
ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ('ERISA'),
and Section 4975 of the Code, impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA and/or Section 4975 of the Code (collectively, 'PLANS'), and
on persons who are fiduciaries with respect to Plans, in connection with the
investment of 'plan assets' of any Plan ('PLAN ASSETS'). ERISA generally imposes
on Plan fiduciaries certain general fiduciary requirements, including those of
investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan.
Generally, any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary with respect to
such Plan Assets.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ('Parties in Interest' under ERISA and
'Disqualified Persons' under the Code) who have certain specified relationships
to a Plan or its Plan Assets, unless a statutory or administrative exemption is
available. Parties in Interest or Disqualified Persons that participate in a
prohibited transaction may be subject to a penalty imposed under ERISA and/or an
excise tax imposed pursuant to Section 4975 of the Code, unless a statutory or
administrative exemption is available. These prohibited transactions generally
are set forth in Section 406 of ERISA and Section 4975 of the Code.
Any fiduciary or other Plan investor considering whether to purchase any
Notes on behalf of or with Plan Assets of any Plan should consult with its
counsel for guidance regarding the ERISA Considerations applicable to the Notes
offered hereby.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA), are not subject to the requirements of ERISA or Section 4975 of the
Code. Accordingly, assets of such plans may be invested in the Notes without
regard to the ERISA considerations described herein, subject to the provisions
of other applicable federal and state law. However, any such plan that is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code
is subject to the prohibited transaction rules set forth in Section 503 of the
Code.
Subject to the considerations described below, the Notes are eligible for
purchase with Plan Assets of any Plan.
Any fiduciary or other Plan investor considering whether to purchase the
Notes with Plan Assets of any Plan should determine whether such purchase is
consistent with its fiduciary duties and whether such purchase would constitute
or result in a non-exempt prohibited transaction under ERISA and/or Section 4975
of the Code because any of the Sellers, the Servicer, the Trust (by reason of a
Seller's ownership of Certificates), the Indenture Trustee, the Owner Trustee,
any other Certificateholder or any other parties may be deemed to be benefiting
from the issuance of the Notes and may be Parties in Interest or Disqualified
Persons with respect to the investing Plan. Any fiduciary or other Plan investor
considering whether to purchase the Notes should consult with its counsel
regarding the applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and Section 4975 of the Code to such investment,
and of the Seller, the Servicer or the Trust as a Party-in-Interest or
Disqualified Person with respect to the investing Plan, the availability of
exemptive relief under any prohibited transaction exemption. For example, DOL
Prohibited Transaction Exemptions 96-23 (relating to transactions determined by
'in-house asset managers'), 95-60 (relating to transactions involving insurance
company general accounts), 91-38 (relating to transactions involving bank
collective investment funds), 90-1 (relating to transactions involving insurance
company pooled separate accounts) or 84-14 (relating to transactions determined
by independent 'qualified professional asset managers') may be available. A
purchaser of the Notes should be aware, however, that even if the conditions
specified in an exemption are met, the scope of the exemptive relief provided by
the exemption might not cover all acts which might be construed as prohibited
transactions.
79
<PAGE>
In addition, under U.S. Department of Labor Regulation Section 2510.3-101
(the 'PLAN ASSET REGULATION'), the purchase with Plan Assets of equity interests
in the Trust could, in certain circumstances, cause the Receivables and other
assets of the Trust to be deemed Plan Assets of the investing Plan which, in
turn, would subject the Trust and its assets to the fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of ERISA and
Section 4975 of the Code. Nevertheless, because the Notes (a) should be treated
as indebtedness under local law and debt, rather than equity, for tax purposes
(see 'Certain Federal Income Tax Consequences--Tax Consequences to Noteholders--
Treatment of the Notes as Indebtedness' herein), and (b) should not be deemed to
have any 'substantial equity features,' purchases of the Notes with Plan Assets
should not be treated as equity investments and, therefore, the Receivables and
other assets included as assets of the Trust should not be deemed to be Plan
Assets of the investing Plans. Those conclusions are based, in part, upon the
traditional debt features of the Notes, including the reasonable expectation of
purchasers of Notes that the Notes (which are highly rated by the Rating
Agencies) will be repaid when due, as well as the absence of conversion rights,
warrants and other typical equity features. Before purchasing the Notes, a
fiduciary or other Plan investor should itself confirm that the Notes constitute
debt for purposes of the Plan Asset Regulation.
The Notes may not be purchased with Plan Assets of any Plan if any of the
Sellers, the Servicer, the Indenture Trustee, the Owner Trustee or any of their
respective affiliates (a) has investment or administrative discretion with
respect to the Plan Assets used to effect such purchase; (b) has authority or
responsibility to give, or regularly gives, investment advice with respect to
such Plan Assets, for a fee and pursuant to an agreement or understanding that
such advice (1) will serve as a primary basis for investment decisions with
respect to such Plan Assets, and (2) will be based on the particular investment
needs of such Plan; or (c) is an employer maintaining or contributing to such
Plan. Each purchaser will be deemed to have represented and warranted that its
purchase of a Note or any interest therein does not violate the foregoing
limitation.
UNDERWRITING
As consideration for the transfer of the Receivables to the Trust, the
Trust will issue the Notes to the Sellers, with (i) Chase receiving 49.40% of
the original principal amount of each class of Notes and the Certificate
Interest and (ii) Chase USA receiving 50.60% of the original principal amount of
each class of Notes and the Certificate Interest. The Certificates are not being
offered or sold hereby.
Subject to the terms and conditions set forth in the underwriting agreement
with respect to the Class A Notes (the 'CLASS A UNDERWRITING AGREEMENT') and the
underwriting agreement with respect to the Class B Notes and the Class C Notes
(the 'CLASS B AND CLASS C UNDERWRITING AGREEMENT,' and together with the Class A
Underwriting Agreement, the 'UNDERWRITING AGREEMENTS'), the Sellers have agreed
to sell to the underwriters with respect to the Class A Notes (the 'CLASS A
UNDERWRITERS') and Chase Securities Inc., as underwriter with respect to the
Class B Notes and the Class C Notes (the 'CLASS B AND CLASS C UNDERWRITER,' and
together with the Class A Underwriters, the 'UNDERWRITERS'), and each of the
Underwriters has agreed to purchase, the principal amount of each class of Notes
set forth opposite its name below.
<TABLE>
<CAPTION>
MERRILL, LYNCH, PIERCE,
CHASE GOLDMAN, FENNER & SMITH
SECURITIES INC. SACHS & CO. INCORPORATED
--------------- ----------- -----------------------
<S> <C> <C> <C>
Class A-1 Notes..... $ $ $
Class A-2 Notes.....
Class A-3 Notes.....
Class A-4 Notes.....
Class A-5 Notes.....
Class A-6 Notes.....
Class B Notes.......
Class C Notes.......
--------------- ----------- -----------
Total.......... $ $ $
--------------- ----------- -----------
--------------- ----------- -----------
</TABLE>
80
<PAGE>
The Underwriters initially propose to offer all or a part of the Notes
directly to the public at the respective public offering prices set forth on the
cover page of this Prospectus and may offer a portion of the Notes to dealers at
a price which represents a concession not in excess of the amounts set forth
below for the respective classes of Notes. The Underwriters may allow, and such
dealers may allow, a concession not in excess of the amounts set forth below for
the respective classes of the Notes for certain dealers. After the initial
public offering, the public offering prices and such concessions may from time
to time be varied by the Underwriters.
<TABLE>
<CAPTION>
CONCESSION TO REALLOWANCE
DEALERS CONCESSION
------------- -----------
<S> <C> <C>
Class A-1 Notes..... % %
Class A-2 Notes.....
Class A-3 Notes.....
Class A-4 Notes.....
Class A-5 Notes.....
Class A-6 Notes.....
Class B Notes.......
Class C Notes.......
</TABLE>
The Indenture Trustee and the Owner Trustee (on behalf of the Trust) may,
from time to time, invest the funds in the Collection Account, the Paid-Ahead
Account and the Reserve Account in Permitted Investments acquired from the
Underwriters.
Chase Securities Inc. may engage in over-allotment transactions,
stabilizing transactions, syndicate covering transactions and penalty bids with
respect to the Notes in accordance with Regulation M under the Exchange Act.
Over-allotment transactions involve syndicate sales in excess of the offering
size, which creates a syndicate short position. Stabilizing transactions permit
bids to purchase the Notes so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of the
Notes in the open market after the distribution has been completed in order to
cover syndicate short positions. Penalty bids permit Chase Securities Inc. to
reclaim a selling concession from a syndicate member when the Notes originally
sold by such syndicate member are purchased in a syndicate covering transaction.
Such over-allotment transactions, stabilizing transactions, syndicate covering
transactions and penalty bids may cause the prices of the Notes to be higher
than they would otherwise be in the absence of such transactions. Neither the
Issuer nor Chase Securities Inc. represent that Chase Securities Inc. will
engage in any such transactions or that such transactions, if commenced, will
not be discontinued without notice.
This Prospectus may be used by Chase Securities Inc., an affiliate of the
Sellers and a subsidiary of the Corporation, in connection with offers and sales
related to market-making transactions in the Notes. Chase Securities Inc. may
act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale. Chase Securities
Inc. has no obligation to make a market in the Notes, and it may discontinue any
such market-making activities at any time without notice, in its sole
discretion.
The Sellers and CITSF will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act or contribute to
payments the Underwriters may be required to make in respect thereof.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Notes will be passed
upon for the Sellers by Simpson Thacher & Bartlett (a partnership that includes
professional corporations), New York, New York and certain other legal matters
will be passed upon for the Sellers by Robert S. Fisher, Esq. and for the
Underwriters by Orrick, Herrington & Sutcliffe LLP, New York, New York. Certain
Oklahoma state tax matters will be passed upon for the Sellers by Crowe &
Dunlevy, P.C., Oklahoma City, Oklahoma. From time to time Simpson Thacher &
Bartlett and Orrick, Herrington & Sutcliffe LLP provide legal services to the
Sellers and their affiliates.
81
<PAGE>
INDEX OF TERMS
TERM PAGE
------------------------------------------------------------- --------
Actual Principal Balance..................................... 57
Actuarial Receivables........................................ 30
Administration Agreement..................................... 9
Administrative Fees.......................................... 58
Administrator................................................ 9
Aggregate Losses............................................. 58
Aggregate Net Losses......................................... 66
Asset Service Center......................................... 34
Available Amount............................................. 63
Available Reserve Account Amount............................. 66
Average Delinquency Percentage............................... 66
Average Net Loss Ratio....................................... 66
Banks........................................................ 1
Business Day................................................. 4
CBC.......................................................... 35
CBC Holding.................................................. 35
Cede......................................................... ii
Cedel........................................................ i, 51
Cedel Participants........................................... 51
Certificate Interest......................................... ii
Certificateholder............................................ 3
Certificates................................................. ii, 3
CFAC......................................................... 14
CFHI......................................................... 14
CFMC......................................................... 1
Chase........................................................ i
Chase Financial Receivables.................................. 14, 31
Chase Marine Finance......................................... 1
Chase Marine Finance Portfolio............................... 16
Chase N.A.................................................... 1
Chase USA.................................................... i
Chase/Chemical Merger........................................ 31
CIT.......................................................... 1
CITCF-NY..................................................... 31
CITSF........................................................ 1
Class........................................................ 49
Class A Noteholders.......................................... 4, 51
Class A Noteholders' Interest Carryover Shortfall............ 64
Class A Noteholders' Interest Distributable Amount........... 64
Class A Noteholders' Monthly Interest Distributable Amount... 64
Class A Notes................................................ 2
Class A-1 Notes.............................................. 2
Class A-2 Notes.............................................. 2
Class A-3 Notes.............................................. 2
82
<PAGE>
TERM PAGE
------------------------------------------------------------- --------
Class A-4 Notes.............................................. 2
Class A-5 Notes.............................................. 2
Class A-6 Notes.............................................. 2
Class A Underwriters......................................... 80
Class A Underwriting Agreement............................... 80
Class B and Class C Underwriters............................. 80
Class B and Class C Underwriting Agreement................... 80
Class B Noteholders.......................................... 4, 51
Class B Noteholders' Interest Carryover Shortfall............ 64
Class B Noteholders' Interest Distributable Amount........... 65
Class B Noteholders' Monthly Interest Distributable Amount... 65
Class B Notes................................................ 2
Class C Noteholders.......................................... 4, 51
Class C Noteholders' Interest Carryover Shortfall............ 65
Class C Noteholders' Interest Distributable Amount........... 65
Class C Noteholders' Monthly Interest Distributable Amount... 65
Clearing Agency.............................................. 50
Clearing Corporation......................................... 50
Closing Date................................................. i
Coast Guard.................................................. 72
Code......................................................... 75
Collection Account........................................... 8
Collection Period............................................ 6
Commission................................................... iii
Contract Rate................................................ 56
Controlling Notes............................................ 47
Cooperative.................................................. 52
Corporation.................................................. i, 1
CPR.......................................................... 40
CPR Table.................................................... 40
Cutoff Date.................................................. ii
Cutoff Date Pool Balance..................................... 4
Dealer Agreements............................................ 32
Dealers...................................................... 32
Definitive Notes............................................. 52
Delinquency Percentage....................................... 66
Deposit Date................................................. 58
Depositaries................................................. 50
Designated Preferred Mortgage................................ 77
Direct Receivables........................................... 31
Distribution Date............................................ ii
DKB.......................................................... 35
DTC.......................................................... i
Due Date..................................................... 30
Duff & Phelps................................................ 10
83
<PAGE>
TERM PAGE
------------------------------------------------------------- --------
Eligible Deposit Account..................................... 57
ERISA........................................................ 79
Euroclear.................................................... i, 52
Euroclear Operator........................................... 52
Euroclear Participants....................................... 52
Events of Default............................................ 47
Events of Servicing Termination.............................. 68
Exchange Act................................................. iii
Excluded Forced-Placed Insurance Premiums.................... 17
Excluded Precomputed Amounts................................. 17
FDIA......................................................... 14
FDIC......................................................... i
Fed.......................................................... 29
Federal Tax Counsel.......................................... 75
Final Scheduled Distribution Date............................ 6
Final Scheduled Maturity Date................................ 4
Financed Boats............................................... 3
FIRREA....................................................... 14
Foreign Investor............................................. 76
FTC Rule..................................................... 75
Genmar....................................................... 33
Indenture.................................................... ii, 2
Indenture Trustee............................................ ii
Indirect Receivables......................................... 31
Interest Accrual Period...................................... 5
Interest Rate................................................ 5
Investment Earnings.......................................... 58
IRS.......................................................... 75
Issuer....................................................... i, 1
Liquidated Receivable........................................ 64
Loss......................................................... 59
Marine Loans................................................. 17
MHC.......................................................... 35
Military Reservist Relief Act................................ 56
Monthly Advance.............................................. 7, 65
Moody's...................................................... 10
NADA......................................................... 33
Net Liquidation Proceeds..................................... 64
Net Loss Ratio............................................... 66
New Financed Boat............................................ 19
Note Pool Factor............................................. 45
Noteholder................................................... 51, 79
Noteholders.................................................. 4
Noteholders' Distributable Amount............................ 65
Noteholders' Interest Distributable Amount................... 65
84
<PAGE>
TERM PAGE
------------------------------------------------------------- --------
Noteholders' Principal Carryover Shortfall................... 65
Noteholders' Principal Distributable Amount.................. 65
Notes........................................................ ii
Obligor...................................................... 7
OID.......................................................... 76
Oklahoma Tax Counsel......................................... 78
Original Pool Balance........................................ 4
Originator................................................... 31
Outstanding Principal Amount................................. 28, 29
Owner Trustee................................................ ii, 2
Paid-Ahead Account........................................... 39
Paid-Ahead Amounts........................................... 9
Paid-Ahead Period............................................ 39
Paid-Ahead Precomputed Receivable............................ 39
Paid-Ahead Simple Interest Receivable........................ 39
Participants................................................. ii
Paying Agent................................................. 57
Payment Shortfall............................................ 8
Permitted Investments........................................ 58
Plan Asset Regulation........................................ 80
Plan Assets.................................................. 79
Plans........................................................ 79
Pool Balance................................................. 4
Precomputed Receivables...................................... 30
Preferred Mortgage........................................... 72
Prepayments.................................................. 37
Principal Balance............................................ 4, 63
Principal Distributable Amount............................... 63
Principal Prepayment......................................... 64
Qualified Institution........................................ 57
Qualified Trust Institution.................................. 57
Rating Agencies.............................................. 10
Receivables.................................................. 17
Receivables Pool............................................. 17
Record Date.................................................. 4
Regional Centers............................................. 32
Registration Statement....................................... iii
Relief Act Reduction......................................... 56
Repurchase Amount............................................ 56
Repurchased Receivable....................................... 63
Reserve Account.............................................. 6
Reserve Account Initial Deposit.............................. 6
Rule of 78's................................................. 30
Rule of 78's Receivables..................................... 30
Rules........................................................ 51
85
<PAGE>
TERM PAGE
------------------------------------------------------------- --------
Sale and Servicing Agreement................................. 3, 64
Schedule of Receivables...................................... 55
Securities Act............................................... iii
Sellers...................................................... i, 1
Servicer..................................................... ii, 1
Servicer Payment............................................. 9, 64-65
Servicing Fee................................................ 9
Servicing Fee Rate........................................... 9
Servicing Transfer........................................... 1
Servicing Transfer Agreements................................ 2
Settlement Date.............................................. 9
Ship Mortgage Statutes....................................... 72
Simple Interest Receivables.................................. 30
Soldiers' and Sailors' Civil Relief Act...................... 56
Specified Reserve Account Balance............................ 7
Standard & Poor's............................................ 10
Stockholders Agreement....................................... 35
Terms and Conditions......................................... 52
Transfer Agent and Registrar................................. 53
Transfer and Servicing Agreements............................ 55
Trust........................................................ i, 1
Trust Accounts............................................... 57
Trust Agreement.............................................. 1
UCC.......................................................... 71
Underwriters................................................. 80
Underwriting Agreement....................................... 80
U.S.......................................................... 75
U.S. Documentable Boats...................................... 72
Used Financed Boat........................................... 19
86
<PAGE>
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Chase
Manhattan Marine Owner Trust 1997-A Class A-1 % Asset Backed Notes, Class
A-2 % Asset Backed Notes, Class A-3 % Asset Backed Notes, Class A-4
% Asset Backed Notes, Class A-5 % Asset Backed Notes, Class A-6
% Asset Backed Notes, Class B % Asset Backed Notes and Class C
% Asset Backed Notes (the 'GLOBAL NOTES') to be issued will be available
only in book-entry form. Investors in the Global Notes may hold Global Notes
through any of The Depository Trust Company ('DTC'), Cedel or Euroclear. The
Global Notes will be tradeable as home market instruments in both the European
and U.S. domestic markets. Initial settlement and all secondary trades will
settle in same-day funds.
Secondary market trading between investors holding Global Notes through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Notes through DTC
will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Global Notes will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Notes will be subject to
U.S. withholding taxes unless such holders meet certain requirements and deliver
appropriate U.S. tax documents to the securities clearing corporation
organizations or their participants.
INITIAL SETTLEMENT
All Global Notes will be held in book-entry form by DTC in the name of Cede
& Co. as nominee of DTC. Investors' interests in the Global Notes will be
represented through financial institutions acting on their behalf as direct and
indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Notes through DTC will follow the
settlement practice applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with the holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Notes through Cedel or Euroclear
accounts will follow the settlement procedures applicable to conventional
eurobonds, except that there will be no temporary global security and no
'lock-up' or restricted period. Global Notes will be credited to the securities
custody accounts on the settlement date against payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Notes are to be transferred from the account of a DTC Participant to the account
of a Cedel Participant or a Euroclear Participant, the purchaser will send
instructions to Cedel, or Euroclear through a Cedel Participant or Euroclear
Participant, at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depositary to receive the Global Notes against
payment. Payment will include interest
A-1
<PAGE>
accrued on the Global Notes from and including the last coupon payment date to
and excluding the settlement date. Payment will then be made by the respective
Depositary to the DTC Participant's account against delivery of the Global
Notes. After settlement has been completed, the Global Notes will be credited to
the respective clearing system and by the clearing system, in accordance with
its usual procedures, to the Cedel Participant's or Euroclear Participant's
account. The Global Notes credit will appear the next day (European time) and
the cash debit will be backed-valued to, and the interest on the Global Notes
will accrue from, the value date (which would be the preceding day when
settlement occurred in New York). If settlement is not completed on the intended
value date (i.e., the trade fails), the Cedel or Euroclear cash debit will be
valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global Notes
are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Notes would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Notes were credited to their accounts. However,
interest on the Global Notes would accrue from the value date. Therefore, in
many cases the investment income on the Global Notes earned during the one-day
period may substantially reduce or offset the amount of such overdraft charges,
although this result will depend on each Cedel Participant's or Euroclear
Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Notes to the
respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global Notes are
to be transferred by the respective clearing system, through the respective
Depositary, to a DTC Participant. The seller will send instructions to Cedel or
Euroclear through a Cedel Participant or Euroclear Participant at least one
business day prior to settlement. In these cases, Cedel or Euroclear will
instruct the respective Depositary, as appropriate, to deliver the bonds to the
DTC Participant's account against payment. Payment will include interest accrued
on the Global Notes from and including the last coupon payment date to and
excluding the settlement date. The payment will then be reflected in the account
of the Cedel Participant or Euroclear Participant the following day, and receipt
of the cash proceeds in the Cedel Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Cedel Participant or
Euroclear Participant have a line of credit with its respective clearing system
and elect to be in debit in anticipation of receipt of the sale proceeds in its
account, the back-valuation will extinguish any overdraft charges incurred over
that one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Cedel Participant's
or Euroclear Participant's account would instead be valued as of the actual
settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Notes from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
A-2
<PAGE>
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's custom procedures;
(b) borrowing the Global Notes in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global Notes
sufficient time to be reflected in their Cedel or Euroclear account in
order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedel Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Notes holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of the
Notes that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must
be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
U.S. branch, for which the interest income is effectively connected with
its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of Notes
and who reside in a country that has a tax treaty with the United States
can obtain an exemption or reduced tax rate (depending on the treaty terms)
by filing Form 1001 (Ownership, Exemption of Reduced Rate Certificate). If
the treaty provides only for a reduced rate, withholding tax will be
imposed at that rate unless the filer alternatively files Form W-8. Form
1001 may be filed by such beneficial owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of
a Global Note or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
The term 'U.S. PERSON' means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is includible in gross income for United States tax purposes regardless
of its source or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust and one or
more United States fiduciaries have the authority to control all substantial
decisions of such trust. This summary does not deal with all aspects of U.S.
federal income tax withholding that may be relevant to foreign holders of the
Global Notes. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global Notes.
A-3
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLERS, THE SERVICER OR BY THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE SELLERS, THE SERVICER OR THE RECEIVABLES SINCE THE DATE HEREOF OR
THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
- ------------------------------------------------------------
TABLE OF CONTENTS
Summary of Terms.................................................. 1
Risk Factors...................................................... 11
The Trust......................................................... 16
The Receivables Pool.............................................. 19
Chase and Chase USA............................................... 34
The CIT Group/Sales Financing, Inc., Servicer..................... 34
Use of Proceeds................................................... 37
Weighted Average Life of the Notes................................ 37
Note Pool Factors and Trading Information......................... 45
Description of the Notes.......................................... 45
Certain Information Regarding
the Notes....................................................... 50
Description of the Certificates................................... 56
Description of the Transfer and Servicing Agreements.............. 57
Certain Legal Aspects of the Receivables.......................... 71
Certain Federal Income Tax Consequences........................... 75
Certain State Tax Consequences.................................... 78
ERISA Considerations.............................................. 79
Underwriting...................................................... 80
Legal Matters..................................................... 81
Index of Terms.................................................... 82
Annex A........................................................... A-1
Until January , 1998 (90 days after the date of this Prospectus), all dealers
effecting transactions in the Notes, whether or not participating in this
distribution, may be required to deliver this Prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver this
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
PROSPECTUS
$266,262,029.25
CHASE MANHATTAN MARINE
OWNER TRUST 1997-A
$238,300,000.00
CLASS A ASSET BACKED NOTES
$10,650,000
CLASS B ASSET BACKED NOTES
$17,312,029.25
CLASS C ASSET BACKED NOTES
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
THE CHASE MANHATTAN BANK
SELLERS
THE CIT GROUP/SALES FINANCING, INC.
SERVICER
UNDERWRITERS OF THE CLASS A NOTES
CHASE SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
UNDERWRITER OF THE CLASS B NOTES AND CLASS C NOTES
CHASE SECURITIES INC.
OCTOBER , 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Estimated expenses in connection with the offering of the Notes being
registered hereunder (other than underwriting discounts and commissions) are
estimated as follow:
Registration Fee............................... $ 80,685.46
Legal Fees and Expenses........................ 175,000.00
Accounting Fees and Expenses................... 25,000.00
Blue Sky Fees and Expenses..................... 5,000.00
Rating Agency Fees............................. 191,444.12
Trustee's Fees and Expenses.................... 20,000.00
Printing ..................................... 75,000.00
Miscellaneous.................................. 870.42
-----------
Total ...................................... $573,000.00
===========
Item 15. Indemnification of Directors and Officers.
In addition to the indemnification provisions set forth below, directors
and officers liability insurance policies presently exist that insure directors
and officers of Chase Manhattan Bank USA, National Association, a national
banking association having its principal executive offices in Wilmington,
Delaware ("Chase USA") and The Chase Manhattan Bank, a New York banking
corporation having its principal executive offices in New York, New York
("Chase"), their parent and certain of their subsidiaries. The policies cover
losses for which Chase USA, Chase, their parent and certain of their
subsidiaries shall be required or permitted by law to indemnify directors and
officers and which result from claims made against such directors or officers
based upon the commission of wrongful acts in the performance of their duties.
The policies also cover losses that the directors or officers must pay as the
result of claims brought against them based upon the commission of wrongful acts
in the performance of their duties and for which they are not indemnified by
Chase USA, Chase, their parent or any of those subsidiaries. The losses covered
by the policies are subject to certain exclusions and do not include fines or
penalties imposed by law or other matters deemed uninsurable under the law. The
policies contain self-insured retention provisions.
Pursuant to the terms of the Underwriting Agreements and an indemnification
agreement among the Sellers, the Underwriters and CITSF, the Underwriters and
CITSF, respectively, will agree to indemnify each controlling person, director
and officer of the Sellers against certain liabilities under the Securities Act,
or contribute to payments such persons may be required to make in respect
thereof.
Chase USA: Article TENTH of the Articles of Association of Chase USA
("Chase USA") provide that any person who was or is made a party or is
threatened to be made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he or she is or was a director or
officer of Chase USA or is or was serving at the request of Chase USA as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by Chase USA to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits Chase USA to provide broader indemnification rights
than permitted prior thereto), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as to
an indemnitee who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in the second
following paragraph with respect to proceedings to enforce rights to
indemnification, Chase USA shall indemnify any such indemnitee in connection
with a proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the board of directors of Chase
USA.
The rights to indemnification described in the immediately preceding
paragraph shall include the right to be paid by Chase USA the expenses incurred
in defending any proceeding for which such right to indemnification is
applicable in advance of its final disposition (hereinafter an "advancement of
expenses"); provided, however, that, if the Delaware General Corporation Law
requires, an advancement of expenses incurred by an indemnitee in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to Chase
USA of an undertaking (hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under such Article TENTH or otherwise.
The rights to indemnification and to the advancement of expenses described
in the two preceding paragraphs are contract rights. If a claim under either of
such paragraphs is not paid in full by Chase USA within sixty days after a
written claim has been received by Chase USA (except in the case of a claim for
an advancement of expenses, in which case the applicable period shall be twenty
days), the indemnitee may at any time thereafter bring suit against Chase USA to
recover the unpaid amount of the claim. If successful in whole or in part in any
such
II-1
<PAGE>
suit, or in a suit brought by Chase USA to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. In any suit brought
by the indemnitee to enforce a right to indemnification under such Article TENTH
(but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and in any suit by Chase
USA to recover an advancement of expenses pursuant to the terms of an
undertaking, Chase USA shall be entitled to recover such expense upon a final
adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of Chase USA (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by Chase USA (including its board of directors, independent legal
counsel, or its stockholders) that the indemnitee has not met such applicable
standard of conduct, shall create a presumption that the indemnitee has not met
such applicable standard of conduct or, in the case of such a suit brought by
the indemnitee, be a defense to such suit. In any suit brought by the indemnitee
to enforce a right to indemnification or to an advancement of expenses under
such Article TENTH, or by Chase USA to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under such Article TENTH or otherwise shall be on Chase USA.
Article TENTH of Chase USA's Articles of Association also provides that the
foregoing right of indemnification or reimbursement shall not be exclusive of
other rights to which any person may be entitled under any statute, Articles of
Association, by-law, agreement, or vote of stockholders or disinterested
stockholders or otherwise. Section 145 of the Delaware General Corporation Law
provides that a Delaware corporation must indemnify a director or officer who
has defended successfully, on the merits or otherwise, any proceeding against
him or any claim, matter or issue therein, for reasonable expenses actually
incurred in such defense.
Article 7 of the Business Corporation Law of the State of New York,
Sections 721 through 726, provides, under certain circumstances, for
indemnification of directors and officers of a corporation who are made or
threatened to be made, a party to an action or proceeding (other than one by or
in the right of a corporation to procure a judgment in its favor), whether civil
or criminal, by reason of their service as an officer or director of a
corporation against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and necessarily incurred as a
result of such action or proceeding or any appeal therein. Article 7 of the New
York Business Corporation Law also provides that the statutory indemnification
provisions are nonexclusive, but prohibits indemnification if a judgment or
other final adjudication adverse to the director or officer of a corporation
establishes that the officer's or director's acts were committed in bad faith or
were the result of active and deliberate dishonesty and were material to the
cause of action so adjudicated, or that such director or officer personally
gained in fact a financial profit or other advantage to which the officer or
director was not legally entitled, or that would be inconsistent with the laws
of the jurisdiction of incorporation (in the case of corporations formed under
the laws of any jurisdiction other than New York), the corporation's certificate
of incorporation, by-laws, resolutions or other proper corporate action or any
court settlement.
Chase: Article VII of Chase's By-Laws provides that Chase shall, to the
fullest extent permitted by applicable law as then in effect, indemnify any
person (the "indemnitee") who was or is involved in any manner (including,
without limitation, as a party or a witness), or is threatened to be made so
involved, in any threatened pending or completed investigation, claim, action,
suit or proceeding, whether civil, administrative or investigative (including,
without limitation, any action , suit or proceeding by or in the right of Chase
to procure a judgment in its favor) (a "proceeding") by reason of the fact that
he is or was a director, officer, employee or agent of Chase, or is or was
serving at the request of Chase as a director, officer or employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against all expense (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such proceeding. Article VII provides that the foregoing indemnification shall
be a contract right and shall include the right to receive payment in advance of
any expenses incurred by the indemnitee in connection with such proceeding,
consistent with the provisions of applicable law as then in effect.
Article VII further provides that Chase may enter into contracts with any
director, officer, employee or agent of Chase in furtherance of the provisions
thereof and may create a trust fund, grant a security interest or use other
means (including, without limitation a letter of credit) to ensure the payment
of such amounts as may be necessary to effect indemnification under Article VII.
Article VII expressly provides that the right of indemnification and
advancement of expenses thereunder shall not be exclusive of any other rights to
which a person seeking indemnification may otherwise be entitled, under any
statute, by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
II-2
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
(a) Exhibits:
<S> <C>
1.1(A) -- Class A Underwriting Agreement (Class A Notes).
1.1(B) -- Class B and Class C Underwriting Agreement (Class B and Class C Notes).
3.1(A) -- Articles of Association of Chase USA.
3.1(B) -- Restated Organization Certificate of Chase.
3.2(A) -- By-laws of Chase USA.
3.2(B) -- By-laws of Chase.
4.1 -- Sale and Servicing Agreement.
4.2 -- Indenture.
4.3(A) -- Certificate of Trust.
4.3(B) -- Amended and Restated Trust Agreement.
4.4(A) -- Chase Administration Agreement.
4.4(B) -- CITSF Administration Agreement.
5.1 -- Opinion of Simpson Thacher & Bartlett with respect to legality.
8.1 -- Opinion of Simpson Thacher & Bartlett with respect to U.S. federal tax matters.
8.2 -- Opinion of Crowe & Dunlevy, P.C. with respect to Oklahoma state tax matters.
10.1 -- Amended and Restated Servicing Agreement.
23.1 -- Consent of Simpson Thacher & Bartlett (included as part of Exhibit 5.1).
23.2 -- Consent of Simpson Thacher & Bartlett (included as part of Exhibit 8.1).
24.1(A) -- Powers of Attorney of directors and officers of Chase USA.*
24.1(B) -- Powers of Attorney of directors and officers of Chase.*
25.1 -- Statement of Eligibility of Trustee on Form T-1.**
</TABLE>
* Previously filed.
** Exhibit 7 to Form T-1 filed herewith was filed in paper pursuant to a
continuing hardship exemption.
(b) Financial Statements:
Not applicable.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes that:
(a) That, for purposes of determining any liability under the Act, each
filing of a Registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act (and, where applicable, each filing of a
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) with respect to any Trust that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit
prompt delivery to each purchaser.
(c) That, insofar as indemnification for liabilities arising under the Act
may be permitted to directors, offices and controlling persons of a
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable. In the event that
a claim for indemnification against such liabilities (other than
payment by a Registrant of expenses incurred or paid by a director,
officer or controlling person of such Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, such Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
(d) (1) That, for purposes of determining any liability under the
Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule
430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(2) That, for the purpose of determining any liability under the
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES FOR CHASE USA
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wilmington, State of Delaware, on
October 10, 1997.
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
By: /s/ Keith Schuck
-----------------------------------------
Keith Schuck
Controller
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed on October 10, 1997 by the
following persons in the capacities indicated.
Signature Title
- --------- -----
* Chairman of the Board and Director
- ------------------------------ and Chief Executive Officer
Donald L. Boudreau
* President and Director
- ------------------------------
Michael J. Barrett
* Director
- ------------------------------
Luke S. Hayden
* Director
- ------------------------------
John J. Hehir, Jr.
* Director
- ------------------------------
William H. Hoefling
* Director
- ------------------------------
Kevin T. Hurley
* Director
- ------------------------------
Thomas Jacob
* Director
- ------------------------------
John M. Nuzum, Jr.
/s/ Keith Schuck Controller (Principal Accounting
- ------------------------------ Officer and Principal Financial Officer)
Keith Schuck
* Director
- ------------------------------
Michael Urkowitz
* The undersigned, by signing his name hereto, does hereby sign this
Amendment No. 1 to Registration Statement on behalf of the above-indicated
directors and officers of the Registrant pursuant to powers of attorney
signed by such officers and directors.
By: /s/ Keith Schuck
------------------------------
Keith Schuck
Attorney-in-Fact
M
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
October 10, 1997.
THE CHASE MANHATTAN BANK
By: /s/ Deborah L. Duncan
-----------------------------
Deborah L. Duncan
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed on October 10, 1997 by the
following persons in the capacities indicated.
Signature Title
- --------- -----
* Chairman of the Board and Director
- ------------------------------ and Chief Executive Officer
Walter V. Shipley
* Director
- ------------------------------
Frank A. Bennack Jr.
* Director
- ------------------------------
Susan V. Berresford
* Director
- ------------------------------
M. Anthony Burns
Director
- ------------------------------
H. Laurance Fuller
* Director
- ------------------------------
Melvin R. Goodes
* Director
- ------------------------------
William H. Gray, III
* Director
- ------------------------------
George V. Grune
* Director and Vice Chairman of the Board
- ------------------------------
William B. Harrison Jr.
* Director
- ------------------------------
Harold S. Hook
* Director
- ------------------------------
Helene L. Kaplan
* Director, President and Chief
- ------------------------------ Operating Officer
Thomas G. Labrecque
* Director
- ------------------------------
Henry B. Schacht
* Controller (Principal Accounting
- ------------------------------ Officer)
Joseph L. Sclafani
* The undersigned, by signing his name hereto, does hereby sign this
Amendment No. 1 to Registration Statement on behalf of the above-indicated
directors and officers of the Registrant pursuant to powers of attorney
signed by such officers and directors.
By: /s/ Deborah L. Duncan
------------------------------
Deborah L. Duncan
Attorney-in-Fact
M
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<PAGE>
SIGNATURES FOR CHASE
Signature Title
- --------- -----
* Director
- ------------------------------
Andrew C. Sigler
* Director
- ------------------------------
John R. Stafford
* Executive Vice President
- ------------------------------ (Principal Financial Officer)
Peter J. Tobin
* Director
- ------------------------------
Marina v.N. Whitman
* The undersigned, by signing his name hereto, does hereby sign this
Amendment No. 1 to Registration Statement on behalf of the above-indicated
directors and officers of the Registrant pursuant to powers of attorney
signed by such officers and directors.
By: /s/ Deborah L. Duncan
------------------------------
Deborah L. Duncan
Attorney-in-Fact
M
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
- ------ ------- -------------
<S> <C>
1.1(A) -- Class A Underwriting Agreement (Class A Notes).
1.1(B) -- Class B and Class C Underwriting Agreement (Class B and Class C Notes).
3.1(A) -- Articles of Association of Chase USA.
3.1(B) -- Restated Organization Certificate of Chase.
3.2(A) -- By-laws of Chase USA.
3.2(B) -- By-laws of Chase.
4.1 -- Sale and Servicing Agreement.
4.2 -- Indenture.
4.3(A) -- Certificate of Trust.
4.3(B) -- Amended and Restated Trust Agreement.
4.4(A) -- Chase Administration Agreement.
4.4(B) -- CITSF Administration Agreement.
5.1 -- Opinion of Simpson Thacher & Bartlett with respect to legality.
8.1 -- Opinion of Simpson Thacher & Bartlett with respect to federal tax matters.
8.2 -- Opinion of Crowe & Dunlevy, P.C. with respect to Oklahoma state tax matters.
10.1 -- Amended and Restated Servicing Agreement.
23.1 -- Consent of Simpson Thacher & Bartlett (included as part of Exhibit 5.1).
23.2 -- Consent of Simpson Thacher & Bartlett (included as part of Exhibit 8.1).
24.1(A) -- Powers of Attorney of directors and officers of Chase USA.*
24.1(B) -- Powers of Attorney of directors and officers of Chase.*
25.1 -- Statement of Eligibility of Trustee on Form T-1.**
</TABLE>
- ----------
* Previously filed.
** Exhibit 7 to Form T-1 filed herewith was filed in paper pursuant to a
continuing hardship exemption.
M
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<PAGE>
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
CLASS A ASSET BACKED NOTES
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
and
THE CHASE MANHATTAN BANK,
Sellers
THE CIT GROUP/SALES FINANCING, INC.,
Servicer
CLASS A UNDERWRITING AGREEMENT
------------------------------
October __, 1997
Chase Securities Inc.,
As Representative of the
Several Class A Underwriters,
270 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
1. Introductory. Chase Manhattan Bank USA, National
Association ("Chase USA"), a national banking association and The Chase
Manhattan Bank ("Chase"), a New York banking corporation (each, a "Bank", and
together referred to herein as the "Banks"), propose to form Chase Manhattan
Marine Owner Trust 1997-A (the "Trust") to sell $41,800,000 aggregate
principal amount of Class A-1 _____% Asset Backed Notes (the "Class A-1 Notes"),
$55,600,000 aggregate principal amount of Class A-2 _____% Asset Backed
Notes (the "Class A-2 Notes"), $50,600,000 aggregate principal amount of
Class A-3 _____% Asset Backed Notes (the "Class A-3 Notes"), $37,300,000
aggregate principal amount of Class A-4 ____% Asset Backed Notes (the "Class A-4
Notes"), $29,300,000 aggregate principal amount of Class A-5 ____% Asset Backed
Notes (the "Class A-5 Notes") and $27,700,000 aggregate principal amount of
Class A-6 _____% Asset Backed Notes (the "Class A-6 Notes," and together with
the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4
Notes and the Class A-5, the "Class A Notes").
The assets of the Trust will include, among other things, a
pool of retail installment sales contracts and purchase money notes and other
notes (the "Receivables") secured by new
<PAGE>
and used boats (the "Financed Boats") and certain monies received or due
thereunder after the Cutoff Date (as hereinafter defined), such Receivables to
be transferred to the Trust by the Banks, and serviced by The CIT Group/Sales
Financing, Inc. ("CITSF") and in its capacity as Servicer, the "Servicer"), or
by a successor Servicer. The Pool Balance of the Receivables as of the close of
business on October 1, 1997 (the "Cutoff Date") was equal to $266,262,029.25
(the "Cutoff Date Pool Balance"). The Class A Notes will be issued pursuant to
the Indenture to be dated as of October 1, 1997 (as amended and supplemented
from time to time, the "Indenture"), between the Trust and Norwest Bank
Minnesota, National Association, as indenture trustee (the "Indenture Trustee").
Simultaneously with the issuance and sale of the Class A Notes
as contemplated herein, the Trust will issue (a) $10,650,000 aggregate
principal amount of Class B _____% Asset Backed Notes (the "Class B Notes") and
$17,312,029.25 aggregate principal amount of Class C ______% Asset Backed Notes
(the "Class C Notes," and together with the Class B Notes, the "Junior Notes")
pursuant to the Indenture, which will be sold pursuant to an underwriting
agreement dated the date hereof (the "Class B and Class C Underwriting
Agreement" and, together with this Agreement, the "Underwriting Agreements")
among the Banks and Chase Securities Inc. and (b) Asset Backed Certificates (the
"Certificates") pursuant to an Amended and Restated Trust Agreement to be dated
as of October 1, 1997 (as amended and supplemented from time to time, the "Trust
Agreement"), among the Banks and Wilmington Trust Company, as owner trustee (the
"Owner Trustee"), each representing a fractional undivided interest in the
Trust. The Certificates will be retained by the Banks and will not be sold
pursuant to the Underwriting Agreements. The Class A Notes and the Junior Notes
are sometimes referred to collectively herein as the "Notes".
Capitalized terms used and not otherwise defined herein shall
have the meanings assigned to such terms in the Sale and Servicing Agreement to
be dated as of October 1, 1997 (as amended and supplemented from time to time,
the "Sale and Servicing Agreement"), among the Trust, and the Banks, as Sellers,
and the Servicer.
This is to confirm the agreement concerning the purchase of
the Class A Notes from the Banks by the several underwriters named in Schedule I
hereto (the "Class A Underwriters"), for whom Chase Securities Inc. is acting as
representative (the "Representative").
2. Representations and Warranties of the Banks. Each
Bank represents and warrants to, and agrees with, the Class A
Underwriters, that:
(a) A registration statement on Form S-3 (No. 333-
32737-01-02), including a form of prospectus, relating to the
2
<PAGE>
Notes has been filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended (the "Act"), and the Rules and Regulations under the Act (the "Rules
and Regulations"). The Banks may have filed one or more amendments thereto,
including the related preliminary prospectus, each of which has previously been
furnished to you. The Banks have included in the registration statement, as
amended on the date such registration statement became effective, all
information (other than information permitted to be omitted from a registration
statement when it becomes effective pursuant to Rule 430A ("Rule 430A
Information") required by the Act and the Rules and Regulations to be included
in the final prospectus with respect to the Notes and the offering thereof. Such
registration statement, as amended on the date that such registration statement
or the most recent post-effective amendment thereto, if any, became or becomes
effective under the Act, including the exhibits thereto and the 430A
Information, is hereinafter referred to as the "Registration Statement." The
Registration Statement has become effective, and no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceeding
for that purpose has been instituted or, to the knowledge of such Bank,
threatened by the Commission. The conditions to the use of a registration
statement on Form S-3 under the Act, as set forth in the General Instructions to
Form S-3 have been satisfied with respect to the Registration Statement.
(b) The Banks propose to file with the Commission pursuant to
Rules 430A and 424(b)(1) or 424(b)(4) under the Rules and Regulations a final
prospectus relating to the sale of the Notes. The prospectus in the form filed
with the Commission pursuant to Rules 430A and 424(b)(1) or 424(b)(4) under the
Rules and Regulations is hereinafter referred to as the "Prospectus." As filed,
the Prospectus shall include all Rule 430A Information, together with all other
such required information, with respect to the Notes and the offering thereof
and, except to the extent that the Representative shall have agreed to a
modification, the Prospectus shall be in all substantive respects in the form
furnished to the Representative prior to the execution of this Agreement or, to
the extent not completed at such time, shall contain only such material changes
as the Banks have advised the Representative, prior to such time, will be
included or made therein. "Preliminary Prospectus" means each prospectus
included in the Registration Statement, or amendments thereof, before it became
effective under the Act, any prospectus filed with the Commission by the Banks
pursuant to Rule 424(a) and the prospectus included in the Registration
Statement on the date the Registration Statement became effective.
(c) The Registration Statement, at the time it became
effective, did, and the Prospectus, at the time the Prospectus is first filed in
accordance with Rule 424(b) and on the Closing Date (as defined herein), will,
comply in all material respects with the applicable requirements of the Act and
the Trust
3
<PAGE>
Indenture Act of 1939 and the Rules and Regulations. At the time the
Registration Statement became effective, it did not include any untrue statement
of a material fact or, did not omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and,
on the date of the filing of the Prospectus pursuant to Rules 430A and 424(b)
and on the Closing Date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that such Bank makes no representation or warranty with respect to information
contained in or omitted from the Registration Statement or the Prospectus in
reliance upon, or in conformity with, information furnished in writing to either
Bank by or on behalf of any Class A Underwriter through the Representative
specifically for use in connection with the preparation of the Registration
Statement or the Prospectus.
(d) In the case of Chase USA, such Bank is a national banking
association organized under the laws of the United States, and in the case of
Chase, such Bank is a New York banking corporation, in each case, with full
power and authority to own its properties and conduct its business as described
in the Prospectus, and had at all relevant times and has power, authority and
legal right to acquire, own and sell the Receivables being transferred by such
Bank to the Trust.
(e) When the Class A Notes have been duly executed and
delivered by the Owner Trustee and, when authenticated by the Indenture Trustee
in accordance with the Indenture and delivered upon the order of the Banks to
the Class A Underwriters pursuant to this Agreement and the Sale and Servicing
Agreement, the Class A Notes will be duly issued and will constitute legal,
valid and binding obligations of the Trust enforceable against the Trust in
accordance with their terms, except to the extent that the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
conservatorship, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights as such laws would apply in the event of the
insolvency, liquidation or reorganization or other similar occurrence with
respect to either Bank or the Trust or in the event of any moratorium or similar
occurrence affecting either Bank or the Trust and to general principles of
equity.
(f) When the Junior Notes have been duly executed and
delivered by the Owner Trustee and, when authenticated by the Indenture Trustee
in accordance with theIndenture and delivered upon the order of the Banks to
Chase Securities Inc. pursuant to the Class B and Class C Underwriting Agreement
and the Sale and Servicing Agreement, the Junior Notes will be duly issued and
will constitute legal, valid and binding obligations of the Trust enforceable
against the Trust in accordance with their terms, except to the extent that the
4
<PAGE>
enforceability thereof may be subject to bankruptcy, insolvency, reorganization,
conservatorship, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights as such laws would apply in the event of the
insolvency, liquidation or reorganization or other similar occurrence with
respect to either Bank or the Trust or in the event of any moratorium or similar
occurrence affecting either Bank or the Trust and to general principles of
equity.
(g) The execution, delivery and performance by such Bank of
this Agreement, the Class B and Class C Underwriting Agreement, and the Basic
Documents to which such Bank is a party, and the consummation by such Bank of
the transactions provided for herein and therein have been, or will have been,
duly authorized by such Bank by all necessary action on the part of such Bank;
and neither the execution and delivery by such Bank of such instruments, nor the
performance by such Bank of the transactions herein or therein contemplated, nor
the compliance by such Bank with the provisions hereof or thereof, will (i)
conflict with or result in a breach or violation of any of the material terms
and provisions of, or constitute a material default under, any of the provisions
of the charter or by-laws of such Bank, or (ii) conflict with any of the
provisions of any law, governmental rule, regulation, judgment, decree or order
binding on such Bank or the properties of such Bank, or (iii) conflict with any
of the material provisions of any material indenture, mortgage, contract or
other instrument to which such Bank is a party or by which such Bank is bound,
or (iv) result in the creation or imposition of any lien, charge or encumbrance
upon any of its property pursuant to the terms of any such indenture, mortgage,
contract or other instruments, except, in the case of clauses (ii) and (iii) ,
for any such breaches or conflicts as would not individually or in the aggregate
have a material adverse effect on the transactions contemplated hereby or on the
ability of such Bank to consummate such transactions.
(h) When executed and delivered by the parties thereto, each
of the Sale and Servicing Agreement and the Trust Agreement will constitute a
legal, valid and binding obligation of such Bank, enforceable against such Bank
in accordance with its terms, except to the extent that the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
conservatorship, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights as such laws would apply in the event of the
insolvency, liquidation or reorganization or other similar occurrence with
respect to such Bank or in the event of any moratorium or similar occurrence
affecting such Bank and to general principles of equity.
(i) All approvals, authorizations, consents, orders or other
actions of any person, corporation or other organization, or of any court,
governmental agency or body or official (except with respect to the state
securities or "blue sky" laws of various jurisdictions) required in connection
with the execution,
5
<PAGE>
delivery and performance of this Agreement, the Class B and Class C Underwriting
Agreement and the Basic Documents to which such Bank is a party, have been or
will be taken or obtained on or prior to the Closing Date.
(j) As of the Closing Date, the representations and
warranties of such Bank in the Trust Agreement will be true and correct.
(k) This Agreement and the Class B and Class C Underwriting
Agreement have been duly executed and delivered by such Bank.
3. Purchase, Sale, Payment and Delivery of the Class A Notes.
On the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, Chase USA agrees to
sell to each Class A Underwriter, and each Class A Underwriter agrees, severally
and not jointly, to purchase from Chase USA, (a) at a purchase price of
_________% of the principal amount thereof, the principal amount of the Class
A-1 Notes set forth opposite the name of such Class A Underwriter in Schedule I
hereto, (b) at a purchase price of _________% of the principal amount thereof,
the principal amount of the Class A-2 Notes set forth opposite the name of such
Class A Underwriter in Schedule I hereto, (c) at a purchase price of _________%
of the principal amount thereof, the principal amount of the Class A-3 Notes set
forth opposite the name of such Class A Underwriter in Schedule I hereto, (d) at
a purchase price of ________% of the principal amount thereof, the principal
amount of the Class A-4 Notes set forth opposite the name of such Class A
Underwriter in Schedule I hereto (e) at a purchase price of ________% of the
principal amount thereof, the principal amount of the Class A-5 Notes set forth
opposite the name of such Class A Underwriter in Schedule I hereto and (f) at a
purchase price of _________% of the principal amount thereof, the principal
amount of the Class A-6 Notes set forth opposite the name of such Class A
Underwriter in Schedule I hereto.
On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth,
Chase agrees to sell to each Class A Underwriter, and each Class A Underwriter
agrees, severally and not jointly, to purchase from Chase, (a) at a purchase
price of _________% of the principal amount thereof, the principal amount of the
Class A-1 Notes set forth opposite the name of such Class A Underwriter in
Schedule II hereto, (b) at a purchase price of _________% of the principal
amount thereof, the principal amount of the Class A-2 Notes set forth opposite
the name of such Class A Underwriter in Schedule II hereto, (c) at a purchase
price of _________% of the principal amount thereof, the principal amount of the
Class A-3 Notes set forth opposite the name of such Class A Underwriter in
Schedule II hereto, (d) at a purchase price of ________% of the principal amount
thereof, the principal amount of the Class A-4 Notes set forth opposite the name
of such Class
6
<PAGE>
A Underwriter in Schedule II hereto (e) at a purchase price of ________% of the
principal amount thereof, the principal amount of the Class A-5 Notes set forth
opposite the name of such Class A Underwriter in Schedule II hereto and (f) at a
purchase price of _________% of the principal amount thereof, the principal
amount of the Class A-6 Notes set forth opposite the name of such Class A
Underwriter in Schedule II hereto.
Each Bank will deliver the Class A Notes being sold by it
hereunder to the Representative for the respective accounts of the Class A
Underwriters against payment of the purchase price in immediately available
funds drawn to the order of Chase USA and Chase, in each case with respect to
the Class A Notes sold by it, at the offices of Orrick, Herrington & Sutcliffe
LLP in New York, New York at 10:00 a.m., New York City time, on October __, 1997
or at such other time not later than seven full business days thereafter as the
Representative and the Banks determine, such time being herein referred to as
the "Closing Date." The Class A Notes of each class to be so delivered will be
initially represented by one or more definitive Class A Notes registered in the
name of Cede & Co., the nominee of The Depository Trust Company ("DTC") and will
be made available for inspection by the Representative at the office where
delivery and payment for such Class A Notes is to take place no later than 1:00
p.m., New York City time, on the Business Day prior to the Closing Date.
4. Offering by the Class A Underwriters. It is understood that
the Class A Underwriters propose to offer the Class A Notes for sale to the
public (which may include selected brokers and dealers) as set forth in the
Prospectus.
5. Covenants of the Banks. Each Bank covenants and
agrees with the Class A Underwriters that:
(a) Such Bank will file the Prospectus with the Commission
pursuant to Rule 424(b)(1) or 424(b)(4), as applicable, of the Rules and
Regulations within the time prescribed therein and will provide evidence
satisfactory to the Representative of such timely filing. During any period that
a prospectus relating to the Class A Notes is required to be delivered to
purchasers of the Class A Notes by the Class A Underwriters and dealers
participating in the initial offering and sale of the Class A Notes on the
Closing Date under the Act (without regard to any market making prospectus
required to be delivered by any Class A Underwriter under the Act) (a
"prospectus delivery period"), such Bank will not file any amendments to the
Registration Statement, or any amendments or supplements to the Prospectus,
unless it shall first have delivered copies of such amendments or supplements to
the Representative, and if the Representative shall have reasonably objected
thereto promptly after receipt thereof; such Bank will promptly advise the
Representative or its counsel (i) when notice is received from the Commission
that any post-effective amendment to the Registration Statement has become or
will become
7
<PAGE>
effective, (ii) of any request by the Commission for any amendment or supplement
to the Registration Statement or the Prospectus or for any additional
information and (iii) of any order or communication suspending or preventing, or
threatening to suspend or prevent, the offer and sale of the Class A Notes or of
any proceedings or examinations that may lead to such an order or communication,
whether by or of the Commission or any authority administering any state
securities or "blue sky" law, as soon as such Bank is advised thereof, and such
Bank will use its reasonable efforts to prevent the issuance of any such order
or communication and to obtain as soon as possible its lifting, if issued.
(b) If, at any time during the prospectus delivery period, any
event occurs as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus in order to comply with the Act or
the Rules and Regulations, such Bank promptly will prepare and file with the
Commission (subject to the Representative's prior review pursuant to paragraph
(a) of this Section 5), an amendment or supplement which will correct such
statement or omission or an amendment or supplement which will effect such
compliance.
(c) Such Bank will furnish to the Representative copies of the
Registration Statement, as originally filed with the Commission, and each
amendment thereto filed with the Commission, including all consents and exhibits
filed therewith and each Preliminary Prospectus, the Prospectus and any amended
or supplemented Prospectus, in each case as soon as available and in such
quantities as the Representative may reasonably request.
(d) Such Bank will cooperate with the Representative in
arranging for the qualification of the Class A Notes for sale and the
determination of their eligibility for investment under the laws of such
jurisdictions, or as necessary to qualify for the Euroclear System or Cedel
Bank, societe anonyme, as the Representative designates and will cooperate in
continuing such qualifications in effect so long as required for the
distribution of the Class A Notes; provided, however, that neither any such Bank
nor the Trust shall be obligated to qualify to do business in any jurisdiction
in which it is not currently so qualified or to take any action which would
subject it to general or unlimited service of process in any jurisdiction where
it is not now so subject.
(e) [Reserved]
(f) So long as any of the Class A Notes is outstanding, such
Bank will furnish to the Representative as soon as practicable, (A) all
documents distributed, or caused to be
8
<PAGE>
distributed, by such Bank to the Class A Noteholders, (B) all documents filed,
or caused to be filed, by such Bank with respect to the Trust with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and any order of the Commission thereunder or pursuant to a
"no-action" letter from the staff of the Commission and (C) from time to time,
such other information in the possession of such Bank concerning the Trust and
any other information concerning such Bank filed with any governmental or
regulatory authority which is otherwise publicly available, as the
Representative may reasonably request.
(g) On or before the Closing Date, such Bank shall cause its
computer records relating to the Receivables to be marked to show the Trust's
absolute ownership of the Receivables transferred by such Bank to the Trust, and
from and after the Closing Date neither such Bank nor the Servicer shall take
any action inconsistent with the Trust's ownership of such Receivables and the
security interest of the Indenture Trustee therein, other than as permitted by
the Sale and Servicing Agreement.
(h) To the extent, if any, that the rating provided with
respect to the Class A Notes by Moody's, Standard & Poor's and/or Duff & Phelps
is conditional upon the furnishing of documents or the taking of any other
actions by such Bank agreed upon on or prior to the Closing Date, such Bank
shall furnish such documents and take any such other actions.
(i) For the period beginning on the date hereof and ending on
the Closing Date, unless waived by the Representative, neither such Bank nor any
trust originated, directly or indirectly, by such Bank will offer to sell or
sell notes (other than the Class A Notes) collateralized by, or certificates
(other than the Certificates) evidencing an ownership interest in, receivables
generated pursuant to marine installment sale contracts or purchase money loans.
6. Payment of Expenses. The Banks will pay all expenses
incident to the performance of their respective obligations under this
Agreement, including (i) the printing and filing of the Registration Statement
as originally filed and of each amendment thereto, (ii) the Indenture Trustee's
and Owner Trustee's acceptance fee and the reasonable fees and disbursements of
the counsel to the Indenture Trustee and counsel to the Owner Trustee, (iii) the
fees and disbursements of Price Waterhouse LLP and Arthur Andersen, (iv) the
fees of the Rating Agencies and (v) blue sky expenses; provided, however, that
the Class A Underwriters may reimburse the Banks for certain expenses incurred
by the Banks as agreed to by the Class A Underwriters and the Banks.
7. Conditions to the Obligations of the Class A
Underwriters. The obligation of the several Class A Underwriters
9
<PAGE>
to purchase and pay for the Class A Notes will be subject to the accuracy of the
representations and warranties on the part of the Banks herein on the date
hereof and as of the Closing Date, to the accuracy of the statements of officers
of the Banks made pursuant to the provisions hereof, to the performance by the
Banks of their respective obligations hereunder and to the following additional
conditions precedent:
(a) On or prior to the date hereof, the
Representative shall have received a letter (a "Procedures
Letter"), dated the date of this Agreement of each of Price
Waterhouse LLP and Arthur Andersen verifying the accuracy of
such financial and statistical data contained in the
Prospectus as the Representative shall deem reasonably
advisable. In addition, if any amendment or supplement to the
Prospectus made after the date hereof contains financial or
statistical data, the Representative shall have received a
letter dated the Closing Date confirming the Procedures Letter
and providing additional comfort on such new data.
(b) The Prospectus shall have been filed in the
manner and within the time period required by Rule 424(b) of
the Rules and Regulations; and prior to the Closing Date, no
stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or
any development involving a prospective change, in or
affecting particularly the business or properties of any of
the Banks, The Chase Manhattan Corporation, CITSF or The CIT
Group, Inc. which, in the reasonable judgment of the
Representative, materially impairs the investment quality of
the Class A Notes or makes it impractical to market the Class
A Notes; (ii) any suspension or material limitation of trading
in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of any of the Banks or
The Chase Manhattan Corporation, on any exchange or in the
over-the-counter market by such exchange or over-the-counter
market or by the Commission; (iii) any banking moratorium
declared by federal or New York authorities; or (iv) any
outbreak or material escalation of major hostilities or any
other substantial national or international calamity or
emergency if, in the reasonable judgment of the
Representative, the effect of any such outbreak, escalation,
calamity or emergency on the United States financial markets
makes it
10
<PAGE>
impracticable or inadvisable to proceed with completion of the
sale of and any payment for the Class A Notes.
(d) The Representative shall have received opinions,
dated the Closing Date and reasonably satisfactory, when taken
together, in form and substance to the Representative, of
Simpson Thacher & Bartlett, special counsel to the Banks,
Richards, Layton & Finger, special counsel to the Trust, and
such other counsel otherwise reasonably acceptable to the
Representative, with respect to such matters as are customary
for the type of transaction contemplated by this Agreement.
(e) The Representative shall have received an opinion
or opinions of Simpson Thacher & Bartlett, special counsel to
the Banks, dated the Closing Date and satisfactory in form and
substance to the Representative, with respect to certain
matters relating to the transfers from each Bank to the Trust
of its Receivables, with respect to the perfection of the
Trust's interest in the Receivables transferred by Chase and
with respect to the grant of a security interest in the
Receivables to the Indenture Trustee, and an opinion of
Richards, Layton & Finger, special counsel to the Trust, with
respect to the perfection of the Trust's interest in the
Receivables transferred by Chase USA and the Indenture
Trustee's interests in the Receivables.
(f) The Representative shall have received from
Norman H. Rosen, Senior Vice President, Secretary and General
Counsel of the Servicer, such opinion or opinions, dated the
Closing Date and satisfactory in form and substance to the
Representative, with respect to corporate law matters.
(g) The Representative shall have received from
Robert S. Fisher, counsel to the Sellers, such opinion or
opinions, dated the Closing Date and satisfactory in form and
substance to the Representative, with respect to certain
matters relating to the transfer to the Trust of Preferred
Ship Mortgages in accordance with the Ship Mortgage Statutes
and other related matters as the Representative may require.
(h) The Representative shall have received from
Orrick, Herrington & Sutcliffe LLP, counsel to Class A
Underwriters, such opinion or opinions, dated the Closing
Date and satisfactory in form and substance to the
Representative, with respect to the validity of the Class A
Notes, the Registration Statement, the Prospectus and other
related matters as the Representative may require, and the
Banks shall have
11
<PAGE>
furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such
matters.
(i) The Representative shall have received an opinion
of Simpson Thacher & Bartlett, special U.S. tax counsel to the
Banks, dated the Closing Date and reasonably satisfactory in
form and substance to the Representative, with respect to such
matters as are customary for the type of transaction
contemplated by this Agreement.
(j) The Representative shall have received an opinion
of Crowe & Dunlevy, P.C., special Oklahoma tax counsel to the
Banks, dated the Closing Date and satisfactory in form and
substance to the Representative, with respect to such matters
as are customary for the type of transaction covered by this
Agreement.
(k) The Representative shall have received an opinion
of Dorsey & Whitney LLP, counsel to the Indenture Trustee,
dated the Closing Date and satisfactory in form and substance
to the Representative, with respect to such matters as are
customary for the transactions contemplated by this Agreement.
In rendering such opinions, counsel to the Indenture Trustee
may rely on the opinion of the office of the general counsel to the Indenture
Trustee.
(l) The Representative shall have received an opinion
of Richards, Layton & Finger, special counsel to the Owner
Trustee, and such other counsel reasonably satisfactory to the
Representative and its counsel, dated the Closing Date and
satisfactory in form and substance to the Representative, with
respect to such matters as are customary for the type of
transaction contemplated by this Agreement;
(m) Each class of Class A Notes shall have been rated
"AAA" by Standard & Poor's, Aaa by Moody's and "AAA" by Duff &
Phelps. The Class B Notes shall have been rated "AA" by
Standard & Poor's, A1 by Moody's and "AA" by Duff & Phelps
and the Class C Notes shall have been rated "A-" by
Standard & Poor's, Baa2 by Moody's or "A-" by Duff & Phelps;
(n) The Representative shall have received a
certificate, dated the Closing Date, of an attorney-in-fact, a
Vice President or more senior officer of each Bank in which
such person, to the best of his or her knowledge after
reasonable investigation, shall state
12
<PAGE>
that (i) the representations and warranties of such Bank in
this Agreement are true and correct in all material respects
on and as of the Closing Date, (ii) such Bank has complied
with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to the
Closing Date, (iii) the representations and warranties of such
Bank, as Seller, in the Sale and Servicing Agreement and, as
Depositor in the Trust Agreement are true and correct as of
the dates specified in the Sale and Servicing Agreement and
the Trust Agreement, (iv) that no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are threatened by the Commission and (v) the Prospectus does
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading;
(o) On the Closing Date, $27,962,029.25 aggregate
amount of Junior Notes shall have been issued and sold
pursuant to the Class B and Class C Underwriting Agreement;
and
(p) CITSF, the Banks and the Representative on behalf
of the Class A Underwriters shall have entered into an
Indemnification Agreement (the "Indemnification Agreement")
satisfactory in form and substance to the parties thereto.
Each Bank will furnish the Representative, or cause the
Representative to be furnished, with such number of conformed copies of such
opinions, certificates, letters and documents as the Representative reasonably
requests.
8. Indemnification. (a) The Banks jointly and severally will
indemnify and hold harmless each Class A Underwriter against any losses, claims,
damages or liabilities, to which such Class A Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of, or are based upon, any
untrue statement or alleged untrue statement of any material fact contained in
the Preliminary Prospectus, the Registration Statement, the Prospectus (other
than any market making prospectus) or any amendment or supplement thereto, or
arise out of, or are based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse each Class A Underwriter
for any legal or other expenses reasonably incurred by such Class A Underwriter
in connection with investigating or defending any such action or claim;
provided, however, that (i) the Banks shall not be liable
13
<PAGE>
in any such case to the extent that any such loss, claim, damage or liability
arises out of, or is based upon, an untrue statement or alleged untrue statement
or omission or alleged omission made (A) in the Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to either
Bank by any Class A Underwriter through the Representative expressly for use
therein or (B) in the CITSF Information (as defined in the Indemnification
Agreement) contained in the Preliminary Prospectus, the Registration Statement
or the Prospectus and (ii) such indemnity with respect to the Preliminary
Prospectus shall not inure to the benefit of any Class A Underwriter (or any
person controlling any such Class A Underwriter) from whom the person asserting
any such loss, claim, damage or liability purchased the Class A Notes which are
the subject thereof if such person did not receive a copy of the Prospectus (or
the Prospectus as supplemented) at or prior to the confirmation of the sale of
such Class A Notes to such person in any case where such delivery is required by
the Act and the untrue statement or omission of a material fact contained in the
Preliminary Prospectus was corrected in the Prospectus (or the Prospectus as
supplemented).
(b) Each Class A Underwriter severally agrees to indemnify and
hold harmless each Bank, the directors, the officers or agents of each Bank who
signed the Registration Statement, and each person, if any, who controls each
Bank within the meaning of Section 15 of the Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section 8, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Preliminary Prospectus, the Registration Statement or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to either Bank by such Class A Underwriter through the
Representative expressly for use in the Preliminary Prospectus, the Registration
Statement or the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to the
indemnifying party of any action commenced against the indemnified party in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have hereunder or otherwise, other than on account of this
indemnity agreement. In case any such action shall be brought against an
indemnified party and it shall have notified the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party with respect to such action), and it being understood that the
indemnifying party shall not, in connection
14
<PAGE>
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys, and, after notice from the indemnifying party to the
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the indemnified party under
subsections (a) or (b) of this Section 8 for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by the indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation.
(d) The obligations of each Bank under this Section 8 shall be
in addition to any liability which such Bank may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Class A Underwriter within the meaning of the Act; and each Class A
Underwriter's obligations under this Section 8 shall be in addition to any
liability which such Class A Underwriter may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of each Bank
and to each person, if any, who controls each Bank within the meaning of Section
15 of the Act.
9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 8 is for any reason held to be unavailable other than in accordance with
its terms, the Banks and the Class A Underwriters shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Banks or the Class A
Underwriters, as incurred, in such proportions so that the Class A Underwriters
are responsible for that portion represented by the percentage that the
underwriting discount and commissions bear to the initial public offering price
appearing thereon and the Banks are responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section, each person, if any, who controls a Class A Underwriter within the
meaning of Section 15 of the Act shall have the same rights to contribution as
such Class A Underwriter, and each director of each Bank, each officer or agent
of each Bank who signed the Registration Statement, and each person, if any, who
controls each Bank within the meaning of Section 15 of the Act shall have the
same rights to contribution as such Bank.
10. Default of Class A Underwriters. If any Class A
Underwriter defaults in its obligations to purchase Class A Notes hereunder and
the aggregate principal amount of the Class A Notes that such defaulting Class A
Underwriter agreed but failed to purchase does not exceed 10% of the total
principal amount of
15
<PAGE>
Class A Notes, the Representative may make arrangements satisfactory to the
Banks for the purchase of such Class A Notes by other persons, including the
non-defaulting Class A Underwriters, but if no such arrangements are made by the
Closing Date, the non-defaulting Class A Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Class A Notes that such defaulting Class A Underwriter agreed but failed to
purchase. If any Class A Underwriter so defaults and the aggregate principal
amount of the Class A Notes with respect to which such default or defaults occur
exceeds 10% of the total principal amount of the Class A Notes and arrangements
satisfactory to the Representative and the Banks for the purchase of such Class
A Notes by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Class A Underwriter or the Banks, except as provided in Section 11. Nothing
herein will relieve a defaulting Class A Underwriter from liability for its
default.
11. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Banks or their respective officers and of the Class A
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation or statement as to the results
thereof, made by or on behalf of the Class A Underwriters, the Banks or any of
their respective representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the Class A Notes. If for
any reason the purchase of the Class A Notes by the Class A Underwriters is not
consummated, each Bank shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 6 and the respective obligations of each
Bank and the Class A Underwriters pursuant to Section 8 and 9 shall remain in
effect. If the purchase of the Class A Notes by the Class A Underwriters is not
consummated for any reason other than solely because of the occurrence of any
event specified in clauses (ii), (iii) or (iv) of Section 7(c), the Banks will
reimburse each Class A Underwriter for all out-of-pocket expenses (including
fees and disbursements of counsel) reasonably incurred by it in connection with
the offering of the Class A Notes.
12. Notices. All communications hereunder will be in writing
and, if sent to the Representative or the Class A Underwriters, will be mailed,
delivered or telegraphed and confirmed to the Representative at Chase Securities
Inc., 270 Park Avenue, 7th Floor, New York, New York 10017, Attention: Asset
Backed Finance Division, or, if sent to the Banks, will be mailed, delivered, or
telegraphed and confirmed to (i) Chase Manhattan Bank USA, National Association,
802 Delaware Avenue, Wilmington, Delaware 19801, Attention: Controller and (ii)
The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention:
Chief Financial Officer (cc: General Counsel).
16
<PAGE>
13. Successors. This Agreement will inure to the benefit of,
and be binding upon, the parties hereto and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties hereto and their
respective successors and the controlling persons and officers and directors
referred to in Sections 8 and 9 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Class A Notes
from any Class A Underwriter shall be deemed to be a successor by reason merely
of such purchase.
14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Agreement.
15. No Bankruptcy Petition. Each Class A Underwriter covenants
and agrees that, prior to the date which is one year and one day after the
payment in full of all securities issued by the Trust, it will not institute
against, or join any other person in instituting against, the Trust any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other proceedings under any Federal or state bankruptcy or similar law.
16. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
17
<PAGE>
If the foregoing is in accordance with the Representative's
understanding of our agreement, kindly sign and return to us the enclosed
duplicate hereof, whereupon it will become a binding agreement among the Banks
and the several Class A Underwriters in accordance with its terms.
Very truly yours,
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION
By
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By
-------------------------------
Name:
Title:
The foregoing Class A
Underwriting Agreement is
hereby confirmed and
accepted as of the date
first written above:
CHASE SECURITIES INC.
on behalf of itself and
as Representative
of the Several Class A Underwriters,
named in Schedule I and Schedule II
By
-------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of Principal Amount of Principal Amount of
Class A Underwriter Class A-1 Notes Class A-2 Notes Class A-3 Notes
- ------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Chase Securities Inc.
--------------- --------------- ---------------
Goldman, Sachs & Co.
--------------- --------------- ---------------
Merrill, Lynch, Pierce,
Fenner & Smith,
Incorporated
--------------- --------------- ---------------
Total
Principal Amount of Principal Amount of Principal Amount of
Class A Underwriter Class A-4 Notes Class A-5 Notes Class A-6 Notes
------------------- --------------- --------------- ---------------
Chase Securities Inc.
--------------- --------------- ---------------
Goldman, Sachs & Co.
--------------- --------------- ---------------
Merrill, Lynch, Pierce,
Fenner & Smith,
Incorporated
--------------- --------------- ---------------
Total
</TABLE>
19
<PAGE>
SCHEDULE II
<TABLE>
Principal Amount of Principal Amount of Principal Amount of
Class A Underwriter Class A-1 Notes Class A-2 Notes Class A-3 Notes
- ------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Chase Securities Inc.
--------------- --------------- ---------------
Goldman, Sachs & Co.
--------------- --------------- ---------------
Merrill, Lynch, Pierce,
Fenner & Smith,
Incorporated
--------------- --------------- ---------------
Total
Principal Amount of Principal Amount of Principal Amount of
Underwriter Class A-4 Notes Class A-5 Notes Class A-6 Notes
- ------------------- --------------- --------------- ---------------
Chase Securities Inc.
--------------- --------------- ---------------
Goldman, Sachs & Co.
--------------- --------------- ---------------
Merrill, Lynch, Pierce,
Fenner & Smith,
Incorporated
--------------- --------------- ---------------
Total
</TABLE>
20
<PAGE>
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
CLASS B ASSET BACKED NOTES
CLASS C ASSET BACKED NOTES
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
and
THE CHASE MANHATTAN BANK,
Sellers
THE CIT GROUP/SALES FINANCING, INC.,
Servicer
CLASS B AND CLASS C UNDERWRITING AGREEMENT
------------------------------------------
October __, 1997
Chase Securities Inc.1
270 Park Avenue
New York, NY 10017
Ladies and Gentlemen:
1. Introductory. Chase Manhattan Bank USA, National
Association ("Chase USA"), a national banking association, and The Chase
Manhattan Bank ("Chase"), a New York banking corporation (each, a "Bank", and
together the "Banks"), propose to form Chase Manhattan Marine Owner Trust 1997-A
(the "Trust") to sell $10,650,000 aggregate principal amount of Class B ____%
Asset Backed Notes (the "Class B Notes") and $17,312,029.25 aggregate principal
amount of Class C ___% Asset Backed Notes (the "Class C Notes," and together
with Class B Notes, the "Junior Notes").
The assets of the Trust will include, among other things, a
pool of retail installment sales contracts and purchase money notes and other
notes (the "Receivables") secured by new and used boats (the "Financed Boats")
and certain monies received or due thereunder on and after the Cutoff Date (as
hereinafter
- --------
1 Assumes Chase Securities Inc. is only Underwriter of Junior
Notes.
<PAGE>
defined), such Receivables to be transferred to the Trust and serviced by The
CIT Group/Sales Financing, Inc. ("CITSF," and in its capacity as Servicer, the
"Servicer"), or by a successor Servicer. The Pool Balance of the Receivables as
of the close of business on October 1, 1997 (the "Cutoff Date") was equal to
$266,262,029.25 (the "Cutoff Date Pool Balance"). The Junior Notes will be
issued pursuant to the Indenture to be dated as of October 1, 1997 (as amended
and supplemented from time to time, the "Indenture"), between the Trust and
Norwest Bank Minnesota, National Association, as indenture trustee (the
"Indenture Trustee").
Simultaneously with the issuance and sale of the Junior
Notes as contemplated herein, the Trust will issue (a) $41,800,000 aggregate
principal amount of Class A-1 ____% Asset Backed Notes (the "Class A-1 Notes"),
$55,600,000 aggregate principal amount of Class A-2 ____% Asset Backed Notes
(the "Class A-2 Notes"), $50,600,000 aggregate principal amount of Class A-3
____% Asset Backed Notes (the "Class A-3 Notes"), $37,300,000 aggregate
principal amount of Class A-4 ____% Asset Backed Notes (the "Class A-4 Notes"),
$29,300,000 aggregate principal amount of Class A-5 ____% Asset Backed Notes
(the "Class A-5 Notes") and $23,700,000 aggregate principal amount of Class A-6
___% Asset Backed Notes (the "Class A-6 Notes," and together with the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the
Class A-5 Notes, the "Class A Notes"), pursuant to the Indenture which will be
sold pursuant to an underwriting agreement dated the date hereof (the "Class A
Underwriting Agreement"; together with this Agreement, the "Underwriting
Agreements") among the Banks and the underwriters named therein (the "Class A
Underwriters") and (b) Asset Backed Certificates (the "Certificates") pursuant
to an Amended and Restated Trust Agreement to be dated as of October 1, 1997
(as amended and supplemented from time to time, the "Trust Agreement"), among
the Banks and Wilmington Trust Company, as owner trustee (the "Owner Trustee"),
each representing a fractional undivided interest in the Trust. The
Certificates will not be sold pursuant to the Underwriting Agreements. The
Class A Notes and the Junior Notes are sometimes referred to collectively
herein as the "Securities".
Capitalized terms used and not otherwise defined herein shall
have the meanings assigned to such terms in the Sale and Servicing Agreement to
be dated as of October 1, 1997 (as amended and supplemented from time to time,
the "Sale and Servicing Agreement"), among the Trust, the Banks, as Sellers,
Servicer.
This is to confirm the agreement concerning the purchase of
the Junior Notes from the Banks by Chase Securities Inc. (the "Class B and Class
C Underwriter").
2
<PAGE>
2. Representations and Warranties of the Banks. Each Bank
represents and warrants to, and agrees with, the Underwriter, that:
(a) A registration statement on Form S-3 (No. 333-
32737/-01/-02) including a form of prospectus, relating to the Securities has
been filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended (the
"Act"), and the Rules and Regulations under the Act (the "Rules and
Regulations"). The Banks may have filed one or more amendments thereto,
including the related preliminary prospectus, each of which has previously been
furnished to you. The Banks have included in such registration statement, as
amended on the date such registration statement became effective, all
information (other than information permitted to be omitted from a registration
statement when it becomes effective pursuant to Rule 430A ("Rule 430A
Information") required by the Act and the Rules and Regulations to be included
in the final prospectus with respect to the Securities and the offering thereof.
Such registration statement, as amended on the date that such registration
statement or the most recent post-effective amendment thereto, if any, became or
becomes effective under the Act, including the exhibits thereto and the 430
Information, is hereinafter referred to as the "Registration Statement." The
Registration Statement has become effective, and no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceeding
for that purpose has been instituted or, to the knowledge of such Bank,
threatened by the Commission. The conditions to the use of a registration
statement on Form S-3 under the Act, as set forth in the General Instructions to
Form S-3, have been satisfied with respect to the Registration Statement;
(b) The Banks propose to file with the Commission pursuant to
Rules 430A and 424(b)(1) or 424(b)(4) under the Rules and Regulations a final
prospectus relating to the sale of the Securities. The prospectus in the form
filed with the Commission pursuant to Rules 430A and 424(b)(1) or 424(b)(4)
under the Rules and Regulations is hereinafter referred to as the "Prospectus."
As filed, the Prospectus shall include all Rule 430A Information, together with
all other such required information, with respect to the Securities and the
offering thereof and, except to the extent that the Underwriter shall have
agreed to a modification, the Prospectus shall be in all substantive respects in
the form furnished to the Underwriter prior to the execution of this Agreement
or, to the extent not completed at such time, shall contain only such material
changes as the Banks have advised the Class B and Class C Underwriter, prior to
such time, will be included or made therein. "Preliminary Prospectus" means each
prospectus included in the Registration Statement, or amendments thereof, before
it became effective under the Act, any prospectus filed with the Commission by
the Banks pursuant to Rule 424(a)
3
<PAGE>
and the prospectus included in the Registration Statement on the
date the Registration Statement became effective;
(c) The Registration Statement, at the time it became
effective, did, and the Prospectus, at the time the Prospectus is first filed in
accordance with Rule 424(b) and on the Closing Date (as defined herein), will,
comply in all material respects with the applicable requirements of the Act and
the Trust Indenture Act of 1939 and the Rules and Regulations. At the time the
Registration Statement became effective, it did not include any untrue statement
of a material fact or, did not omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and,
on the date of the filing of the Prospectus pursuant to Rules 430A and 424(b)
and on the Closing Date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that such Bank makes no representation or warranty with respect to information
contained in or omitted from the Registration Statement or the Prospectus in
reliance upon, or in conformity with, information furnished in writing to either
Bank by or on behalf of the Underwriter through the Underwriter specifically for
use in connection with the preparation of the Registration Statement or the
Prospectus;
(d) In the case of Chase USA, such Bank is a national banking
association organized under the laws of the United States, and in the case of
Chase, such Bank is a New York banking corporation, in each case, with full
power and authority to own its properties and conduct its business as described
in the Prospectus, and had at all relevant times and has power, authority and
legal right to acquire, own, and sell the Receivables being transferred by such
Bank to the Trust;
(e) When the Class A Notes have been duly executed and
delivered by the Owner Trustee and, when authenticated by the Indenture Trustee
in accordance with the Indenture and delivered upon the order of the Banks to
the Class A Underwriters pursuant to the Class A Underwriting Agreement and the
Sale and Servicing Agreement, the Class A Notes will be duly issued and will
constitute legal, valid and binding obligations of the Trust enforceable against
the Trust in accordance with their terms, except to the extent that the
enforceability thereof may be subject to bankruptcy, insolvency, reorganization,
conservatorship, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights as such laws would apply in the event of the
insolvency, liquidation or reorganization or other similar occurrence with
respect to either Bank or the Trust or in the event of any moratorium or similar
occurrence affecting either Bank or the Trust and to general principles of
equity;
4
<PAGE>
(f) When the Junior Notes have been duly executed and
delivered by the Owner Trustee and, when authenticated by the Indenture Trustee
in accordance with the Indenture and delivered upon the order of the Banks to
the Class B and Class C Underwriter pursuant to the Class B and Class C
Underwriting Agreement and the Sale and Servicing Agreement, the Junior Notes
will be duly issued and will constitute legal, valid and binding obligations of
the Trust enforceable against the Trust in accordance with their terms, except
to the extent that the enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, conservatorship, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights as such laws would
apply in the event of the insolvency, liquidation or reorganization or other
similar occurrence with respect to either Bank or the Trust or in the event of
any moratorium or similar occurrence affecting either Bank or the Trust and to
general principles of equity;
(g) The execution, delivery and performance by such Bank of
this Agreement, the Class A Underwriting Agreement, and the Basic Documents to
which such Bank is a party, and the consummation by such Bank of the
transactions provided for herein and therein have been, or will have been, duly
authorized by such Bank by all necessary action on the part of such Bank; and
neither the execution and delivery by such Bank of such instruments, nor the
performance by such Bank of the transactions herein or therein contemplated, nor
the compliance by such Bank with the provisions hereof or thereof, will (i)
conflict with or result in a breach or violation of any of the material terms
and provisions of, or constitute a material default under, any of the provisions
of the charter or by-laws of such Bank, or (ii) conflict with any of the
provisions of any law, governmental rule, regulation, judgment, decree or order
binding on such Bank or the properties of such Bank, or (iii) conflict with any
of the material provisions of any material indenture, mortgage, contract or
other instrument to which such Bank is a party or by which such Bank is bound,
or (iv) result in the creation or imposition of any lien, charge or encumbrance
upon any of its property pursuant to the terms of any such indenture, mortgage,
contract or other instruments, except, in the case of clauses (ii) and (iii) ,
for any such breaches or conflicts as would not individually or in the aggregate
have a material adverse effect on the transactions contemplated hereby or on the
ability of such Bank to consummate such transactions;
(h) When executed and delivered by the parties thereto, such
of the Sale and Servicing Agreement and the Trust Agreement will constitute a
legal, valid and binding obligation of such Bank, enforceable against such Bank
in accordance with its terms, except to the extent that the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
conservatorship, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights as such laws would apply in the event of the
insolvency, liquidation or
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<PAGE>
reorganization or other similar occurrence with respect to such Bank or in the
event of any moratorium or similar occurrence affecting such Bank and to general
principles of equity;
(i) All approvals, authorizations, consents, orders or other
actions of any person, corporation or other organization, or of any court,
governmental agency or body or official (except with respect to the state
securities or "blue sky" laws of various jurisdictions) if so required in
connection with the execution, delivery and performance of this Agreement, the
Class A Underwriting Agreement and the Basic Documents to which such Bank is a
party has been or will be taken or obtained on or prior to the Closing Date;
(j) As of the Closing Date, the representations and
warranties of such Bank, in the Trust Agreement will be true and
correct;
(k) This Agreement and the Class A Underwriting
Agreement have been duly executed and delivered by such Bank;
3. Purchase, Sale, Payment and Delivery of the Junior Notes.
On the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, Chase USA agree to
sell to the Underwriter, and the Underwriter agrees, to purchase from Chase USA,
(a) at a purchase price of ________% of the principal amount thereof,
$10,650,000 principal amount of the Class B Notes and (b) at a purchase price
of ____% of the principal amount thereof, $17,312,029.25 principal amount of
the Class C Notes.
On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth,
Chase agrees to sell to the Underwriter, and the Underwriter agrees, to purchase
from Chase, at (a) a purchase price of ________% of the principal amount
thereof, $10,650,000 principal amount of the Class B Notes and (b) a purchase
price of ____% of the principal amount thereof, $17,312,029.25 principal amount
of the Class C Notes.
Each Bank will deliver the Junior Notes being sold by it
hereunder to the Underwriter against payment of the purchase price in
immediately available funds drawn to the order of Chase USA and Chase, in each
case with respect to the Junior Notes sold by it, at the offices of Orrick,
Herrington & Sutcliffe LLP in New York, New York at 10:00 a.m., New York City
time, on October _______, 1997 or at such other time not later than seven full
business days thereafter as the Class B and Class C Underwriter and the Banks
determine, such time being herein referred to as the "Closing Date." The Junior
Notes of each class to be so delivered will be initially represented by one or
more definitive Junior Notes registered in the name of Cede & Co., the nominee
of The Depository Trust Company ("DTC"), except for a Class C Note registered in
the name of Chase Securities Inc. in an amount of
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<PAGE>
$29.25, and will be made available for inspection by the Class B and Class C
Underwriter at the office where delivery and payment for such Junior Notes is to
take place no later than 1:00 p.m., New York City time, on the Business Day
prior to the Closing Date.
4. Offering by the Underwriter. It is understood that the
Class B and Class C Underwriter proposes to offer the Junior Notes for sale to
the public (which may include selected brokers and dealers) as set forth in the
Prospectus.
5. Covenants of the Banks. Each Bank covenants and
agrees with the Underwriter that:
(a) Such Bank will file the Prospectus with the Commission
pursuant to Rule 424(b)(1) or 424(b)(4) of the Rules and Regulations within the
time prescribed therein and will provide evidence satisfactory to the Class B
and Class C Underwriter of such timely filing. During any period that a
prospectus relating to the Junior Notes is required under the Act to be
delivered to purchasers of the Junior Notes by the underwriters and dealers
participating in the initial offering and sale of the Junior Notes on the
Closing Date under the Act (without regard to any market making prospectus
required to be delivered by the Junior Notes Underwriter pursuant to the Act) (a
"prospectus delivery period"), such Bank will not file any amendments to the
Registration Statement, or any amendments or supplements to the Prospectus,
unless it shall first have delivered copies of such amendments or supplements to
the Class B and Class C Underwriter, and, if the Underwriter shall have
reasonably objected thereto promptly after receipt thereof; such Bank will
promptly advise the Underwriter or its counsel (i) when notice is received from
the Commission that any post-effective amendment to the Registration Statement
has become or will become effective, (ii) of any request by the Commission for
any amendment or supplement to the Registration Statement or the Prospectus or
for any additional information and (iii) of any order or communication
suspending or preventing, or threatening to suspend or prevent, the offer and
sale of the Certificates or of any proceedings or examinations that may lead to
such an order or communication, whether by or of the Commission or any authority
administering any state securities or "blue sky" law, as soon as such Bank is
advised thereof, and such Bank will use its reasonable efforts to prevent the
issuance of any such order or communication and to obtain as soon as possible
its lifting, if issued.
(b) If, at any time during the prospectus delivery period, any
event occurs as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus in order to
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<PAGE>
comply with the Act or the Rules and Regulations, such Bank promptly will
prepare and file with the Commission (subject to the Class B and Class C
Underwriter's prior review pursuant to paragraph (a) of this Section 5), an
amendment or supplement which will correct such statement or omission or an
amendment or supplement which will effect such compliance.
(c) Such Bank will furnish to the Class B and Class C
Underwriter copies of the Registration Statement, as originally filed with the
Commission, and each amendment thereto filed with the Commission, including all
consents and exhibits filed therewith and each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus; in each case as soon as
available and in such quantities as the Class B and Class C Underwriter may
reasonably request.
(d) Such Bank will cooperate with the Class B and Class C
Underwriter in arranging for the qualification of the Junior Notes for sale and
the determination of their eligibility for investment under the laws of such
jurisdictions as the Class B and Class C Underwriter designates and will
cooperate in continuing such qualifications in effect so long as required for
the distribution of the Junior Notes; provided, however, that neither any such
Bank nor the Trust shall be obligated to qualify to do business in any
jurisdiction in which it is not currently so qualified or to take any action
which would subject it to general or unlimited service of process in any
jurisdiction where it is not now so subject.
(e) [Reserved]
(f) So long as any of the Junior Notes is outstanding, such
Bank will furnish to the Class B and Class C Underwriter as soon as practicable,
(A) all documents distributed, or caused to be distributed, by such Bank to the
holder of Junior Notes, (B) all documents filed, or caused to be filed, by such
Bank with respect to the Trust with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and any order of the
Commission thereunder or pursuant to a "no-action" letter from the staff of the
Commission and (C) from time to time, such other information in the possession
of such Bank concerning the Trust and any other information concerning such Bank
filed with any governmental or regulatory authority which is otherwise publicly
available, as the Class B and Class C Underwriter may reasonably request.
(g) On or before the Closing Date, such Bank shall cause its
computer records relating to the Receivables to be marked to show the Trust's
absolute ownership of such Receivables transferred by such Bank to the Trust,
and from and after the Closing Date neither such Bank nor the Servicer shall
take any action inconsistent with the Trust's ownership of such Receivables and
the security interest of the Indenture Trustee
8
<PAGE>
therein, other than as permitted by the Sale and Servicing
Agreement.
(h) To the extent, if any, that the rating provided with
respect to the Junior Notes of any other class by Moody's, Standard & Poor's
and/or Duff & Phelps is conditional upon the furnishing of documents or the
taking of any other actions by such Bank agreed upon on or prior to the
Closing Date, such Bank shall furnish such documents and take any such other
actions.
(i) For the period beginning on the date hereof and ending on
the Closing Date, unless waived by the Class B and Class C Underwriter, neither
such Bank nor any trust originated, directly or indirectly, by such Bank will
offer to sell or sell notes (other than the Class A Notes) collateralized by, or
certificates (other than the Certificates) collateralized by receivables
generated pursuant to marine installment sale contracts or purchase money loans.
6. Payment of Expenses. The Banks will pay all expenses
incident to the performance of their respective obligations under this
Agreement, including (i) the printing and filing of the Registration Statement
as originally filed and of each amendment thereto, (ii) the Indenture Trustee's
and Owner Trustee's acceptance fee and the reasonable fees and disbursements of
the counsel to the Indenture Trustee and counsel to the Owner Trustee, (iii) the
fees and disbursements of Price Waterhouse LLP and Arthur Andersen, (iv) the
fees of the Rating Agencies and (v) blue sky expenses; provided, however, that
the Class B and Class C Underwriter may reimburse the Banks for certain expenses
incurred by the Banks as agreed to by the Class B and Class C Underwriter and
the Banks.
7. Conditions to the Obligations of the Underwriter. The
obligation of the Underwriter to purchase and pay for the Junior Notes will be
subject to the accuracy of the representations and warranties on the part of the
Banks herein on the date hereof and as of the Closing Date, to the accuracy of
the statements of officers of the Banks made pursuant to the provisions hereof,
to the performance by the Banks of their respective obligations hereunder and to
the following additional conditions precedent:
(a) On or prior to the date hereof the Class B and
Class C Underwriter shall have received a letter (a
"Procedures Letter"), dated the date of this Agreement of each
of Price Waterhouse LLP and Arthur Andersen verifying the
accuracy of such financial and statistical data contained in
the Prospectus as the Class B and Class C Underwriter shall
deem reasonably advisable. In addition, if any amendment or
supplement to the Prospectus made after the date hereof
contains financial or statistical data, the Class B and Class
C Underwriter shall have received a letter dated the
9
<PAGE>
Closing Date confirming each Procedures Letter and
providing additional comfort on such new data;
(b) The Prospectus shall have been filed in the
manner and within the time period required by Rule 424(b) of
the Rules and Regulations; and prior to the Closing Date, no
stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened;
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or
any development involving a prospective change, in or
affecting particularly the business or properties of any of
the Banks, The Chase Manhattan Corporation, CITSF or The CIT
Group, Inc. which, in the reasonable judgment of the
Underwriter, materially impairs the investment quality of the
Junior Notes or makes it impractical to market the Junior
Notes; (ii) any suspension or material limitation of trading
in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of any of the Banks or
The Chase Manhattan Corporation, on any exchange or in the
over-the-counter market by such exchange or over-the-counter
market or by the Commission; (iii) any banking moratorium
declared by Federal or New York authorities; or (iv) any
outbreak or material escalation of major hostilities or any
other substantial national or international calamity or
emergency if, in the reasonable judgment of the Class B and
Class C Underwriter, the effect of any such outbreak,
escalation, calamity or emergency on the United States
financial markets makes it impracticable or inadvisable to
proceed with completion of the sale of and any payment for the
Junior Notes;
(d) The Class B and Class C Underwriter shall have
received opinions, dated the Closing Date and reasonably
satisfactory, when taken together, in form and substance to
the Class B and Class C Underwriter, of Simpson Thacher &
Bartlett, special counsel to the Banks, Richards, Layton &
Finger, special counsel to the Trust, and such other counsel
otherwise reasonably acceptable to the Class B and Class C
Underwriter, with respect to such matters as are customary for
the type of transaction contemplated by this Agreement;
(e) The Class B and Class C Underwriter shall have
received an opinion or opinions of Simpson Thacher & Bartlett,
special counsel to the Banks, dated the Closing Date and
satisfactory in form and substance to
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<PAGE>
the Class B and Class C Underwriter, with respect to certain
matters relating to the transfers from each Bank to the Trust
of its Receivables, with respect to the perfection of the
Trust's interest in the Receivables transferred by Chase and
with respect to the grant of a security interest in the
Receivables to the Indenture Trustee, and an opinion of
Richards, Layton & Finger, Special Counsel to the Trust, with
respect to the perfection of the Trust's interest in the
Receivables transferred by Chase USA and the Indenture
Trustee's interests in the Receivables;
(f) The Class B and Class C Underwriter shall have
received from Norman H. Rosen, Senior Vice President,
Secretary and General Counsel of the Servicer, such opinion or
opinions, dated the Closing Date and satisfactory in form and
substance to the Class B and Class C Underwriter, with respect
to corporate matters;
(g) The Class B and Class C Underwriter shall have
received from Robert S. Fisher, counsel to the Sellers, such
opinion or opinions, dated the Closing Date and satisfactory
in form and substance to the Class B and Class C Underwriter,
with respect to certain matters relating to the transfer to
the Trust of Preferred Ship Mortgages in accordance with the
Ship Mortgage Statutes and other related matters as the Class
B and Class C Underwriter may require;
(h) The Class B and Class C Underwriter shall have
received from Orrick, Herrington & Sutcliffe LLP, counsel to
the Class B and Class C Underwriter, such opinion or opinions,
dated the Closing Date and satisfactory in form and substance
to the Class B and Class C Underwriter, with respect to the
validity of the Junior Notes, the Registration Statement, the
Prospectus and other related matters as the Class B and Class
C Underwriter may require, and the Banks shall have furnished
to such counsel such documents as they reasonably request for
the purpose of enabling them to pass upon such matters;
(i) The Class B and Class C Underwriter shall have
received an opinion of Simpson Thacher & Bartlett, special
U.S. tax counsel to the Banks, dated the Closing Date and
reasonably satisfactory in form and substance to the Class B
and Class C Underwriter, with respect to such matters as are
customary for the type of transaction contemplated by this
Agreement;
(j) The Class B and Class C Underwriter shall have
received an opinion of Crowe & Dunlevy, P.C., special Oklahoma
tax counsel to the Banks, dated the
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<PAGE>
Closing Date and satisfactory in form and substance to the
Class B and Class C Underwriter, with respect to such matters
as are customary for the type of transaction covered by this
Agreement;
(k) The Class B and Class C Underwriter shall have
received an opinion of Dorsey & Whitney LLP, counsel to the
Indenture Trustee, dated the Closing Date and satisfactory in
form and substance to the Class B and Class C Underwriter with
respect to such matters as are customary for the transactions
contemplated by this Agreement;
In rendering such opinions, counsel to the Indenture Trustee
may rely on the opinion of the office of the general counsel to the Indenture
Trustee.
(l) The Class B and Class C Underwriter shall have
received an opinion of counsel to the Owner Trustee, and such
other counsel reasonably satisfactory to the Class B and Class
C Underwriter and its counsel, dated the Closing Date and
satisfactory in form and substance to the Class B and Class C
Underwriter, with respect to such matters as are customary for
the type of transaction contemplated by this Agreement;
(m) The Class B Notes have been rated at least "AA"
by Standard & Poor's, "A1" by Moody's and "AA" by Duff &
Phelps and the Class C Notes have been rated at least "A-" by
Standard & Poor's, "Baa2" by Moody's and "A-" by Duff &
Phelps. Each class of Senior Notes shall have been rated "AAA"
by Standard & Poor's, Aaa by Moody's and "AAA" by Duff &
Phelps;
(n) The Class B and Class C Underwriter shall have
received a certificate, dated the Closing Date, of an
attorney-in-fact, a Vice President or more senior officer of
each Bank in which such person, to the best of his or her
knowledge after reasonable investigation, shall state that (i)
the representations and warranties of such Bank in this
Agreement are true and correct in all material respects on and
as of the Closing Date, (ii) that such Bank has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing
Date, (iii) the representations and warranties of such Bank,
as Seller, in the Sale and Servicing Agreement and, as
Depositor, in the Trust Agreement, are true and correct as of
the dates specified in the Sale and Servicing Agreement and
the Trust Agreement, (iv) that no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are threatened by the Commission and (v) the Prospectus
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does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading;
(o) On the Closing Date, all of the Class A Notes
shall have been issued and sold pursuant to the Class A
Underwriting Agreement; and
(p) CITSF, the Banks and the Class B and Class C
Underwriter shall have entered into an Indemnification
Agreement (the "Indemnification Agreement") satisfactory in
form and substance to the parties thereto.
Each Bank will furnish the Class B and Class C Underwriter, or
cause the Class B and Class C Underwriter to be furnished, with such number of
conformed copies of such opinions, certificates, letters and documents as the
Underwriter reasonably requests.
8. Indemnification. (a) The Banks jointly and severally will
indemnify and hold harmless the Class B and Class C Underwriter against any
losses, claims, damages or liabilities, to which the Class B and Class C
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of, or are based upon, any untrue statement or alleged untrue statement of any
material fact contained in the Preliminary Prospectus, the Registration
Statement, the Prospectus (other than any market making prospectus) or any
amendment or supplement thereto, or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
will reimburse the Class B and Class C Underwriter for any legal or other
expenses reasonably incurred by the Underwriter in connection with investigating
or defending any such action or claim; provided, however, that (i) the Banks
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of, or is based upon, an untrue statement or
alleged untrue statement or omission or alleged omission made (A) in Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to either Bank by the Class B and Class C Underwriter expressly for
use therein or (B) in the CITSF Information (as defined in the Indemnification
Agreement) contained in the Preliminary Prospectus, the Registration Statement
or the Prospectus and (ii) such indemnity with respect to the Preliminary
Prospectus shall not inure to the benefit of the Class B and Class C Underwriter
(or any person controlling any the Class B and Class C Underwriter) from whom
the person asserting any such loss, claim, damage or liability purchased the
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<PAGE>
Junior Notes which are the subject thereof if such person did not receive a copy
of the Prospectus (or the Prospectus as supplemented) at or prior to the
confirmation of the sale of such Junior Notes to such person in any case where
such delivery is required by the Act and the untrue statement or omission of a
material fact contained in the Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as supplemented).
(b) The Class B and Class C Underwriter agrees to indemnify
and hold harmless each Bank, the directors, the officers or agents of each Bank
who signed the Registration Statement, and each person, if any, who controls
each Bank within the meaning of Section 15 of the Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section 8, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Preliminary Prospectus, the Registration Statement or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to either Bank by the Class B and Class C Underwriter
expressly for use in the Preliminary Prospectus, the Registration Statement or
the Prospectus (or any amendment or supplement).
(c) Each indemnified party shall give prompt notice to the
indemnifying party of any action commenced against the indemnified party in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have hereunder or otherwise, other than on account of this
indemnity agreement. In case any such action shall be brought against an
indemnified party and it shall have notified the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party with respect to such action), and it being understood that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys, and,
after notice from the indemnifying party to the indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to the indemnified party under subsections (a) or (b) of this Section 8
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by the indemnified party, in connection with the defense
thereof other than reasonable costs of investigation.
(d) The obligations of each Bank under this Section 8 shall
be in addition to any liability which such Bank may
14
<PAGE>
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls the Class B and Class C Underwriter within the
meaning of the Act; and the Class B and Class C Underwriter's obligations under
this Section 8 shall be in addition to any liability which the Class B and Class
C Underwriter may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of each Bank and to each person, if
any, who controls each Bank within the meaning of Section 15 of the Act.
9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 8 is for any reason held to be unavailable other than in accordance with
its terms, the Banks and the Underwriter shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Banks or the Class B and Class C
Underwriter, as incurred, in such proportions so that the Class B and Class C
Underwriter is responsible for that portion represented by the percentage that
the underwriting discount and commissions bear to the initial public offering
price appearing thereon and the Banks are responsible for the balance; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section, each person, if any, who controls the Class B and Class C
Underwriter within the meaning of Section 15 of the Act shall have the same
rights to contribution as the Class B and Class C Underwriter, and each director
of each Bank, each officer or agent of each Bank who signed the Registration
Statement, and each person, if any, who controls each Bank within the meaning of
Section 15 of the Act shall have the same rights to contribution as such Bank.
10. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Banks or their respective officers and of the Class B and
Class C Underwriter set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation or statement as to the
results thereof, made by or on behalf of the Underwriter, each Bank or any of
their respective representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the Junior Notes. If for
any reason the purchase of the Junior Notes by the Underwriter is not
consummated, each Bank shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 6 and the respective obligations of the
Banks and the Class B and Class C Underwriter pursuant to Section 5, 6, 8 and 9
shall remain in effect. If the purchase of the Junior Notes by the Class B and
Class C Underwriter is not consummated for any reason other than solely because
of the occurrence of any event specified in clauses (ii), (iii) or (iv) of
Section 7(c),
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<PAGE>
the Banks will reimburse the Class B and Class C Underwriter for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by it in connection with the offering of the Junior Notes.
11. Notices. All communications hereunder will be in writing
and, if sent to the Class B and Class C Underwriter, will be mailed, delivered
or telegraphed and confirmed to the Class B and Class C Underwriter at Chase
Securities Inc., 270 Park Avenue, 7th Floor, New York, New York 10017,
Attention: Asset Backed Finance Division, or, if sent to the Banks, will be
mailed, delivered, or telegraphed and confirmed to (i) Chase Manhattan Bank USA,
National Association, 802 Delaware Avenue, Wilmington, Delaware 19801,
Attention: Controller and (ii) The Chase Manhattan Bank, 270 Park Avenue, New
York, New York 10017, Attention: Chief Financial Officer (cc: General Counsel).
12. Successors. This Agreement will inure to the benefit of,
and be binding upon, the parties hereto and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties hereto and their
respective successors and the controlling persons and officers and directors
referred to in Sections 8 and 9 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Junior Notes
from the Class B and Class C Underwriter shall be deemed to be a successor by
reason merely of such purchase.
13. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Agreement.
14. No Bankruptcy Petition. The Class B and Class C
Underwriter covenants and agrees that, prior to the date which is one year and
one day after the payment in full of all securities issued by the Trust, it will
not institute against, or join any other person in instituting against, the
Trust any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other proceedings under any federal or state bankruptcy or
similar law.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
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If the foregoing is in accordance with the Class B and Class C
Underwriter's understanding of our agreement, kindly sign and return to us the
enclosed duplicate hereof, whereupon it will become a binding agreement between
the Banks and the Class B and Class C Underwriter in accordance with its terms.
Very truly yours,
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION
By
---------------------------------
Name: Keith Schuck
Title: Vice President
THE CHASE MANHATTAN BANK
By
---------------------------------
Name:
Title:
The foregoing Class B and Class C
Underwriting Agreement is hereby
confirmed and accepted as of the
date first written above:
CHASE SECURITIES INC.
By
-------------------------------------
Name:
Title:
<PAGE>
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION
Charter No. 23160
ARTICLES OF ASSOCIATION
For the purpose of organizing an Association to perform any lawful activities of
national banks, the undersigned do enter into the following Articles of
Association:
FIRST. The title of this Association shall be Chase Manhattan Bank USA, National
Association (the "Association").
SECOND. The main office of the Association shall be in the City of Wilmington,
County of New Castle, State of Delaware. The general business of the Association
shall be conducted at its main office and its branches.
THIRD. The board of directors of this Association shall consist of not less than
five nor more than twenty-five persons, the exact number to be fixed and
determined from time to time by resolution of a majority of the full board of
directors or by resolution of a majority of the shareholders at any annual or
special meeting thereof. Each director, during the full term of his
directorship, shall own common or preferred stock of the Association or of a
holding company owning the Association, with an aggregate par, fair market or
equity value of not less than $1,000. Any vacancy in the board of directors may
be filled by action of the shareholders or a majority of the remaining directors
Terms of directors, including directors selected to fill vacancies, shall expire
at the next regular meeting of shareholders at which directors are elected,
unless the directors resign or are removed from office.
Despite the expiration of a director's term, the director shall continue to
serve until his or her successor is elected and qualifies or until there is a
decrease in the number of directors and his or her position is eliminated.
Honorary or advisory members of the board of directors, without voting power or
power of final decision in matters concerning the business of the Association,
may be appointed by resolution of a majority of the full board of directors, or
by resolution of shareholders at any annual or special meeting. Honorary or
advisory directors shall not be counted to determine the number of directors of
the Association or the presence of a quorum in connection with any board action,
and shall not be required to own qualifying shares.
FOURTH. There shall be an annual meeting of the shareholders to elect directors
and transact whatever other business may be brought before the meeting. It shall
be held at the main office or any other convenient place the board of directors
may designate, on the day of each year specified therefore in the bylaws, or if
that day falls on a legal holiday in the state in which the Association is
located, on the next following banking day. If no election is held on the day
fixed or in event of a legal holiday, on the following banking day, an election
may be held on any subsequent day within 60 days of the day fixed, to be
designated by the board of directors, or, if the directors fail to fix the day,
by shareholders representing two-thirds of the shares issued and outstanding. In
all cases at least 10 days advance notice of the meeting shall be given to the
shareholders by first class mail.
In all elections of directors, the number of votes each common shareholder may
cast will be determined by multiplying the number of shares he or she owns by
the number of directors to be elected. Those votes may be cumulated and cast for
a single candidate or may be distributed among two or more candidates in the
manner selected by the shareholder. On all other questions, each common
shareholder shall be entitled to one vote for each share of stock held by him or
her.
A director may resign at any time by delivering written notice to the board of
directors, its Chairperson, or to the Association, which resignation shall be
effective when the notice is delivered unless the notice specifies a later
effective date.
<PAGE>
A director may be removed by shareholders at a meeting called to remove him or
her, when notice of the meeting stating that the purpose or one of the purposes
is to remove him or her is provided, if there is a failure to fulfill one of the
affirmative requirements for qualification, or for cause, provided, however,
that a director may not be removed if the number of votes sufficient to elect
him or her under cumulative voting is voted against his or her removal.
FIFTH. The authorized amount of capital stock of this Association shall be
417,000 shares of common stock of the par value of One Hundred dollars ($100.00)
each; but said capital stock may be increased or decreased from time to time,
according to the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association shall
have any preemptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued, or sold, nor
any right of subscription to any thereof other than such, if any, as the board
of directors, in its discretion may from time to time determine and at such
price as the board of directors may from time to time fix.
Unless otherwise specified in the Articles of Association or required by law,
(1) all matters requiring shareholder action, including amendments to the
Articles of Association, must be approved by shareholders owning a majority
voting interest in the outstanding voting stock, and (2) each shareholder shall
be entitled to one vote per share.
The Association, at any time and from time to time, may authorize and issue debt
obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The board of directors shall appoint one of its members President of this
Association, and one of its members Chairperson of the board and shall have the
power to appoint one or more Vice Presidents, a Secretary who shall keep minutes
of the directors' and shareholders' meetings and be responsible for
authenticating the records of the Association, and such other officers and
employees as may be required to transact the business of this Association. A
duly appointed officer may appoint one or more officers or assistant officers if
authorized by the board of directors in accordance with the bylaws.
The board of directors shall have the power to:
(1) Define the duties of the officers, employees, and agents of the
Association.
(2) Delegate the performance of its duties, but not the responsibility for its
duties, to the officers, employees, and agents of the Association.
(3) Fix the compensation and enter into employment contracts with its officers
and employees upon reasonable terms and conditions consistent with
applicable law.
(4) Dismiss officers and employees.
(5) Require bonds from officers and employees and to fix the penalty thereof.
(6) Ratify written policies authorized by the Association's management or
committees of the board.
(7) Regulate the manner in which any increase or decrease of the capital of the
Association shall be made, provided that nothing herein shall restrict the
power of shareholders to increase or decrease the capital of the
Association in accordance with law.
(8) Manage and administer the business and affairs of the Association.
(9) Adopt initial bylaws, not inconsistent with law or the Articles of
Association, for managing the business and regulating the affairs of
the Association.
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(10) Amend or repeal bylaws, except to the extent that the Articles of
Association reserve this power in whole or in part to shareholders.
(11) Make contracts.
(12) Generally perform all acts that are legal for a board of directors to
perform.
SEVENTH. The board of directors shall have the power to change the location of
the main office to any other place within the limits of the City of Wilmington,
without the approval of the shareholders, and shall have the power to establish
or change the location of any branch or branches of the Association to any other
location permitted under applicable law, without the approval of the
shareholders subject to approval by the Office of the Comptroller of the
Currency.
EIGHTH. The corporate existence of this Association shall continue until
termination according to the laws of the United States.
NINTH. These Articles of Association may be amended at any regular or special
meeting of the shareholders by the affirmative vote of the holders of a majority
of the stock of this Association, unless the vote of the holders of a greater
amount of stock is required by law, and in that case by the vote of the holders
of such greater amount. The Association's board of directors may propose one or
more amendments to the Articles of Association for submission to the
shareholders.
In witness whereof, we have hereunto set our hands as of
this 8th of August, 1996.
/s/ Donald L. Boudreau /s/ Michael Urkowitz
- --------------------------------- ----------------------------------
/s/ William H. Hoefling /s/ Luke S. Hayden
- --------------------------------- ----------------------------------
/s/ Michael J. Barrett /s/ Thomas Jacob
- --------------------------------- ----------------------------------
/s/ Kevin T. Hurley
- --------------------------------- ----------------------------------
/s/ John J. Hehir, Jr.
- ---------------------------------
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RESTATED
ORGANIZATION CERTIFICATE
OF
THE CHASE MANHATTAN BANK
Under Section 8007 of the New York Banking Law
WE, WALTER V. SHIPLEY and ANTHONY J. HORAN, being, respectively, the
Chairman of the Board and the Secretary of THE CHASE MANHATTAN BANK, a New York
banking organization, do hereby certify as follows:
1. The name of the Corporation is The Chase Manhattan Bank. The Corporation
was formed under the name Chemical Bank.
2. The Organization Certificate of The Chase Manhattan Bank was filed by
the Superintendent of Banks of the State of New York on November 26, 1968.
3. The text of the organization certificate, as amended heretofore, is
hereby restated without further amendment or change to read as herein set forth
in full:
FIRST: The name by which the Corporation is to be known is THE CHASE
MANHATTAN BANK.
SECOND: The principal office of the Corporation is to be located in New
York, New York.
THIRD: The amount of authorized stock which the Corporation is hereafter to
have is $1,335,000,000 and the number of shares into which such capital stock is
to be divided is 125,000,000 shares consisting of 110,000,000 shares of Common
Stock, par value $12 per share, and 15,000,000 shares of Preferred Stock, par
value $1 per share, which shall be issued in one or more classes or series
having such designations, relative rights, preferences or limitations as fixed
by the Board of Directors of the Corporation at the time of issuance of any such
Preferred Stock.
FOURTH: The number of directors of the Corporation shall be not less than
seven nor more than twenty-five.
FIFTH: The Corporation is to exercise the powers conferred by
Section 100 of the banking laws of the State of New York.
4. This restated organization certificate was approved by a resolution
adopted by the Board of Directors of the Corporation, on July 16, 1996.
<PAGE>
2
IN WITNESS WHEREOF, the undersigned have executed this restated
organization certificate this 25th day of March, 1997.
/s/ Walter V. Shipley
--------------------------------
Walter V. Shipley
Chairman of the Board
/s/ Anthony J. Horan
--------------------------------
Anthony J. Horan
Secretary
<PAGE>
3
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, ANTHONY J. HORAN, being duly sworn, depose and say that I, the said
ANTHONY J. HORAN, am the Secretary of THE CHASE MANHATTAN BANK, and that I have
read and signed the foregoing Certificate and know the contents thereof and the
statements contained therein are true.
/s/ Anthony J. Horan
------------------------------
Anthony J. Horan
Secretary
Subscribed and sworn to before
me this 25th day of March 1997.
- ------------------------------
Notary Public
<PAGE>
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION
BY-LAWS
Article I
Meetings of Shareholders
Section 1.1. Annual Meeting. The regular annual meeting of the shareholders to
elect directors and transact whatever other business may properly come before
the meeting, shall be held at the main office of the Association, or such other
place as the board may designate, at noon, on April 1st of each year, or if that
date falls on a legal holiday in the State in which the Association is located,
on the next following banking day. Notice of the meeting shall be mailed,
postage prepaid, at least 10 days and no more than 60 days prior to the date
thereof, addressed to each shareholder at his/her address appearing on the books
of the Association. If, for any cause, an election of directors is not made on
that date, or in the event of a legal holiday, on the next following banking
day, an election may be held on any subsequent day within 60 days of the date
fixed, to be designated by the board, or, if the directors fail to fix the date,
by shareholders representing two thirds of the shares issued and outstanding.
Section 1.2. Special Meetings. Except as otherwise specifically provided by
statute, special meetings of the shareholders may be called for any purpose at
any time by a majority of the board of directors or by any one or more
shareholders owning, in the aggregate, not less than twenty-five percent of the
stock of the Association or by the Chairperson of the board of directors or the
President . Every such special meeting, unless otherwise provided by law, shall
be called by mailing, postage prepaid, not less than 10 days nor more than 60
days prior to the date fixed for the meeting, to each shareholder at the address
appearing on the books of the Association a notice stating the purpose of the
meeting.
Section 1.3. Nominations of Directors. Nominations for election to the board of
directors may be made by the board of directors or by any stockholder of any
outstanding class of capital stock of the Association entitled to vote for the
election of directors. Nominations, other than those made by or on behalf of the
existing management of the Association, shall be made in writing and shall be
delivered or mailed to the President of the Association and to the Comptroller
of the Currency, Washington, D.C., not less than 14 days nor more than 50 days
prior to any meeting of shareholders called for the election of directors,
provided, however, that if less than 21 days' notice of the meeting is given to
shareholders, such nomination shall be mailed or delivered to the President of
the Association and to the Comptroller of the Currency not later than the close
of business on the seventh day following the day on which the notice of meeting
was mailed. Such notification shall contain the following information to the
extent known to the notifying shareholder:
(1) The name and address of each proposed nominee.
(2) The principal occupation of each proposed nominee.
(3) The total number of shares of capital stock of the Association that
will be voted for each proposed nominee.
(4) The name and residence address of the notifying shareholder.
(5) The number of shares of capital stock of the Association owned by the
notifying shareholder.
Nominations not made in accordance herewith may, in his/her discretion, be
disregarded by the Chairperson of the meeting, and upon his/her instructions,
the vote tellers may disregard all votes cast for each such nominee.
Section 1.4. Proxies. Shareholders may vote at any meeting of the shareholders
by proxies duly authorized in writing, but no officer or employee of this
Association shall act as proxy. Proxies shall be valid only for one meeting, to
be specified therein, and any adjournments of such meeting. Proxies shall be
dated and filed with the records of the meeting. Proxies with rubber stamped
facsimile signatures may be used and unexecuted
<PAGE>
proxies may be counted upon receipt of a confirming telegram from the
shareholder. Proxies meeting the above requirements submitted at any time during
a meeting shall be accepted.
Section 1.5. Quorum. A majority of the outstanding capital stock, represented in
person or by proxy, shall constitute a quorum at any meeting of shareholders,
unless otherwise provided by law, or by the shareholders or directors pursuant
to Section 10.2, but less than a quorum may adjourn any meeting, from time to
time, and the meeting may be held, as adjourned, without further notice. A
majority of the votes cast shall decide every question or matter submitted to
the shareholders at any meeting, unless otherwise provided by law or by the
Articles of Association, or by the shareholders or directors pursuant to Section
10.2. Any action required or permitted to be taken by the shareholders may be
taken without a meeting by unanimous written consent of the shareholders to a
resolution authorizing the action. The resolution and the written consent shall
be filed with the minutes of the proceedings of the shareholders.
Article II
Directors
Section 2.1. Board of Directors. The board of directors ("board") shall have the
power to manage and administer the business and affairs of the Association.
Except as expressly limited by law, all corporate powers of the Association
shall be vested in and may be exercised by the board.
Section 2.2. Number. The board shall consist of not less than five nor more than
twenty-five persons, the exact number within such minimum and maximum limits to
be fixed and determined from time to time by resolution of a majority of the
full board or by resolution of a majority of the shareholders at any meeting
thereof; provided, however, that a majority of the full board may not increase
the number of directors to a number which: (1) exceeds by more than two the
number of directors last elected by shareholders where such number was 15 or
less; and (2) exceeds by more than four the number of directors last elected by
shareholders where such number was 16 or more, but in no event shall the number
of directors exceed 25.
Section 2.3. Organization Meeting. The Secretary shall notify the
directors-elect of their election and of the time at which they are required to
meet at the main office of the Association to organize the new board and elect
and appoint officers of the Association for the succeeding year. Such meeting
shall be held on the day of the election or as soon thereafter as practicable,
and, in any event, within 30 days thereof. If, at the time fixed for such
meeting, there shall not be a quorum, the directors present may adjourn the
meeting, from time to time, until a quorum is obtained.
Section 2.4. Regular Meetings. The time and location of regular meetings of the
board shall be set by the board. Such meetings may be held without notice. Any
business may be transacted at any regular meeting. The board may adopt any
procedures for the notice and conduct of any meetings as are not prohibited by
law.
Section 2.5. Special Meetings. Special meetings of the board may be called at
the request of the Chairperson of the board, the President, or three or more
directors. Each member of the board shall be given notice stating the time and
place, by telegram, telephone, letter or in person, of each such special meeting
at least one day prior to such meeting. Any business may be transacted at any
special meeting.
Section 2.6. Action by the Board. Except as otherwise provided by law, corporate
action to be taken by the board shall mean such action at a meeting of the
board. Any action required or permitted to be taken by the board or any
committee of the board may be taken without a meeting if all members of the
board or the committee consent in writing to a resolution authorizing the
action. The resolution and the written consents thereto shall be filed with the
minutes of the proceedings of the board or committee. Any one or more members of
the board or any committee may participate in a meeting of the board or
committee by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to
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hear each other at the same time. Participation by such means shall constitute
presence in person at such meeting.
Section 2.7. Waiver of Notice. Notice of a special meeting need not be given to
any director who submits a signed waiver of notice, whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him or her.
Section 2.8. Quorum and Manner of Acting. Except as otherwise required by law,
the Articles of Association or these by-laws, a majority of the directors shall
constitute a quorum for the transaction of any business at any meeting of the
board and the act of a majority of the directors present and voting at a meeting
at which a quorum is present shall be the act of the board. In the absence of a
quorum, a majority of the directors present may adjourn any meeting, from time
to time, until a quorum is present and no notice of any adjourned meeting need
be given. At any such adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally called.
Section 2.9. Vacancies. In the event a majority of the full board increases the
number of directors to a number which exceeds the number of directors last
elected by shareholders, as permitted by Section 2.2, directors may be appointed
to fill the resulting vacancies by vote of such majority of the full board. In
the event of a vacancy in the board for any other cause, a director may be
appointed to fill such vacancy by vote of majority of the remaining directors
then in office.
Section 2.10. Removal of Directors. The vacancy created by the removal of a
director pursuant to this Section may be filled by the board in accordance with
Section 2.9 of these by-laws or by the shareholders.
Article III
Committees
Section 3.1. Executive Committee. There may be an executive committee consisting
of the Chairperson of the board and not less than two other directors appointed
by the board annually or more often. Subject to the limitations in Section
3.5(g) of these by-laws, the executive committee shall have the maximum
authority permitted by law.
Section 3.2. Audit Committee. There may be an audit committee composed of not
less than two directors, exclusive of any active officers, appointed by the
board annually or more often, whose duty it shall be to make an examination at
least once during each calendar year and within fifteen months of the last
examination into the affairs of the Association, or cause continuous suitable
examinations to be made, by auditors responsible only to the board, and to
report the results of any such examinations in writing to the board from time to
time. Such examinations shall include audits of the fiduciary business of the
Association as may be required by law or regulation.
Section 3.3. Trust Committee. There may be a trust committee consisting of at
least two directors, as appointed by the board, who shall serve on the trust
committee at the pleasure of the board. The trust committee shall have power to
review the general conduct of the fiduciary business of the Association and to
pass upon all such matters relating to the conduct of the fiduciary business of
the Association as may be submitted to the trust committee and shall, from time
to time, exercise such other powers as may be assigned to it by the board.
Section 3.4. Other Committees. The board may appoint, from time to time, other
committees of one or more persons, for such purposes and with such powers as the
board may determine.
Section 3.5. General.
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(a) Each committee shall elect a Chairperson from among the members
thereof and shall also designate a Secretary of the committee, who shall keep a
record of its proceedings.
(b) Vacancies occurring from time to time in the membership of any
committee shall be filled by the board for the unexpired term of the member
whose departure causes such vacancy. The board may designate one or more
alternate members of any committee, who may replace any absent member or members
at any meeting of such committee.
(c) Each committee shall adopt its own rules of procedure and shall
meet at such stated times as it may, by resolution, appoint. It shall also meet
whenever called together by its Chairperson or the Chairperson of the board.
(d) No notice of regular meetings of any committee need be given.
Notice of every special meeting shall be given either by mailing such notice to
each member of such committee at his or her address, as the same appears in the
records of the Association, at least two days before the day of such meeting, or
by notifying each member on or before the day of such meeting by telephone or by
personal notice, or by leaving a written notice at his or her residence or place
of business on or before the day of such meeting. Waiver of notice in writing of
any meeting, whether prior or subsequent to such meeting, or attendance at such
meeting, shall be equivalent to notice of such meeting. Unless otherwise
indicated in the notice thereof, any and all business may be transacted at any
special meeting.
(e) All committees shall, with respect to all matters, be subject to
the authority and direction of the board and shall report to it when required.
(f) Unless otherwise required by law, the Articles of Association or
these by-laws, a quorum at any meeting of any committee shall be one-third of
the full membership and the act of a majority of members present and voting at a
meeting at which a quorum is present shall be the act of the committee.
(g) No committee shall have authority to take any action which is
expressly required by law or regulation to be taken at a meeting of the board or
by a specified proportion of directors.
Article IV
Officers and Employees
Section 4.1. Chairperson of the Board. The board shall appoint one of its
members to be the Chairperson of the board to serve at its pleasure. Such person
shall preside at all meetings of the board. The Chairperson of the board shall
supervise the carrying out of the policies adopted or approved by the board;
shall have general executive powers, as well as the specific powers conferred by
these by-laws; and shall also have and may exercise such further powers and
duties as from time to time may be conferred upon, or assigned by the board.
Section 4.2. President. The board shall appoint one of its members to be the
President of the Association. In the absence of the Chairperson, the President
shall preside at any meeting of the board. The President shall have general
executive powers, and shall have and may exercise any and all other powers and
duties pertaining by law, regulation, or practice to the office of President, or
imposed by these by-laws. The President shall also have and may exercise such
further powers and duties as from time to time may be conferred, or assigned by
the board.
Section 4.3. Vice President. The board may appoint one or more Vice Presidents.
Each Vice President shall have such powers and duties as may be assigned by the
board.
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Section 4.4. Secretary. The board shall appoint a Secretary, Cashier, or other
designated officer who shall be Secretary of the board and of the Association,
and shall keep accurate minutes of all meetings. The Secretary shall attend to
the giving of all notices required by these by-laws; shall be custodian of the
corporate seal, records, documents and papers of the Association; shall provide
for the keeping of proper records of all transactions of the Association; shall
have and may exercise any and all other powers and duties pertaining by law,
regulation or practice, to the office of Cashier, or imposed by these by-laws;
and shall also perform such other duties as may be assigned from time to time,
by the board.
Section 4.5. Other Officers. The board may appoint one or more Assistant Vice
Presidents, one or more Trust Officers, one or more Assistant Secretaries, one
or more Assistant Cashiers, one or more Managers and Assistant Managers of
branches and such other officers and attorneys in fact as from time to time may
appear to the board to be required or desirable to transact the business of the
Association. Such officers shall respectively exercise such powers and perform
such duties as pertain to their several offices, or as may be conferred upon, or
assigned to, them by the board, the Chairperson of the board, or the President.
The board may authorize an officer to appoint one or more officers or assistant
officers.
Section 4.6. Tenure and Compensation. The Chairperson of the board and the
President shall be appointed by the board to hold office until the next annual
organization meeting of the board and until their successors are appointed and
qualified. The term of office of all other officers shall be at the pleasure of
the board. The compensation of all officers shall be fixed by resolution of the
board, except that the board may authorize the Chairperson of the board and the
President each to fix and to delegate to such other officers as the board may
designate authority to fix any compensation of any person in any official
position level not above a level specified by the board. Any officer may be
dismissed at the pleasure of the board.
Section 4.7. Resignation. An officer may resign at any time by delivering notice
to the Association. A resignation is effective when the notice is given unless
the notice specifies a later effective date.
Article V
Fiduciary Activities
Section 5.1. Trust Investments. Funds held in a fiduciary capacity shall be
invested according to the instrument establishing the fiduciary relationship and
local law. Where such instrument does not specify the character and class of
investments to be made and does not vest in the Association a discretion in the
matter, funds held pursuant to such instrument shall be invested in investments
in which corporate fiduciaries may invest under applicable law.
Article VI
Stock and Stock Certificates
Section 6.1. Transfers. Shares of stock shall be transferable on the books of
the Association, and a transfer book shall be kept in which all transfers of
stock shall be recorded. Every person becoming a shareholder by such transfer
shall, in proportion to his or her shares, succeed to all rights of the prior
holder of such shares. The board may impose conditions upon the transfer of the
stock reasonably calculated to simplify the work of the Association with respect
to stock transfers, voting at shareholder meetings, and related matters and to
protect it against fraudulent transfers.
Section 6.2. Stock Certificates. Certificates of stock shall bear the signature
of the President (which may be engraved, printed or impressed), and shall be
signed manually or by facsimile process by the Secretary, Assistant Secretary,
Cashier, Assistant Cashier, or any other officer appointed by the board for that
purpose, to be known as an authorized officer, and the seal of the Association
shall be engraved thereon. Each certificate
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shall recite on its face that the stock represented thereby is transferable only
upon the books of the Association properly endorsed. In case any such officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such before such certificate is issued, it
may be issued by the Association with the same effect as if such officer had not
ceased to be such at the time of its issue. The corporate seal may be a
facsimile, engraved or printed.
Article VII
Corporate Seal
The President, the Cashier, the Secretary or any Assistant Cashier or Assistant
Secretary, or other officer thereunto designated by the board, shall have
authority to affix the corporate seal to any document requiring such seal, and
to attest the same. Such seal shall be substantially in the following form: A
circle, with the words "Chase Manhattan Bank USA, National Association" within
such circle.
Article VIII
Miscellaneous Provisions
Section 8.1. Fiscal Year. The fiscal year of the Association shall be the
calendar year.
Section 8.2. Execution of Instruments. All agreements, indentures, mortgages,
deeds, conveyances, transfers, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, proxies and other instruments or documents may
be signed, executed, acknowledged, verified, delivered or accepted on behalf of
the Association by the Chairperson of the board, or the President, or any Vice
President, or the Secretary, or the Cashier, or, if in connection with exercise
of fiduciary powers of the Association, by any of those officers or by any Trust
Officer. Any such instruments may also be executed, acknowledged, verified,
delivered or accepted on behalf of the Association in such other manner and by
such other officers as the board may from time to time direct. The provisions of
this Section 8.2 are supplementary to any other provision of these by-laws.
Section 8.3. Records. The Articles of Association, the by-laws and the
proceedings of all meetings of the shareholders, the board, and standing
committees of the board, shall be recorded in appropriate minute books provided
for that purpose. The minutes of each meeting shall be signed by the Secretary,
Cashier or other officer appointed to act as Secretary of the meeting.
Section 8.4. Corporate Governance Procedures. To the extent not inconsistent
with applicable Federal banking law, bank safety and soundness or these by-laws,
the corporate governance procedures found in the Delaware General Corporation
Law shall be followed by the Association.
Article IX
Indemnification
Section 9.1. Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director or an officer of the Association or is or was serving at the request of
the Association as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with
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respect to an employee benefit plan (hereinafter an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Association to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Association to provide broader indemnification rights than such law permitted
the Association to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith; provided, however, that,
except as provided in Section 9.3 of these by-laws with respect to proceedings
to enforce rights to indemnification, the Association shall indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized by the
board.
Section 9.2. Right to Advancement of Expenses. The right to indemnification
conferred in Section 9.1 of these by-laws shall include the right to be paid by
the Association the expenses (including attorney's fees) incurred in defending
any such proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Association of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section 9.2 or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections 9.1 and 9.2 of these by-laws shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
Section 9.3. Right of Indemnitee to Bring Suit. If a claim under Section 9.1 or
9.2 of these by-laws is not paid in full by the Association within sixty (60)
days after a written claim has been received by the Association, except in the
case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the indemnitee may at any time thereafter
bring suit against the Association to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by the
Association to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (1) any suit brought by the indemnitee to
enforce a right to indemnification hereunder (but not in a suit brought by the
indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (2) in any suit brought by the Association to recover an
advancement of expenses pursuant to the terms of an undertaking, the Association
shall be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the Association
(including the board, the Association's independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Association (including the board, the Association's independent legal counsel,
or its shareholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the Association to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article IX or otherwise shall be on the Association.
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Section 9.4. Non-Exclusivity of Rights. The rights to indemnification and to the
advancement of expenses conferred in this Article IX shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, the Association's Articles of Association, by-laws, agreement, vote of
shareholders or disinterested directors or otherwise.
Section 9.5. Insurance. The Association may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Association or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Association would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
Section 9.6. Indemnification of Employees and Agents of the Association. The
Association may, to the extent authorized from time to time by the board, grant
rights to indemnification and to the advancement of expenses to any employee or
agent of the Association to the fullest extent of the provisions of this Article
IX with respect to the indemnification and advancement of expenses of directors
and officers of the Association.
Article X
By-laws
Section 10.1. Inspection. A copy of the by-laws, with all amendments, shall at
all times be kept in a convenient place at the main office of the Association,
and shall be open for inspection to all shareholders during banking hours.
Section 10.2. Amendments. The by-laws may be amended, altered or repealed, at
any regular meeting of the board, by a vote of a majority of the total number of
the directors except as provided below. The Association's shareholders may amend
or repeal the by-laws even though the by-laws also may be amended or repealed by
its board.
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I, Andrew T. Semmelman, certify that: (1) I am the duly constituted Secretary of
The Chase Manhattan Bank (USA) and Secretary of its board, and as such officer
am the official custodian of its records; (2) the foregoing by-laws will be the
by-laws of The Chase Manhattan Bank (USA) upon its conversion to a national
banking association charter under the name "Chase Manhattan Bank USA, National
Association", and all of them thereafter will be lawfully in force and effect.
I have hereunto affixed my official signature and the seal of The Chase
Manhattan Bank (USA), in the city of Wilmington, State of Delaware, on this 7th
day of August, 1996.
/s/ Andrew T. Semmelman
------------------------------
Secretary
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BY-LAWS
THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank)
AS AMENDED THROUGH
March 18, 1997
Office of the Secretary
270 Park Avenue, 35th floor
New York, NY 10017
<PAGE>
CONTENTS
SUBJECT
Article
I Meetings of Stockholders
Section 1.01 Annual Meeting
Section 1.02 Special Meetings
Section 1.03 Quorum
II Board of Directors
Section 2.01 Number
Section 2.02 Vacancies
Section 2.03 Annual Meeting
Section 2.04 Regular Meetings
Section 2.05 Special Meetings
Section 2.06 Quorum
Section 2.07 Rules and Regulations
Section 2.08 Compensation
III Committees
Section 3.01 Executive Committee
Section 3.02 Examining Committee
Section 3.03 Other Committees
IV Officers and Agents
Section 4.01 Officers
Section 4.02 Clerks and Agents
Section 4.03 Term of Office
Section 4.04 Chairman of the Board
Section 4.05 President
Section 4.06 Vice Chairman of the Board
Section 4.07 Chief Financial Officer
Section 4.08 Controller
Section 4.09 Secretary
Section 4.10 General Auditor
Section 4.11 Powers and Duties of Other
Officers
Section 4.12 Fidelity Bonds
V Corporate Seal
VI Fiscal Year
VII Indemnification
Section 7.01 Right to Indemnification
Section 7.02 Contracts and Funding
Section 7.03 Employee Benefit Plans
Section 7.04 Indemnification Not Exclusive Right
Section 7.05 Advancement of Expenses; Procedures
VIII By-laws
Section 8.01 Inspection
Section 8.02 Amendments
Section 8.03 Construction
<PAGE>
BY-LAWS
OF
THE CHASE MANHATTAN BANK
ARTICLE I
Meetings of Stockholders
Section 1.01. Annual Meeting. The annual meeting of stockholders of The
Chase Manhattan Bank (herein called the Bank), shall be held in the Borough of
Manhattan, City of New York, State of New York, within the first four months of
each calendar year, on such date and at such time and place as the Board of
Directors (herein called the Board), may determine, for the election of
directors and the transaction of such other business as may properly come before
the meeting. Notice of such meeting, stating the purpose or purposes thereof and
the time when and the place where it is to be held and signed by the Chairman of
the Board (herein called the Chairman), the President, a Vice Chairman of the
Board or the Secretary or an Assistant Corporate Secretary of the Bank, shall be
served by personal delivery upon each stockholder of record entitled to vote at
such meeting not less than 10 nor more than 50 days before said meeting.
Section 1.02. Special Meetings. A special meeting of the stockholders may
be called at any time by the Board, the Chairman, the President, or a Vice
Chairman of the Board, or upon the request in writing of the holders of record
of not less than 40% of the outstanding capital stock. Notice of any special
meeting, stating the time, place and purpose or purposes thereof, shall be given
by personal delivery to the stockholders in the manner provided in Section 1.01
for the giving of notice of annual meetings of stockholders. In the case of any
meeting of stockholders, annual or special, called for a purpose requiring other
or further notice, such notice shall be given as required by law.
Section 1.03. Quorum. A majority of the outstanding common stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
stockholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held as
adjourned, without further notice.
ARTICLE II
Board of Directors
Section 2.01. Number. The business and affairs of the Bank shall be managed
by or under the direction of a Board of Directors, of such number as may be
fixed from time to time by resolution adopted by the Board, but in no event less
than 7 or more than 25, selected, organized and continued in accordance with the
provisions of the New York Banking Law. Each director hereafter elected shall
hold office until the next annual meeting of the stockholders and until his
successor is elected and has qualified, or until his death or until he shall
resign or shall have been removed.
Section 2.02. Vacancies. In case of any increase in the number of
directors, the additional director or directors, and in case of any vacancy in
the board due to death, resignation, removal, disqualification or any other
cause, the successors to fill the vacancies, not exceeding one-third of the
entire Board, shall be elected by a majority of the directors then in office.
Section 2.03. Annual Meeting. An annual meeting of the directors shall be
held each year, without notice, immediately following the annual meeting of
stockholders. The time and place of such meeting shall be designated by the
Board. At such meeting, the directors shall, after qualifying, elect from their
own number a Chairman of the Board, a President and one or more Vice Chairmen of
the
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Board, and shall elect or appoint such other officers authorized by these
By-laws as they may deem desirable, and appoint the Committees specified in
Article III hereof. The directors may also elect to serve at the pleasure of the
Board, one or more Honorary Directors, not members of the Board. Honorary
Directors of the Board shall be paid such compensation or such fees for
attendance at meetings of the Board, and meetings of other committees of the
Board, as the Board shall determine from time to time.
Section 2.04. Regular Meetings. The Board shall hold a regular meeting
without notice at the principal office of the Bank on the third Tuesday in each
month, with such exceptions as shall be determined by the Board, at such time as
shall be determined by the Board, unless another time or place, within or
without the State, shall be fixed by resolution of the Board. Should the day
appointed for a regular meeting fall on a legal holiday, the meeting shall be
held at the same time on the preceding day or on such other day as the Board may
order.
Section 2.05. Special Meetings. Special meetings of the Board shall be held
whenever called by the Chairman, the President, a Vice Chairman of the Board,
the Secretary or a majority of the directors at the time in office. A notice
shall be given as hereinafter in this Section provided of each such special
meeting, in which shall be stated the time and place of such meeting, but,
except as otherwise expressly provided by law or by these By-laws, the purposes
thereof need not be stated in such notice. Except as otherwise provided by law,
notice of each such meeting shall be mailed to each director, addressed to him
at his residence or usual place of business, at least two (2) days before the
day on which such meeting is to be held, or shall be sent addressed to him at
such place by telegraph, cable, wireless or other form of recorded communication
or be delivered personally or by telephone not later than noon of the calendar
day before the day on which such meeting is to be held. At any regular or
special meeting of the Board, or any committee thereof, one or more Board or
committee members may participate in such meeting by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. This type of participation
shall constitute presence in person at the meeting. Notice of any meeting of the
Board shall not, however, be required to be given to any director who submits a
signed waiver of notice whether before or after the meeting, or if he shall be
present at such meeting; and any meeting of the Board shall be a legal meeting
without any notice thereof having been given if all the directors of the Bank
then in office shall be present thereat.
Section 2.06. Quorum. One-third of the members of the entire Board, or the
next highest integer in the event of a fraction, shall constitute a quorum, but
if less than a quorum be present, a majority of those present may adjourn any
meeting from time to time and the meeting may be held as adjourned without
further notice.
Section 2.07. Rules and Regulations. The Board may adopt such rules and
regulations for the conduct of its meetings and the management of the affairs of
the Bank as it may deem proper, not inconsistent with the laws of the State of
New York or these By-laws.
Section 2.08. Compensation. Directors shall be entitled to receive from the
Bank such fees for attendance at meetings of the Board or of any committee, or
both, as the Board from time to time shall determine. The Board may also
likewise provide that the Bank shall reimburse each such director or member of
such committee for any expenses paid by him on account of his attendance at any
such meeting. Nothing in this Section contained shall be construed to preclude
any director from serving the Bank in any other capacity and receiving
compensation therefor.
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ARTICLE III
Committees
Section 3.01. Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, shall appoint an Executive Committee which, when
the Board is not in session, shall have and may exercise all the powers of the
Board that lawfully may be delegated including, without limitation, the power
and authority to declare dividends. The Executive Committee shall consist of
such number of directors as the Board shall from time to time determine, but not
less than five and one of whom shall be designated by the Board as Chairman
thereof, as follows: (a) the Chairman of the Board, the President, the Vice
Chairmen of the Board; and (b) such other directors, none of whom shall be an
officer of the Bank, as shall be appointed to serve at the pleasure of the
Board. The Board, by resolution adopted by a majority of the entire Board, may
designate one or more directors as alternate members of the Executive Committee
and the manner and circumstances in which such alternate members shall replace
or act in the place of absent or disqualified members of the Executive
Committee. The attendance of one-third of the members of the Committee or their
substitutes, or the next highest integer in the event of a fraction, at any
meeting shall constitute a quorum, and the act of a majority of those present at
a meeting thereof at which a quorum is present shall be the act of the
Committee. All acts done and powers conferred by the Committee from time to time
shall be deemed to be, and may be certified as being done or conferred under
authority of the Board. The Committee shall fix its own rules and procedures,
and the minutes of the meetings of the Committee shall be submitted at the next
regular meeting of the Board at which a quorum is present, or if impracticable
at the next such subsequent meeting. The Committee shall hold meetings "On Call"
and such meetings may be called by the Chairman of the Executive Committee, the
Chairman of the Board, the President, a Vice Chairman of the Board, or the
Secretary. Notice of each such meeting of the Committee shall be given by mail,
telegraph, cable, wireless or other form of recorded communication or be
delivered personally or by telephone to each member of the Committee not later
than the day before the day on which such meeting is to be held. Notice of any
such meeting need not be given to any member of the Committee who submits a
signed waiver of notice whether before or after the meeting, or if he shall be
present at such meeting; and any meeting of the Committee shall be a legal
meeting without any notice thereof having been given, if all the members of the
Committee shall be present thereat. In the case of any meeting, in the absence
of the Chairman of the Executive Committee, such member as shall be designated
by the Chairman of the Executive Committee or the Executive Committee shall act
as Chairman of the meeting.
Section 3.02. Examining Committee. The Board, by resolution adopted by a
majority of the entire Board, shall appoint an Examining Committee composed of
not less than three of its members, none of whom shall be an officer of the
Bank, to hold office at its pleasure and one of whom shall be designated by the
Board as chairman thereof. The Committee shall make such examination into the
affairs of the Bank and its loans and discounts and make such reports in writing
thereof as may be directed by the Board or required by the Banking Law. The
attendance of one-third of the members of the Committee, or the next highest
integer in the event of a fraction, at any meeting shall constitute a quorum,
and the act of a majority of those present at a meeting thereof at which a
quorum is present shall be the act of the Committee.
Section 3.03. Other Committees. The Board, by resolution adopted by a
majority of the entire Board, may appoint, from time to time, such other
committees composed of not less than three of its members for such purposes and
with such duties and powers as the Board may determine. The attendance of
one-third of the members of such other committees, or the next highest integer
in the event of a fraction, at any meeting shall constitute a quorum, and the
act of a majority of those present at a meeting thereof at which a quorum is
present shall be the act of such other committees.
ARTICLE IV
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Officers and Agents
Section 4.01. Officers. The officers of the Bank shall be (a) a Chairman of
the Board, a President and one or more Vice Chairmen of the Board, each of whom
must be a director and shall be elected by the Board; (b) a Chief Financial
Officer, a Controller, a Secretary and a General Auditor, each of whom shall be
elected by the Board; and (c) may include a Chief Credit Officer, a Chief
Administrative Officer, a Chief Technology Officer, one or more Group Executives
and such other officers as may from time to time be elected by the Board or
under its authority, or appointed by the Chairman or the President or a Vice
Chairman of the Board.
Section 4.02. Clerks and Agents. The Board may elect and dismiss, or the
Chairman or the President or a Vice Chairman of the Board may appoint and
dismiss, or delegate to any other officers authority to appoint and dismiss,
such clerks, agents and employees as may be deemed advisable for the prompt and
orderly transaction of the Bank's business, and may prescribe, or authorize the
appointing officers to prescribe, their respective duties, subject to the
provisions of these By-laws.
Section 4.03. Term of Office. The officers designated in Section 4.01(a)
shall be elected by the Board at its annual meeting. The officers designated in
Section 4.01(b) may be elected at the annual or any other meeting of the Board.
The officers designated in Section 4.01(c) may be elected at the annual or any
other meeting of the Board or appointed at any time by the designated proper
officers. Any vacancy occurring in any office designated in Section 4.01(a) may
be filled at any regular or special meeting of the Board. The officers elected
pursuant to Section 4.01(a) shall each hold office for the term of one year and
until their successors are elected, unless sooner disqualified or removed by a
vote of two-thirds of the whole Board. The officers elected by the Board
pursuant to Section 4.01(b) of these By-laws shall hold office at the pleasure
of the Board. All other officers, clerks, agents and employees elected by the
Board, or appointed by the Chairman, the President or a Vice Chairman of the
Board, or under their authority, shall hold their respective offices at the
pleasure of the Board or officers elected pursuant to Section 4.01(a).
Section 4.04. Chairman of the Board. The Chairman shall be the chief
executive officer of the Bank and shall have, subject to the control of the
Board, general supervision and direction of the policies and operations of the
Bank. He shall preside at all meetings of the stockholders and at all meetings
of the Board. He shall have the right to execute any document or perform any act
which could be or is required to be executed or performed by the President of
the Bank. He shall have the power to sign checks, orders, contracts, leases,
notes, drafts and other documents and instruments in connection with the
business of the Bank, and together with the Secretary or an Assistant Corporate
Secretary to execute conveyances of real estate and other documents and
instruments to which the seal of the Bank is affixed. He shall perform such
other duties as from time to time may be prescribed by the Board.
Section 4.05. President. The President shall, subject to the direction and
control of the Board and the Chairman, participate in the supervision of the
policies and operations of the Bank. In general, the President shall perform all
duties incident to the office of President, and such other duties as from time
to time may be prescribed by the Board or the Chairman. In the absence of the
Chairman, the President shall preside at meetings of stockholders and of the
Board. The President shall have the same power to sign for the Bank as is
prescribed in these By-laws for the Chairman.
Section 4.06. Vice Chairman of the Board. The Vice Chairman of the Board,
or if there be more than one, then each of them, shall, subject to the direction
and control of the Board and the Chairman, participate in the supervision of the
policies and operations of the Bank, and shall have such other duties as may be
prescribed from time to time by the Board or the Chairman. In the absence of the
Chairman and the President, a Vice Chairman, as designated by the Chairman or
the Board, shall preside at meetings of the stockholders and of the Board. Each
Vice Chairman shall have the same power to sign for the Bank as is prescribed in
these By-laws for the Chairman.
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Section 4.07. Chief Financial Officer. The Chief Financial Officer shall
have such powers and perform such duties as the Board, the Chairman, the
President, or a Vice Chairman of the Board may from time to time prescribe,
which duties may include, without limitation, responsibility for strategic
planning, corporate finance, control, tax and auditing activities, and shall
perform such other duties as may be prescribed by these By-laws.
Section 4.08. Controller. The Controller shall exercise general supervision
of the accounting departments of the Bank. He shall be responsible to the Chief
Financial Officer and shall render reports from time to time relating to the
general financial condition of the Bank. He shall render such other reports and
perform such other duties as from time to time may be prescribed by the Chief
Financial Officer, a Vice Chairman of the Board, the President or the Chairman.
Section 4.09. Secretary. The Secretary shall:
(a) record all the proceedings of the meetings of the stockholders, the
Board and the Executive Committee in one or more books kept for that purpose;
(b) see that all notices are duly given in accordance with the provisions
of these By-laws or as required by law;
(c) be custodian of the seal of the Bank; and he may see that such seal or
a facsimile thereof is affixed to any documents the execution of which on behalf
of the Bank is duly authorized and may attest such seal when so affixed; and
(d) in general, perform all duties incident to the office of Secretary and
such other duties as from time to time may be prescribed by the Board and the
Chairman.
Section 4.10. General Auditor. The General Auditor shall exercise general
supervision of the Auditing Division. He shall audit the affairs of the Bank and
its subsidiaries, including appraisal of the soundness and adequacy of internal
controls and operating procedures and shall ascertain the extent of compliance
with policies and procedures of the Bank. He shall be responsible to the Board
and shall make such audits and prepare such regular reports as the Board, its
Examining Committee or the Chairman may, from time to time, require or as in his
judgment are necessary in the performance of his duties.
Section 4.11. Powers and Duties of Other Officers. The powers and duties of
all other officers of the Bank shall be those usually pertaining to their
respective offices, subject to the direction and control of the Board and as
otherwise provided in these By-laws.
Section 4.12. Fidelity Bonds. The Board, in its discretion, may require any
or all officers, agents, clerks and employees of the Bank to give bonds covering
the faithful performance of their duties or may obtain insurance covering the
same, in either case in form and amount approved by the Board, the premiums
thereon to be paid by the Bank.
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ARTICLE V
Corporate Seal
The corporate seal of the Bank shall be in the form of a circle and shall
bear the full name of the Bank and the words "Corporate Seal New York" together
with the logo of The Chase Manhattan Corporation.
ARTICLE VI
Fiscal Year
The fiscal year of the Bank shall be the calendar year.
ARTICLE VII
Indemnification
Section 7.01. Right to Indemnification. The Bank shall to the fullest
extent permitted by applicable law as then in effect indemnify any person (the
"Indemnitee") who was or is involved in any manner (including, without
limitation, as a party or a witness), or is threatened to be made so involved,
in any threatened, pending or completed investigation, claim, action, suit or
proceeding, whether civil, administrative or investigative (including, without
limitation, any action, suit or proceeding by or in the right of the Bank to
procure a judgment in its favor) (a "Proceeding") by reason of the fact that he
is or was a director, officer, employee or agent of the Bank, or is or was
serving at the request of the Bank as a director, officer or employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against all expenses (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such Proceeding. Such indemnification shall be a contract right and shall
include the right to receive payment in advance of any expenses incurred by the
Indemnitee in connection with such Proceeding, consistent with the provisions of
applicable law as then in effect.
Section 7.02. Contracts and Funding. The Bank may enter into contracts with
any director, officer, employee or agent of the Bank in furtherance of the
provisions of this Article VII and may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article VII.
Section 7.03. Employee Benefit Plans. For purposes of this Article VII,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the Bank" shall include any service as a director, officer, employee, or
agent of the Bank which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner not opposed to the best interests of a corporation.
Section 7.04. Indemnification Not Exclusive Right. The right of
indemnification and advancement of expenses provided in this Article VII shall
not be exclusive of any other rights to which a person seeking indemnification
may otherwise be entitled, under any statute, by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. The provisions of this Article VII shall inure to the benefit of the
heirs and legal representatives of any person entitled to indemnity under this
Article
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VII and shall be applicable to Proceedings commenced or continuing after
the adoption of this Article VII whether arising from acts or omissions
occurring before or after such adoption.
Section 7.05. Advancement of Expenses; Procedures. In furtherance, but not
in limitation, of the foregoing provisions, the following procedures and
remedies shall apply with respect to advancement of expenses and the right to
indemnification under this Article VII:
(a) Advancement of Expenses. All reasonable expenses incurred by or on
behalf of the Indemnitee in connection with any Proceeding shall be advanced to
the Indemnitee by the Bank within twenty (20) days after the receipt by the Bank
of a statement or statements from the Indemnitee requesting such advance or
advances from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the expenses
incurred by the Indemnitee and, if required by law at the time of such advance,
shall include or be accompanied by an undertaking by or on behalf of the
Indemnitee to repay the amounts advanced if, and to the extent, it should
ultimately be determined that the Indemnitee is not entitled to be indemnified
against such expenses.
(b) Written Request for Indemnification. To obtain indemnification under
this Article VII, an Indemnitee shall submit to the Secretary of the Bank a
written request, including such documentation and information as is reasonably
available to the Indemnitee and reasonably necessary to determine whether and to
what extent the Indemnitee is entitled to indemnification (the "Supporting
Documentation"). The determination of the Indemnitee's entitlement to
indemnification shall be made within a reasonable time after receipt by the Bank
of the written request for indemnification together with the Supporting
Documentation. The Secretary of the Bank shall, promptly upon receipt of such a
request for indemnification, advise the Board in writing that the Indemnitee has
requested indemnification.
(c) Procedure for Determination. The Indemnitee's entitlement to
indemnification under this Article VII shall be determined (i) by the Board by a
majority vote of a quorum (as defined in Article II of these By-laws) consisting
of directors who were not parties to such action, suit or proceeding, or (ii) if
such quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders, but only if a majority of the disinterested
directors, if they constitute a quorum of the Board, presents the issue of
entitlement to indemnification to the stockholders for their determination.
ARTICLE VIII
By-laws
Section 8.01. Inspection. A copy of the By-laws shall at all times be kept
in a convenient place at the principal office of the Bank, and shall be open for
inspection by stockholders during banking hours.
Section 8.02. Amendments. Except as otherwise specifically provided by
statute, these By-laws may be added to, amended, altered or repealed at any
meeting of the Board by vote of a majority of the entire Board, provided that
written notice of any such proposed action shall be given to each director prior
to such meeting, or that notice of such addition, amendment, alteration or
repeal shall have been given at the preceding meeting of the Board.
Section 8.03. Construction. The masculine gender, where appearing in these
By-laws, shall be deemed to include the feminine gender.
7
<PAGE>
EX-4.1
================================================================================
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
a National Banking Association
THE CHASE MANHATTAN BANK,
a New York Banking Corporation,
as Sellers,
THE CIT GROUP/SALES FINANCING, INC.,
a Delaware Corporation
as Servicer,
and
CHASE MANHATTAN MARINE OWNER TRUST 1997-A,
as Issuer
=================================
SALE AND SERVICING AGREEMENT
Dated as of October 1, 1997
=================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..................................... 1
SECTION 1.1. Definitions............................................... 1
SECTION 1.2. Usage of Terms............................................ 31
SECTION 1.3. Methods of Allocating Payments on
Receivables; Allocations................................ 31
ARTICLE II
CONVEYANCE OF RECEIVABLES....................... 31
SECTION 2.1. Conveyance of Receivables................................. 31
SECTION 2.2. Closing................................................... 33
ARTICLE III
THE RECEIVABLES................................. 33
SECTION 3.1. Representations and Warranties of the
Sellers; Conditions Relating to the
Receivables............................................. 33
SECTION 3.2. Repurchase Upon Breach or Failure of a
Condition............................................... 37
SECTION 3.3. Custody of Receivable Files............................... 37
SECTION 3.4. Duties of Servicer as Custodian........................... 38
SECTION 3.5. Instructions; Authority to Act............................ 40
SECTION 3.6. Effective Period and Termination.......................... 41
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES........................ 41
SECTION 4.1. Duties of Servicer........................................ 41
SECTION 4.2. Collection of Receivable Payments......................... 44
SECTION 4.3. Realization Upon Receivables.............................. 45
SECTION 4.4. Maintenance of Security Interests in
Financed Boats. ....................................... 46
SECTION 4.5. Covenants of Servicer..................................... 47
SECTION 4.6. Purchase of Receivables Upon Breach....................... 47
SECTION 4.7. Servicing Fee............................................. 48
SECTION 4.8. Monthly Report............................................ 48
SECTION 4.9. Annual Statement as to Compliance......................... 49
SECTION 4.10. Annual Report of Accountants.............................. 49
SECTION 4.11. Access by Holders to Certain
Documentation and Information Regarding
Receivables............................................. 50
SECTION 4.12. Reports to Holders and the Rating
i
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Agencies................................................ 50
SECTION 4.13. Reports to the Securities and Exchange
Commission.............................................. 50
SECTION 4.14. Maintenance of Fidelity Bond.............................. 50
SECTION 4.15. Satisfaction of Receivable................................ 51
ARTICLE V
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO NOTEHOLDERS AND THE CERTIFICATEHOLDERS.............. 51
SECTION 5.1. Establishment of Accounts................................. 51
Section 5.2. Collections; Applications................................. 53
SECTION 5.3. Monthly Advances.......................................... 55
SECTION 5.4. Additional Deposits....................................... 56
SECTION 5.5. Distributions............................................. 56
SECTION 5.6. Reserve Account........................................... 58
SECTION 5.7. Net Deposits.............................................. 60
SECTION 5.8. Statements to Certificateholders and
Noteholders............................................. 60
ARTICLE VI
THE SELLERS................................... 62
SECTION 6.1. Representations of Sellers............................... 62
SECTION 6.2. Liability of Sellers; Indemnities........................ 63
SECTION 6.3. Merger or Consolidation of Sellers....................... 65
SECTION 6.4. Limitation on Liability of Sellers and
Others................................................. 65
SECTION 6.5. Sellers May Own Notes and Certificates................... 65
ARTICLE VII
THE SERVICER; REPRESENTATIONS AND INDEMNITIES........................ 66
SECTION 7.1. Representations of the Servicer........................... 66
SECTION 7.2. Liability of Servicer, Indemnities........................ 67
SECTION 7.3. Merger or Consolidation of Servicer....................... 68
SECTION 7.4. Limitation on Liability of Servicer and
Others.................................................. 68
SECTION 7.5. Servicer Not To Resign.................................... 69
SECTION 7.6. Assignment of Servicing................................... 69
SECTION 7.7. Insurance................................................. 70
SECTION 7.8. Indemnity by Issuer....................................... 70
SECTION 7.9. Servicer May Own Notes and Certificates................... 70
ARTICLE VIII
EVENTS OF SERVICING TERMINATION.......................... 71
SECTION 8.1. Events of Servicing Termination.......................... 71
SECTION 8.2. Appointment of Successor................................. 73
SECTION 8.3. Notification to Noteholders and
ii
<PAGE>
Certificateholders...................................... 74
SECTION 8.4. Waiver of Past Defaults................................... 74
ARTICLE IX
TERMINATION...................................... 74
SECTION 9.1. Optional Purchase of All Receivables;
Trust Termination....................................... 74
ARTICLE X
MISCELLANEOUS PROVISIONS.................................. 77
SECTION 10.1. Amendment................................................. 77
SECTION 10.2. Protection of Title to Owner Trust
Estate.................................................. 78
SECTION 10.3. Governing Law............................................. 81
SECTION 10.4. Notices................................................... 81
SECTION 10.5. Severability of Provisions................................ 81
SECTION 10.6. Assignment................................................ 82
SECTION 10.7. Certificates and Notes Nonassessable and
Fully Paid.............................................. 82
SECTION 10.8. Third-Party Beneficiaries................................. 82
SECTION 10.9. Assignment to Indenture Trustee........................... 82
SECTION 10.10. Limitation of Liability of Owner Trustee
and Indenture Trustee................................... 82
SECTION 10.11. Power-of-Attorney......................................... 83
SCHEDULES
Schedule A-1 - List of Chase Receivables
Schedule A-2 - List of Chase USA Receivables
Schedule B - Allocation of Notes and Certificates
Schedule C - Allocation of Fees and Expenses to
Servicer
EXHIBITS
Exhibit A - Form of Servicer's Certificate
Exhibit B - Form of Monthly Report
Exhibit C - Form of Amended and Restated Servicing
Agreement
iii
<PAGE>
Sale and Servicing Agreement, dated as of October 1, 1997 (as
amended, supplemented or otherwise modified and in effect from time to time,
this "Agreement") among CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, a
national banking association ("Chase USA") and THE CHASE MANHATTAN BANK, a New
York banking corporation ("Chase," and collectively with Chase USA and their
respective successors hereunder, the "Sellers"), THE CIT GROUP/SALES FINANCING,
INC. ("CITSF"), as Servicer (together with any successor hereunder, the
"Servicer") and CHASE MANHATTAN MARINE OWNER TRUST 1997-A, as issuer (the
"Issuer").
W I T N E S S E T H :
In consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accrued Interest" on a Receivable, as of any date of
determination, means that amount of interest accrued on the Principal Balance at
the related Contract Rate but not paid by or on behalf of the Obligor.
"Accounts" means, collectively, the Collection Account, the
Reserve Account, the Paid-Ahead Account and the Note Distribution Account.
"Actual Principal Balance" means, as of the close of business
on the last day of a Collection Period, (a) with respect to a Precomputed
Receivable, the sum of (i) the Principal Balance thereof as of such day and (ii)
the portion of all Scheduled Payments on such Receivable due and unpaid on or
prior to such day allocable to principal using the actuarial method and (b) with
respect to a Simple Interest Receivable, the Principal Balance thereof as of
such day.
"Administration Agreements" mean collectively, the CITSF
Administration Agreement and the Chase Administration Agreement.
"Administrators" means each of the Chase Administrator
and the CITSF Administrator.
<PAGE>
"Administrative Fees" means late payment fees, extension fees
and transfer of equity and assumption fees with respect to the Receivables.
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. A Person shall not be
deemed to be an Affiliate of any Person solely because such other Person has the
contractual right or obligation to manage such Person unless such other Person
controls such Person through equity ownership or otherwise.
"Aggregate Losses" has the meaning specified in the
Servicing Agreement.
"Aggregate Net Losses" means, for a Distribution Date, the
amount equal to (i) the aggregate Principal Balance of all Receivables that
became Liquidated Receivables during the related Collection Period minus (ii)
the Net Liquidation Proceeds allocable to principal collected during such
Collection Period with respect to any Liquidated Receivables.
"Agreement" means this Sale and Servicing Agreement, dated as
of October 1, 1997, among the Issuer, the Sellers and the Servicer, as the same
may be amended and supplemented from time to time.
"Amount Financed" in respect of a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Boat and
related costs.
"Andrews" shall mean Andrews Record Management, Inc.
"Applied Paid-Ahead Amount" means, with respect to any
Precomputed Receivable and any Collection Period for which the amount actually
paid is less than the Scheduled Payment due during such Collection Period, the
Deferred Paid-Ahead Amount with respect to such Precomputed Receivable to the
extent of such shortfall; provided that if such Precomputed Receivable becomes a
Liquidated Receivable during such Collection Period, the Applied Paid-Ahead
Amount with respect to such Collection Period shall equal such Receivable's then
outstanding Deferred Paid-Ahead Amount, if any.
"Assignment" means an assignment of a Preferred Mortgage in
compliance with the requirements of the Ship Mortgage Statutes.
2
<PAGE>
"Authenticating Agent" has the meaning specified in Section
2.13 of the Indenture and shall initially be the corporate trust office of Chase
and its successors and assigns in such capacity.
"Authorized Officer" means any officer of the Owner Trustee,
Indenture Trustee or Servicer who is authorized to act on behalf of the Owner
Trustee, Indenture Trustee or Servicer, as applicable, and who is identified as
such on the list of authorized officers delivered by each such party on the
Closing Date.
"Available Amount" means, on any Distribution Date, an amount
equal to the excess of (A) the sum of (i) all amounts on deposit in the
Collection Account attributable to collections or
3
<PAGE>
deposits made in respect of the Receivables in the related Collection Period
(including Net Liquidation Proceeds, any recoveries on Liquidated Receivables
and any Applied Paid-Ahead Amounts), (ii) the Repurchase Amounts for any
Receivable repurchased by either Seller or purchased by the Servicer and the
Optional Purchase Amount, if applicable, and (iii) any Monthly Advances made by
the Servicer (with respect to (ii) and (iii) above,to the extent such Repurchase
Amounts, the Optional Purchase Amount or Monthly Advances are paid on or before
the Deposit Date immediately preceding such Distribution Date), over (B) the sum
of the following amounts (to the extent that the Servicer has not already
withheld such amounts from Collections on the Receivables): (i) any amounts
incorrectly deposited in the Collection Account, (ii) Investment Earnings on the
funds in the Collection Account, (iii) payments on the Receivables not
transferred to the Issuer (including, without limitation, Excluded
Administrative Fees, Excluded Paid-Ahead Amounts and Excluded Forced-Placed
Insurance Premiums) and (iv) any other amounts, if any, permitted to be
withdrawn from the Collection Account by the Servicer (or to be retained by the
Servicer from Collections on the Receivables) pursuant to this Agreement.
"Available Reserve Account Amount" means, for each
Distribution Date, an amount equal to the lesser of (i) the amount on deposit in
the Reserve Account and (ii) the Specified Reserve Account Balance for such
Distribution Date.
"Average Annual Balance" means, for any calendar year or
partial calendar year, the quotient obtained by dividing (x) the Pool Balance as
of the end of each month of such calendar year or partial calendar year, as the
case may be, by (y) twelve (12) or the number of months constituting such
partial calendar year with respect to any partial calendar year.
"Average Delinquency Percentage" means for any Distribution
Date, the average of the Delinquency Percentages for such Distribution Date and
the preceding two (2) Distribution Dates.
"Average Net Loss Ratio" means for any Distribution Date, the
average of the Net Loss Ratios for such Distribution Date and the preceding two
(2) Distribution Dates.
"Basic Documents" means this Agreement, the Certificate of
Trust, the Indenture, the Depository Agreements, the Trust Agreement, the
Administration Agreements and other documents and certificates delivered in
connection therewith.
"Benefit Plan" has the meaning specified in Section
11.12 of the Trust Agreement.
"Book-Entry Notes" means the Notes, ownership and
transfers of which shall be made through book entries by a
4
<PAGE>
Clearing Agency or Foreign Clearing Agency as described in Section 2.10 of the
Indenture.
"Business Day" means a day, other than a Saturday or a Sunday,
on which the Indenture Trustee and banks located in New York, New York,
Wilmington, Delaware and Minneapolis, Minnesota are open for the purpose of
conducting a commercial banking
business.
"Business Trust Statute" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as amended from time to time.
"Capital Accounts" has the meaning specified in
Section 5.7 of the Trust Agreement.
"Cedel" means Centrale de Livraison de Valeurs
Mobilieres, S.A.
"Certificate" means a certificate evidencing the
beneficial interest of a Certificateholder in the Owner Trust Estate.
"Certificate Distribution Account" has the meaning
specified in Section 5.1 of the Trust Agreement.
"Certificate Interest" means the fractional undivided
beneficial equity interests in the Trust represented by the Certificates.
"Certificate of Trust" means the Certificate of Trust in the
form of Exhibit B to the Trust Agreement filed for the Issuer pursuant to
Section 3810(a) of the Business Trust Statute.
"Certificate Register" and "Certificate Registrar" means the
register maintained and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.
"Certificated Securities" means a "certificated security"
within the meaning of the Relevant UCC.
"Certificateholder" means (i) initially, each of Chase and
Chase USA and (ii) thereafter, the Person in whose name a Certificate is
registered in the Certificate Register.
5
<PAGE>
"CFAC" means Chase Financial Acceptance Corporation, a
Delaware corporation, and any successor thereto.
"CFHI" means Chase Financial Holdings, Inc., a Delaware
corporation, and any successor thereto.
"CFMC" means Chase Financial Management Corporation, an Ohio
corporation, and any successor thereto.
"Chase" means The Chase Manhattan Bank, a New York banking
corporation, and any successor thereto.
"Chase Administration Agreement" means the Chase
Administration Agreement dated as of October 1, 1997, among the Issuer, Chase
and the Indenture Trustee, as the same may be amended and supplemented from time
to time.
"Chase Administrator" means The Chase Manhattan Bank, as
administrator under the Chase Administration Agreement, and its successors and
assigns.
"Chase Financial Receivables" means those Chase USA
Receivables owned by CFAC or CFHI before being sold to Chase USA pursuant to the
Purchase and Sale Agreement.
"Chase Receivable" means a Receivable transferred by Chase to
the Issuer pursuant to Section 2.1.
"Chase USA" means Chase Manhattan Bank USA, National
Association, a national banking association, or any successor thereto.
"Chase USA Receivable" means a Receivable transferred by Chase
USA to the Issuer pursuant to Section 2.1.
"CIT" means The CIT Group, Inc., a Delaware corporation.
"CITSF" means The CIT Group/Sales Financing, Inc., a Delaware
corporation, and its successors in interest as permitted under the Basic
Documents.
"CITSF Administration Agreement" means the CITSF
Administration Agreement dated as of October 1, 1997, among the Issuer, CITSF
and the Indenture Trustee, as the same may be amended and supplemented from time
to time.
6
<PAGE>
"CITSF Administrator" means CITSF, as administrator under the
CITSF Administration Agreement, and its successors and assigns.
"Class A-1 Interest Rate" means [___]% per annum.
"Class A-1 Notes" means $41,800,000 aggregate principal amount
of Class A-1 [___]% Asset Backed Notes, substantially in the form of Exhibit B
to the Indenture.
"Class A-2 Interest Rate" means [___]% per annum.
"Class A-2 Notes" means $55,600,000 aggregate principal amount
of Class A-2 [___]% Asset Backed Notes, substantially in the form of Exhibit B
to the Indenture.
"Class A-3 Interest Rate" means [___]% per annum.
"Class A-3 Notes" means $50,600,000 aggregate principal amount
of Class A-3 [___]% Asset Backed Notes, substantially in the form of Exhibit B
to the Indenture.
"Class A-4 Interest Rate" means [___]% per annum.
"Class A-4 Notes" means $37,300,000 aggregate principal amount
of Class A-4 [___]% Asset Backed Notes, substantially in the form of Exhibit B
to the Indenture.
"Class A-5 Interest Rate" means [___]% per annum.
"Class A-5 Notes" means $29,300,000 aggregate principal amount
of Class A-5 [___]% Asset Backed Notes, substantially in the form of Exhibit B
to the Indenture.
"Class A-6 Interest Rate" means [___]% per annum.
"Class A-6 Notes" means $23,700,000 aggregate principal amount
of Class A-6 [___]% Asset Backed Notes, substantially in the form of Exhibit B
to the Indenture.
"Class A Notes" means the Class A-1 Notes, the Class A- 2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the
Class A-6 Notes.
"Class A Noteholders' Interest Carryover Shortfall" means, for
any Distribution Date, the excess of (i) the Class A Noteholders' Interest
Distributable Amount for the preceding Distribution Date over (ii) the amount
in respect of interest that was actually deposited in the Note Distribution
Account in respect of the Class A Notes on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to the Class A
Noteholders on the preceding Distribution Date, to the extent permitted by law,
at the respective Interest Rates
7
<PAGE>
borne by the Class A Notes for the related Interest Accrual Period.
"Class A Noteholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of (x) the Class A Noteholders' Monthly
Interest Distributable Amount for all classes of Class A Notes for such
Distribution Date and (y) the Class A Noteholders' Interest Carryover Shortfall
for such Distribution Date.
"Class A Noteholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, for each class of Class A Notes, interest
accrued during the related Interest Accrual Period at the Interest Rate
borne by such class of Class A Notes on the outstanding principal balance of
the Class A Notes of such class on such Distribution Date (or, in the case of
the first Distribution Date, on the Closing Date). Interest for purposes of
this definition shall be computed on the basis of a 360-day year of twelve
30-day months.
"Class B Note" means $10,650,000 aggregate principal amount of
Class B [___]% Asset Backed Notes, substantially in the form of Exhibit C to the
Indenture.
"Class B Interest Rate" means [___]% per annum.
"Class B Noteholders' Interest Carryover Shortfall" means, for
any Distribution Date, the excess of (i) the Class B Noteholders' Interest
Distributable Amount for the preceding Distribution Date over (ii) the amount
in respect of interest that was actually deposited in the Note Distribution
Account in respect of the Class B on such preceding Distribution Date, plus
interest on the amount of interest due but not paid to the Class B Noteholders
on the preceding Distribution Date, to the extent permitted by law, at the
Interest Rate borne by the Class B Notes for the related Interest Accrual
Period.
"Class B Noteholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of (x) the Class B Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and (y) the Class B
Noteholders' Interest Carryover Shortfall for such Distribution Date.
"Class B Noteholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, interest accrued during the Interest Accrual
Period at the related Interest Rate borne by the Class B Notes on the
outstanding principal balance of the Class B Notes on such Distribution Date
(or, in the case of the first Distribution Date, on the Closing Date). Interest
for purposes of this definition on the Class B Notes shall be computed on the
basis of a 360-day year of twelve 30-day months.
8
<PAGE>
"Class C Note" means $17,312,029.25 aggregate principal amount
of Class C [___]% Asset Backed Notes, substantially in the form of Exhibit D to
the Indenture.
"Class C Interest Rate" means [___]% per annum.
"Class C Noteholders' Interest Carryover Shortfall" means, for
any Distribution Date, the excess of (i) the Class C Noteholders' Interest
Distributable Amount for the preceding Distribution Date over (ii) the amount
in respect of interest that was actually deposited in the Note Distribution
Account in respect of the Class C Notes on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to the Class C
Noteholders on the preceding Distribution Date, to the extent permitted by law,
at the Interest Rate borne by the Class C Notes for the related Interest Accrual
Period.
"Class C Noteholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of (x) the Class C Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and (y) the Class C
Noteholders' Interest Carryover Shortfall for such Distribution Date.
"Class C Noteholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, interest accrued during the related Interest
Accrual Period at the Interest Rate borne by the Class C Notes on the
outstanding principal balance of the Class C Notes on such Distribution Date
(or, in the case of the first Distribution Date, on the Closing Date).
Interest for purposes of this definition on the Class C Notes shall be
computed on the basis of a 360-day year of twelve 30-day months.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act. The initial
Clearing Agency shall be The Depository Trust Company.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other person for whom from time to time a
Clearing Agency effects book-entry transfers of securities deposited with the
Clearing Agency (including a Foreign Clearing Agency).
"Closing Date" means October __, 1997.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Collection Account" has the meaning specified in
Section 5.1(a)(i).
"Collection Period" means each calendar month beginning with
October 1997 until Chase Manhattan Marine Owner Trust 1997-A shall terminate
pursuant to Article IX of the Trust Agreement.
9
<PAGE>
"Collections" means all collections in respect of
Receivables, including Net Liquidation Proceeds.
"Control" means (a) with respect to a Security
Entitlement if:
(i) (A) the Indenture Trustee is the Securities
Intermediary for the Reserve Account, or
(B) the Indenture Trustee
(1) is registered on the records of the
Securities Intermediary as the person
having such a Security Entitlement against
the Securities Intermediary, or
(2) has obtained the agreement, in
writing, of the Securities Intermediary
for such Security Entitlement that it will
comply with orders of the Indenture Trustee
regarding the sale or redemption of the
Security Entitlement without further consent
of any other person, and
(ii) the Securities Intermediary for such Security
Entitlement
(a) is the registered owner of the related Financial
Asset,
(b) is the holder of the Security Certificate
for the related Financial Asset, or
(c) holds its interest in the related Financial
Asset directly through a clearing corporation
(as defined in Revised Article 8); and
(b) with respect to a United States Security Entitlement if:
(i) (A) the Indenture Trustee is a participant in the
book entry system maintained by the Federal
Reserve Bank that is acting as fiscal agent for
the issuer of such the Securities United States
Security Entitlement; and
(B) such Federal Reserve Bank has indicated by book
entry that such United States Security
Entitlement has been credited to the Indenture
Trustee's securities account in such book entry
system; or
(ii) (A) the Indenture Trustee
(1) is registered on the records of a
Securities Intermediary as the Person
having a Security Entitlement in respect
of such United States Security Entitlement
against such Securities Intermediary; or
(2) has obtained the agreement, in writing, of
the Securities Intermediary for such
Security Entitlement that it will comply
with orders of the Indenture Trustee
regarding the sale or redemption of the
Security Entitlement without further consent
of any other Person; and
(b) the Securites Intermediary for such Security
Entitlement is a participant in the book entry
system maintained by the Federal Reserve Bank
that is acting as fiscal agent for the issuer of
such United States Security Entitlement; and
(c) such Federal Reserve Bank has indicated by book
entry that such United States Security
Entitlement has been credited to the Securities
Intermediary's securities account in such book
entry system.
"Contract Rate" of a Receivable means the annual rate of
interest stated in such Receivable.
"Controlling Notes" means (i) all classes of Class A Notes
voting as a single class until the Class A Notes have been paid in full, (ii)
after the Class A Notes have been paid in full, the Class B Notes and (iii)
after the Class B Notes have been paid in full, the Class C Notes.
"Corporate Trust Office" shall mean the New York office of the
Indenture Trustee or the Wilmington, Delaware office of the Owner Trustee, as
applicable.
"Cutoff Date" means October 1, 1997.
"Cutoff Date Pool Balance" shall be $266,262,029.25 .
------------------------ ----------------
"Dealer" means the dealer which sold a Financed Boat and which
originated or assisted in the origination of the Dealer Receivable relating to
such Financed Boat under a Dealer Agreement.
"Dealer Agreement" means any agreement and, if applicable,
assignment under which Dealer Receivables were originated by or through a Dealer
and sold to an Originating Entity.
"Dealer Receivable" means a Receivable originated with the
involvement of a Dealer.
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Deferred Paid-Ahead Amount" means, with respect to any
Collection Period and any Precomputed Receivable, the amount, if any, held by
the Servicer pursuant to Section 5.2(b) or in the Paid-Ahead Account with
respect to such Receivable.
"Definitive Notes" means Notes issued in certificated, fully
registered form as provided in Section 2.12 of the Indenture.
"Delaware Trustee" has the meaning specified in
Section 10.1 of the Trust Agreement.
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<PAGE>
"Delinquency Percentage" means, for any Distribution Date, the
sum of the outstanding Principal Balances of all Receivables which were 60 days
or more delinquent (including Receivables, which are not Liquidated Receivables,
relating to Financed Boats that have been repossessed), as of the close of
business on the last day of the Collection Period immediately preceding such
Distribution Date, determined in accordance with the Servicer's normal
practices, such sum expressed as a percentage of the Pool Balance as of the
close of business on the last day of such Collection Period.
"Delivery" when used with respect to Reserve Account
Property means:
(a) with respect to any Physical Property (that
is not either a United States Security Entitlement or a Security
Entitlement), physical delivery thereof to the Indenture Trustee or
its nominee or custodian endorsed to, or registered in the name of,
the Indenture Trustee or its nominee or custodian or endorsed in blank.
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(b) with respect to any Uncertificated Security
(i) if the issuer of the Uncertificated Security is organized
under the laws of an Old Article 8 Jurisdiction, registration on the
books and records of the issuer thereof in the name of the financial
intermediary, the sending of a confirmation by the financial
intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such
financial intermediary of entries on its books and records identifying
such uncertificated certificates as belonging to the Indenture
Trustee or its nominee or custodian; and (i) if the issuer of the
Uncertificated Security is organized under the laws of a jurisdiction
that has adopted Revised Article 8, (A) the issuer registers the
Indenture Trustee as the registered owner thereof or (y) the Indenture
Trustee otherwise satisfies the requirements of Section 8-106(c) of
Revised Article 8.
"Deposit Date" means the Business Day immediately
preceding each Distribution Date.
"Depositor" means each Seller in its capacity as
Depositor under the Trust Agreement.
"Determination Date" means the third Business Day prior
to a Distribution Date.
"Designated Receivables" means those Receivables having
original Principal Balances of $50,000 or more.
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"Distribution Date" means, in the case of the first Collection
Period, November 17, 1997, and in the case of every Collection Period
thereafter, the 15th day of the following month, or if the 15th day is not a
Business Day, the next following Business Day, commencing with the first
Distribution Date.
"Duff & Phelps" means Duff & Phelps Credit Rating Company and
its successors and assigns.
"Eligible Deposit Account" means (a) a separately identifiable
deposit account established in the deposit taking department of a Qualified
Institution, which, except in the case of the Reserve Account, may be Chase so
long as Chase is a Qualified Institution; or (b) a segregated identifiable trust
account established in the trust department of a Qualified Trust Institution,
which shall, except in the case of the Reserve Account, initially be Chase, and
may be maintained with Chase so long as Chase is a Qualified Trust Institution.
"Eligible Servicer" means CITSF, Chase, either Trustee or any
other Person qualified to act as Servicer of the Receivables under applicable
federal and state laws and regulations, which Person services not less than
$100,000,000 in outstanding principal amount of marine installment sale
contracts.
"ERISA" has the meaning specified in Section 11.12 of
the Trust Agreement.
"Euroclear Operator" means Morgan Guaranty Trust Company of
New York, Brussels, Belgium office, in its capacity as the operator of the
Euroclear system.
"Excluded Administrative Fees" means all Administrative Fees
incurred by the Obligors prior to August 18, 1997.
"Excluded Forced-Placed Insurance Premiums" means, with
respect to any Receivable, any forced-placed insurance premium not included in
such Receivable's Principal Balance as of the Cutoff Date.
"Excluded Precomputed Amounts" means, with respect to any
Precomputed Receivable, any Scheduled Payments due thereon prior to the Cutoff
Date.
"Executive Officer" means, with respect to any corporation or
bank, the Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, President, Executive Vice President, any Vice President, the Secretary
or the Treasurer of such corporation or bank, and with respect to any
partnership, any general partner thereof.
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"Event of Default" means an event specified in Section
5.1 of the Indenture.
"Event of Servicing Termination" means an event
specified in Section 8.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Expenses" has the meaning specified in Section 8.2 of
the Trust Agreement.
"Farm Credit Entitlement" means a "Security
Entitlement" as defined in 12 C.F.R. Section 615.5450.
"FDIC" means the Federal Deposit Insurance Corporation
or any successor thereto.
"FHLBank Entitlement": means a "Security Entitlement"
as defined in 12 C.F.R. Section 912.1.
"FHLMC" means the Federal Home Loan Mortgage
Corporation or any successor thereto.
"Financed Boat" means, with respect to a Receivable, a new or
used power boat (including any boat motors and accompanying boat trailers) or
sail boat, together with all accessions thereto, securing an Obligor's
indebtedness under such Receivable.
"Final Scheduled Distribution Date" means for (a) the Class
A-1 Notes, the January 2000 Distribution Date, (b) the Class A-2 Notes, the
March 2002 Distribution Date, (c) the Class A-3 Notes, the January 2005
Distribution Date, (d) the Class A-4 Notes, the April 2007 Distribution Date,
(e) the Class A-5 Notes, the October 2009 Distribution Date, (f) Class A-6
Notes, the April 2012 Distribution Date, (g) the Class B Note, the August 2013
Distribution Date and (h) the Class C Notes, October 2017 Distribution Date.
"Final Scheduled Maturity Date" means the last day of the
Collection Period immediately preceding the Note Final Scheduled Distribution
Date with respect to the Class C Notes.
"Financial Asset" means within the meaning of Section
8-102(a)(9) of Revised Article 8.
"FNMA" means the Federal National Mortgage Association
or any successor thereto.
"Foreign Clearing Agency" means, collectively, CEDEL
and the Euroclear Operator.
"Funding Corporation Entitlement" means a "Security
Entitlement" as defined in 12 C.F.R. Section 1511.1.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to the Indenture. A Grant of the Trust Estate or of any
other agreement or instrument shall include all rights, powers and options (but
none of the obligations) of the Granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments and all other moneys payable thereunder, to
give and receive notices and other communications, to make waivers or other
agreements, to
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exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Holder" or "Holders" means, unless the context otherwise
requires, both Certificateholders and Noteholders.
"HUD Entitlement" means a "Security Entitlement" as
defined in 24 C.F.R. Section 81.2.
"Indemnified Parties" has the meaning specified in
Section 8.2 of the Trust Agreement.
"Indenture" means the Indenture dated as of October 1, 1997,
between the Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time.
"Indenture Trustee" means, initially, Norwest Bank Minnesota,
National Association, as Indenture Trustee under the Indenture, or any successor
Indenture Trustee under the Indenture.
"Independent" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Sellers and any Affiliate of any of the foregoing
persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Sellers
or any Affiliate of any of the foregoing Persons and (c) is not connected with
the Issuer, any such other obligor, the Sellers or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent engineer, appraiser or other expert appointed
by the Issuer and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read the definition of "Independent" in this Agreement and that the signer is
Independent within the meaning thereof.
"Insolvency Event" means, for a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as
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amended), liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Insurance Policy" means, with respect to each Receivable, the
policy of physical damage and all other insurance covering the related Financed
Boat or the Obligor.
"Interest Accrual Period" means, with respect to any
Distribution Date, the period from and including the most recent Distribution
Date (or, in the case of the first Distribution Date, the Closing Date) on which
interest has been paid to but excluding the following Distribution Date.
"Interest Rate" means the rate of interest borne by the
Notes of any class.
"Investment Earnings" means, with respect to any Distribution
Date, the investment earnings (net of losses and investment expenses) on amounts
on deposit in the Collection Account and the Paid-Ahead Account.
"Issuer" means Chase Manhattan Marine Owner Trust 1997- A, a
Delaware business trust, until a successor replaces it and, thereafter, means
such successor and, for purposes of any provision contained in the Indenture and
required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any of its authorized officers and
delivered to the Indenture Trustee.
"Lien" means a security interest, lien, charge, pledge or
encumbrance of any kind other than tax liens, mechanics' liens or any other
liens that attach by operation of law.
"Liquidation Expenses" means all reasonable fees of third
parties, amounts advanced to satisfy taxes and tax liens and other expenses
incurred by the Servicer in the course of converting any defaulted Receivable or
Financed Boat into cash
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proceeds (including, without limitation, expenses relating to recovery,
repossession, transporting, repair, care, custody, control and resale of such
Financed Boat), but shall not include expenses customarily deducted by third
parties from sale proceeds in connection with sales or other dispositions of
boats.
"Liquidated Receivable" means a defaulted Receivable as to
which (i) the Servicer has (A) recovered all amounts that it expects to
recover either by sale or disposition of the related Financed Boat or
otherwise or (B) all or any part of a scheduled payment is 120 days or more
past due, (including, without limitation, a Receivable whose related Obligor
is unable to be located), or (ii) all or any part of a scheduled payment is 120
days or more past due.
"Loss" has the meaning specified in the Servicing
Agreement.
"Military Reservist Relief Act" means the California
Military Reservist Relief Act of 1991, as amended.
"Monthly Advance" means, with respect to any Distribution
Date, any payment made by the Servicer pursuant to Section 5.3 hereof.
"Monthly Report" has the meaning assigned in Section 4.8
hereof. The form of Monthly Report is attached as Exhibit B hereto.
"Moody's" means Moody's Investors Service, a division of Dun &
Bradstreet Corporation, and its successors and assigns.
"Net Liquidation Proceeds" means the monies collected by the
Servicer (from whatever source) during a Collection Period on a Liquidated
Receivable, net of (i) any payments required by law to be remitted to the
Obligor and (ii) other expenses customarily deducted by third parties from sales
proceeds in connection with sales or other dispositions of boats.
"Net Loss Ratio" means, for any Distribution Date, an amount,
expressed as a percentage, equal to (i) the Aggregate Net Losses for such
Distribution Date divided by (ii) the average of the Pool Balances on each of
the related Settlement Dates and the last day of the related Collection Period.
"New Financed Boat" means a Financed Boat the model year of
which is the year of origination of the related Receivable or a later year.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3
Note, a Class A-4 Note, a Class A-5 Note, a Class A-6 Note, a Class B Note or
a Class C Note.
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"Note Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1(a)(ii).
"Note Owner" means, with respect to a Book-Entry Note, the
person who is the owner of beneficial interests in such Book-Entry Note, as
reflected on the books of the Clearing Agency or Foreign Clearing Agency, or on
the books of a direct or indirect Clearing Agency Participant.
"Note Pool Factor" for each class of Notes as of the close of
business on a Distribution Date means an eight-digit decimal figure equal to the
Outstanding Amount of such class of Notes divided by the original Outstanding
Amount of such class of Notes. The Note Pool Factor for each class of Notes will
be 1.00000000 as of the Cutoff Date; thereafter, the Note Pool Factor for each
class of Notes will decline to reflect reductions in the Outstanding Amount of
such class of Notes.
"Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Noteholders' Distributable Amount" means, for any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of (x) the Class A Noteholders' Interest
Distributable Amount for such Distribution Date, (y) the Class B Noteholders'
Interest Distributable Amount for such Distribution Date and (z) the Class C
Noteholders' Interest Distributable Amount for such Distribution Date.
"Noteholders' Monthly Principal Distributable Amount" means,
for any Distribution Date prior to the Distribution Date on which the Notes have
been paid in full, 100% of the Principal Distribution Amount for such
Distribution Date; and for the Distribution Date on which the Notes are paid in
full, the portion of the Principal Distribution Amount for such Distribution
Date required to pay the Notes in full.
"Noteholders' Principal Carryover Shortfall" means, for
any Distribution Date, the excess of (x) the Noteholders'
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Principal Distributable Amount for the preceding Distribution Date over (y) the
amount in respect of principal that was actually deposited in the Note
Distribution Account on such preceding Distribution Date.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of (i) the Principal Distributable Amount for such
Distribution Date and (ii) the Noteholders' Principal Carryover Shortfall for
such Distribution Date; provided that the Noteholders' Principal Distributable
Amount shall not exceed the Outstanding Amount of the Notes. In addition, on the
Final Scheduled Distribution Date of each class of Notes, the principal
required to be deposited in the Note Distribution Account will include the
amount necessary (after giving effect to the other amounts to be deposited in
the Note Distribution Account on such Distribution Date and allocable to
principal) to reduce the Outstanding Amount of such class of Notes to zero.
"Note Register" and "Note Registrar" have the meanings
specified in Section 2.4 of the Indenture.
"Obligor" on a Receivable means the purchaser or the
co-purchasers of the Financed Boat purchased in part or in whole by the
execution and delivery of such Receivable or any other Person who owes or may be
liable for payments under such Receivable.
"Officer's Certificate" means a certificate signed by the
chairman of the board, the president, the treasurer, the controller, any
executive or senior vice president or any vice president of a Seller or the
Servicer, as appropriate, meeting the requirements of Section 11.1 of the
Indenture.
"Old Article 8 Jurisdiction" means any jurisdiction that has
not adopted Revised Article 8.
"Opinion of Counsel" means a written opinion of counsel (who
may be counsel to a Seller or the Servicer) reasonably acceptable in form and
substance to the Indenture Trustee, meeting the requirements of Section 11.1 of
the Indenture (or in the case of an Opinion of Counsel delivered to the Owner
Trustee, reasonably acceptable in form and substance to the Owner Trustee).
"Optional Purchase Amount" means an aggregate of the following
amounts calculated for each Receivable (other than any Liquidated Receivable) as
of the close of business on the last day of the Collection Period as of which
the Servicer exercises its option to purchase the Owner Trust Estate pursuant to
Section 9.1(a): (i) its Actual Principal Balance, plus (ii) one-month's interest
on its Actual Principal Balance as of the related Settlement Date accrued at a
rate equal to the greater of (A) the weighted average Contract Rate of the
Receivables (based on their Actual Principal Balances as of such Settlement
Date) and (B) the sum of the Interest Rate with respect to the Class C Notes and
the Servicing Fee Rate, minus (iii) all Collections of (or
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allocable to) interest on each such Receivable received during such Collection
Period (including from any Applied Paid-Ahead Amounts or Repurchase Amounts) and
deposited (or required to be deposited) into the Collection Account.
"Originating Entity" means, with respect to any Receivable,
the Affiliate of CFAC, Chase, Chase USA or a predecessor of any of them which
originated such Receivable.
"Outstanding" means, when used with respect to Notes, as of
the date of determination, all Notes theretofore authenticated and delivered
under the Indenture except:
(a) Notes theretofore canceled by the Note
Registrar or delivered to the Note Registrar for
cancellation;
(b) Notes or portions thereof the payment for which
money in the necessary amount has been theretofore deposited
with the Indenture Trustee or any Paying Agent in trust for
the Holders of such Notes (provided that if such Notes are to
be redeemed, notice of such redemption has been duly given
pursuant to the Indenture or provision therefor, satisfactory
to the Indenture Trustee, has been made); and
(c) Notes in exchange for or in lieu of other Notes
which have been authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Indenture Trustee
is presented that any such Notes are held by a bona fide
purchaser;
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any other obligor upon the Notes, either Seller, the Servicer or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Indenture Trustee shall
be protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that an Authorized Officer of the
Indenture Trustee either actually knows to be so owned or has received written
notice that such Note is so owned shall be so disregarded. Notes so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Indenture Trustee the pledgee's right so
to act with respect to such Notes and that the pledgee is not the Issuer, any
other obligor upon the Notes, a Seller, the Servicer or any Affiliate of the
foregoing Persons.
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"Outstanding Amount" means, when used with respect to Notes,
as of any date of determination, the aggregate principal amount of all Notes, or
a class of Notes, as applicable, Outstanding as of such date.
"Owner Trust Estate" means all right, title and interest of
the Issuer in and to the property and rights assigned to the Issuer pursuant to
Article II of this Agreement, all funds on deposit from time to time in the
Trust Accounts (other than the Note Distribution Account) and all other property
of Issuer from time to time, including any rights of the Owner Trustee and the
Issuer pursuant to this Agreement.
"Owner Trustee" means Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under the Trust Agreement, and any successor Owner Trustee thereunder.
"Paid-Ahead Account" means the account designated as such,
established and maintained pursuant to Section 5.1(a)(iii).
"Paid-Ahead Amount" means, with respect to any Collection
Period and a Precomputed Receivable, any amount collected on such Precomputed
Receivable in excess of the sum of (i) the Scheduled Payment due on such
Precomputed Receivable during such Collection Period and (ii) any past due
Scheduled Payments from prior Collection Periods received during such Collection
Period but not representing a Principal Prepayment in full of such Receivable.
"Paying Agent" means: (a) when used in the Indenture or
otherwise with respect to the Notes, the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 of the Indenture and is authorized by the Indenture Trustee to make
the payments to and distributions from the Collection Account and the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer; and (b) when used in the Trust Agreement or otherwise
with respect to the Certificates, the Owner Trustee or any other paying agent or
co-paying agent appointed pursuant to Section 3.9 of the Trust Agreement, and in
the case of the Indenture with respect to the Notes, and the Trust Agreement
with respect to the Certificates, such Paying Agent shall initially be the
corporate trust office of Chase.
"Payment Shortfall" means (i) with respect to any Simple
Interest Receivable and any Collection Period, the excess of (A) the product of
(1) one-twelfth of the Contract Rate of such Receivable and (2) the Principal
Balance of such Receivable as of the related Settlement Date (or, in the case of
the first Collection Period, as of the Cutoff Date) over (B) the amount of
interest, if any, collected on such Receivable during the related Collection
Period and (ii) with respect to any Precomputed
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Receivable and any Collection Period, the excess of (A) the Scheduled Payment
due on such Precomputed Receivable during the related Collection Period over (B)
the amount with respect to such payment collected on such Receivable (including
any Applied Paid-Ahead Amounts with respect to such Collection Period).
"Permitted Investments" means, at any time, any one or more of
the following obligations, securities (certificated or uncertificated) or
instruments (excluding any security with the "r" symbol attached to its rating):
(i) obligations of the United States of America or
any agency thereof; provided such obligations are backed by
the full faith and credit of the United States of America;
(ii) general obligations of or obligations
guaranteed as to the timely payment of interest and principal
by any state of the United States of America or the District
of Columbia then rated "A-1+" or "AAA" by Standard & Poor's,
"D-1+" by Duff & Phelps (if rated by Duff & Phelps) and P-1+
or Aaa by Moody's;
(iii) commercial paper which is then rated P-1 by
Moody's, "D-1+" by Duff & Phelps (if rated by Duff & Phelps)
and "A-1+" by Standard & Poor's;
(iv) certificates of deposit, demand or time
deposits, federal funds or banker's acceptances issued by any
depository institution or trust company (including the Owner
Trustee acting in its commercial banking capacity)
incorporated under the laws of the United States or of any
state thereof or incorporated under the laws of a foreign
jurisdiction with a branch or agency located in the United
States of America and subject to supervision and examination
by federal or state banking authorities which short term
unsecured deposit obligations of such depository institution
or trust company are then rated P-1 by Moody's, "D-1+" by Duff
& Phelps (if rated by Duff & Phelps) and "A-1+" by Standard &
Poor's;
(v) demand or time deposits of, or certificates of
deposit issued by, any bank, trust company, savings bank or
other savings institution so long as such deposits or
certificates of deposit are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by
any bank, insurance company or other corporation the short
term unsecured debt or deposits of which are rated P-1 by
Moody's, "D-1+" by Duff & Phelps (if rated by Duff & Phelps)
and "A-1+" by Standard & Poor's or
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the long-term unsecured debt of which are rated Aaa by
Moody's and "AAA" by Standard & Poor's;
(vii) repurchase obligations with respect to any
security described in clauses (i) or (ii) herein or any other
security issued or guaranteed by the FHLMC, FNMA or any other
agency or instrumentality of the United States of America
which is backed by the full faith and credit of the United
States of America, in either case entered into with a federal
agency or a depository institution or trust company (acting as
principal) described in (iv) above;
(viii) investments in money market funds, which funds
(A) are not subject to any sales, load or other similar
charge; and (B) are rated at least "AAAM" or "AAAM-G" by
Standard & Poor's, "D-1+" by Duff & Phelps (if rated by Duff &
Phelps) and Aaa by Moody's;
(ix) such other investments where either (A) the
short-term unsecured debt or deposits of the obligor on such
investments are rated "A-1+" by Standard & Poor's, "D-1+" by
Duff & Phelps (if rated by Duff & Phelps) and P-1 by Moody's;
and
(x) any other obligation or security satisfying
the Rating Agency Condition;
Permitted Investments include money market mutual funds (so long as such fund
has the ratings specified in clause (viii) hereof), including, without
limitation, the VISTA U.S. Government Money Market Fund or any other fund for
which Chase, the Owner Trustee or an Affiliate thereof serves as an investment
advisor, administrator, shareholder servicing agent, and/or custodian or
subcustodian, notwithstanding that (i) Chase, Norwest Bank Minnesota, National
Association, Wilmington Trust Company or an Affiliate thereof charges and
collects fees and expenses from such funds for services rendered, (ii) Chase,
Norwest Bank Minnesota, National Association, Wilmington Trust Company or an
Affiliate thereof charges and collects fees and expenses for services rendered
pursuant to this Agreement, and (iii) services performed for such funds and
pursuant to this Agreement may converge at any time. The Indenture Trustee
specifically authorizes Chase, Norwest Bank Minnesota, National Association,
Wilmington Trust Company or an Affiliate thereof to charge and collect all fees
and expenses from such funds for services rendered to such funds (but not to
exceed investment earnings), in addition to any fees and expenses Chase, Norwest
Bank Minnesota, National Association, or Wilmington Trust Company, as
applicable, may charge and collect for services rendered pursuant to this
Agreement.
"Person" means a legal person, including any
individual, corporation, limited liability company, estate,
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partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"Physical Property" means banker's acceptances, commercial
paper, negotiable certificates of deposits and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of the
Relevant UCC and are susceptible to physical delivery and Certificated
Securities.
"Pool Balance" as of any date of determination means the
aggregate Principal Balance of the Receivables, calculated as of the close of
business on such date.
"Precomputed Receivable" means (i) any Receivable under which
the portion of a payment allocable to earned interest (which may be referred to
in the related Receivable as an add-on finance charge) and the portion allocable
to the Amount Financed is determined according to the sum of periodic balances
or the sum of monthly balances or any equivalent method or (ii) any monthly
actuarial Receivable.
"Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.5 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Preferred Mortgage" means a "preferred mortgage" as defined
in Section 31322 of the Ship Mortgage Statutes.
"Principal Balance" means, as of the close of business on the
last day of a Collection Period, (a) with respect to a Precomputed Receivable,
the Amount Financed minus the sum of (i) that portion of all Scheduled Payments
due on or prior to such day allocable to principal using the actuarial method,
(ii) any payment of the Repurchase Amount with respect to the Precomputed
Receivable allocable to principal using the actuarial method and (iii) any
Principal Prepayment applied to reduce the Principal Balance of the Precomputed
Receivable in full and (b) with respect to a Simple Interest Receivable, the
Amount Financed minus the sum of (i) the portion of all payments made by or on
behalf of the related Obligor on or prior to such day and allocable to principal
using the Simple Interest Method and (ii) any payment of the Repurchase Amount
with respect to the Simple Interest Receivable allocable to principal using the
Simple Interest Method, in each case without giving effect to any adjustments
due to bankruptcy or similar proceedings.
"Principal Distributable Amount" means, for each Distribution
Date, an amount equal to the sum of the following amounts with respect to the
related Collection Period, in each case calculated in accordance with the method
specified in each
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Receivable, (i) (A) all payments of principal (including all Principal
Prepayments applied during the related Collection Period as described below)
made on each Simple Interest Receivable during the related Collection Period and
(B) that portion of the Scheduled Payments due during such Collection Period
allocable to principal using the actuarial method with respect to each
Precomputed Receivable (or the Principal Balance thereof if such Precomputed
Receivable is prepaid in full during such Collection Period), (ii) the Principal
Balance of each Repurchased Receivable and (iii) the Principal Balance of each
Receivable that became a Liquidated Receivable during the related Collection
Period; provided, however, that (x) payments of principal (including Principal
Prepayments) with respect to a Repurchased Receivable received after the last
day of the Collection Period in which the Receivable became a Repurchased
Receivable shall not be included in the Principal Distribution Amount and (y) if
a Liquidated Receivable is purchased by a Seller or the Servicer pursuant to
this Agreement on the Deposit Date immediately following the Collection Period
in which it became a Liquidated Receivable, no amount will be included with
respect to such Receivable in the Principal Distribution Amount pursuant to
clause (iii) above. Principal Prepayments with respect to Simple Interest
Receivables will be treated as collections for the Collection Period in which
they are received, and Principal Prepayments with respect to Precomputed
Receivables will be deposited into the Paid-Ahead Account or retained by the
Servicer pursuant to Section 5.2(b) and treated as collections for the
Collection Period in which the related Scheduled Payment was due.
"Principal Prepayment" means a payment or other recovery of
principal on a Receivable (including insurance proceeds and Net Liquidation
Proceeds applied to principal on a Receivable) which is received in advance of
its due date.
"Proceeding" means any suit in equity, action or law or
other judicial or administrative proceeding.
"Purchase and Sale Agreement" means the Purchase and Sale
Agreement, dated as of August 20, 1997, among CFAC, CFHI and Chase USA, as the
same may be amended and supplemented from time to time.
"Qualified Institution" means a depository institution
organized under the laws of the United States of America or any one of the
States thereof or incorporated under the laws of a foreign jurisdiction with a
branch or agency located in the United States of America or one of the States
thereof and subject to supervision and examination by federal or state banking
authorities which at all times has the Required Deposit Rating and, in the case
of any such institution organized under the laws of the United States of
America, whose deposits are insured by the FDIC.
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"Qualified Trust Institution" means an institution organized
under the laws of the United States of America or any one of the States thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times (i) is authorized under such laws to act as a trustee or in any other
fiduciary capacity, (ii) has not less than one billion dollars in assets under
fiduciary management, and (iii) has a long term deposits rating of not less than
"BBB-" by Standard & Poor's, "BBB-" by Duff & Phelps (if rated by Duff & Phelps)
and Baa3 by Moody's.
"Rating Agency" means any of Standard & Poor's, Moody's
or Duff & Phelps.
"Rating Agency Condition" means, with respect to any action or
event, that each Rating Agency shall have notified the Sellers, the Servicer,
the Indenture Trustee and the Owner Trustee, in writing, that such action or
event will not result in reduction or withdrawal of any then outstanding rating
of any outstanding Note with respect to which it is the Rating Agency.
"Receivable" means a retail installment sale contract or
purchase money promissory note or other promissory note and security agreement
executed by an Obligor in respect of a Financed Boat, and all proceeds thereof
and payments thereunder (other than (i) Excluded Precomputed Amounts, (ii)
Excluded Administrative Fees and (iii) Excluded Force-Placed Insurance
Premiums), which Receivable shall be identified on Schedule A-1 or Schedule A-2
to this Agreement.
"Receivable Files" means, the documents specified in Section
3.3, together with all other documents or records that the Servicer shall add to
such documents from time to time in accordance with its customary procedures.
"Receivables Pool" means the pool of Receivables
included in the Trust.
"Record Date" means, with respect to any Distribution Date,
the Business Day prior to such Distribution Date unless Definitive Notes are
issued, in which case, Record Date, with respect to such Definitive Notes
shall mean the last day of the immediately preceding calendar month.
"Redemption Date" means in the case of a redemption of the
Class C Notes pursuant to Section 10.1 of the Indenture, the Distribution Date
specified by the Servicer pursuant to such Section 10.1.
"Redemption Price" means in the case of a redemption of
the Class C Notes pursuant to Section 10.1 of the Indenture, an
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amount equal to the Outstanding Amount of such Notes plus accrued and unpaid
interest thereon at the related Interest Rate to but excluding the Redemption
Date.
"Relevant UCC" means the Uniform Commercial Code as in
effect in the applicable jurisdiction.
"Relief Act Reduction" shall mean the reduction of the rate of
interest payable on any Receivable to a rate below the Contract Rate pursuant to
the Soldiers' and Sailors' Civil Relief Act or the Military Reservist Relief
Act.
"Repurchase Amount" of a Repurchased Receivable (other than a
Receivable purchased by the Servicer pursuant to Section 9.1(a)) means the sum
of, as of the last day of the Collection Period as of which the repurchase of
such Receivable is deemed to be effective, (i) its Actual Principal Balance plus
(ii) Accrued Interest thereon to such last day.
"Repurchased Receivable" means a Receivable repurchased by a
Seller pursuant to Section 3.2 or 10.2(n) or purchased by the Servicer
pursuant to Section 4.6 or 9.1(a).
"Required Deposit Rating" shall be a short-term certificate of
deposit rating from Moody's of P-1, from Duff & Phelps of "D-1" (if rated by
Duff & Phelps) and from Standard & Poor's of "A-1+," and a long-term unsecured
debt rating of not less than Aa3 by Moody's and "AA-" by Standard & Poor's.
"Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.6.
"Reserve Account Initial Deposit" means an amount equal
to $11,981,791.32.
"Reserve Account Property" means all amounts and investments
held from time to time in the Reserve Account (whether in the form of deposit
accounts, Physical Property, Security Entitlements, Uncertificated Securities or
otherwise), including the Reserve Account Initial Deposit and all proceeds of
the foregoing.
"Reserve Account Transfer Amount" means, for any Distribution
Date, an amount equal to the lesser of (a) the Available Reserve Account Amount
for such Distribution Date and (b) the amount, if any, by which the sum of the
amounts set forth in clauses (i) through (v) of Section 5.5(c), exceeds the
Available Amount for such Distribution Date.
"Responsible Officer" means, (i) with respect to any Trustee,
any officer within the Corporate Trust Office of such Trustee, including any
Vice President, Assistant Vice President, Assistant Treasurer or Assistant
Secretary, and (ii) with respect to the Servicer, the President, any Vice
President, Assistant
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Vice President, Secretary, Assistant Secretary, or in the case of clauses (i)
and (ii), any other officer of such Person customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Revised Article 8" means Revised Article 8 (1994 Version)
(and corresponding amendments to Article 9) as promulgated by the National
Conference of Commissioners on Uniform State Laws.
"Sale Proceeds" has the meaning specified in Section 9.1(b).
"Sallie Mae Entitlement" means a "Security Entitlement"
as defined in 31 C.F.R. Section 354.1.
"Scheduled Payment" means, with respect to a Precomputed
Receivable, that portion of the payment required to be made by the Obligor
during each Collection Period sufficient to amortize the Principal Balance of
such Receivable under the related actuarial method over the term of the
Receivable and to provide interest at the related Contract Rate. When Scheduled
Payment is used with reference to a Collection Period, it means the payment
which is due during such Collection Period.
"Schedule of Receivables" means, collectively,
Schedules A-1 and A-2 attached hereto.
"Secretary of Transportation" means the Secretary of the
United States Department of Transportation.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Intermediary" means a "securities intermediary"
within the meaning of Section 8-102(a)(14) of Revised Article 8.
"Security Certificate" means a "security certificate" within
the meaning of Section 8-102(a)(16) of Revised Article 8.
"Security Entitlement" means a "security entitlement" within
the meaning of Section 8-102(a)(17) of Revised Article 8.
"Sellers" means collectively, Chase USA, in its capacity as
the seller of the Chase USA Receivables under this Agreement, and each successor
to Chase USA (in the same capacity) pursuant to Section 6.3 and Chase in its
capacity as the seller of the Chase Receivables under this Agreement, and each
successor to Chase (in the same capacity) pursuant to Section 6.3.
"Servicer" means CITSF in its capacity as servicer of the
Receivables under this Agreement, and each successor to The CIT Group/Sales
Financing, Inc. (in the same capacity) pursuant to Section 7.3.
"Servicer's Certificate" means a certificate, substantially in
the form of Exhibit A attached hereto, completed and executed by the Servicer by
its chairman of the board, the president, treasurer, controller or any
executive, senior vice president or vice president pursuant to Section 4.8.
"Servicer Payment" with respect to any Distribution Date,
means an amount equal to the sum of the reimbursement then due to the Servicer
for outstanding Monthly Advances pursuant to Section 5.3 and the Servicing Fee
for such Distribution Date (including any unpaid Servicing Fees for prior
Distribution Dates).
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"Servicing Agreement" means the Servicing Agreement, dated May
9, 1997, as amended and restated as of September 15, 1997, and as such agreement
may be further amended, among the Sellers, CFHI, CFAC and the Servicer, a copy
of which is attached hereto as Exhibit D.
"Servicing Fee" with regard to a Collection Period means the
fee payable to the Servicer for services rendered during such Collection Period,
determined pursuant to Section 4.7.
"Servicing Fee Rate" means .50%.
"Servicing Officer" means any officer of the Servicer involved
in, or responsible for, the administration and servicing of Receivables whose
name appears on a list of servicing officers appearing in an Officers'
Certificate furnished to the Issuer by the Servicer, as the same may be amended
from time to time.
"Settlement Date" means, with respect to any Collection
Period, the last day of the Collection Period immediately preceding such
Collection Period, and with respect to any Distribution Date, the last day of
the second Collection Period preceding the Collection Period in which such
Distribution Date occurs.
"Ship Mortgage Statutes" means Chapter 313 of Title 46 of the
United State Code, as amended from time to time.
"Simple Interest Method" means the method of allocating a
fixed level payment to principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid principal balance multiplied by the
period of time elapsed since the preceding payment of interest was made and the
remainder of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which
the portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Soldiers' and Sailors' Civil Relief Act" means the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
"Specified Reserve Account Balance" means for each
Distribution Date an amount equal to 4.5% (except as described in the following
sentence) of the Pool Balance as of the related Settlement Date with respect to
such Distribution Date, but in any event not less than the lesser of (i)
$5,325,240.58 and (ii) such Pool Balance. Notwithstanding the foregoing, if for
any Distribution Date (commencing with the Distribution Date in January 1998)
(x) the Average Net Loss Ratio exceeds 2.75% or (y) the Average Delinquency
Percentage exceeds 3.00%, then the
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Specified Reserve Account Balance shall be 8.00%; provided, that, the Specified
Reserve Account Balance will revert back to the amounts specified in the first
sentence above if, for any three consecutive Distribution Dates, clauses (x) and
(y) above are not triggered. Upon written notification to the Indenture Trustee
by the Sellers, the Specified Reserve Account Balance may be reduced to a lesser
amount as determined by the Sellers, so long as such reduction satisfies the
Rating Agency Condition.
"Standard & Poor's" means Standard & Poor's Ratings Services,
and its successors and assigns.
"Treasury Entitlement" means a "Security Entitlement"
as defined in 31 C.F.R. Section 357.2.
"Treasury Regulations" means the treasury regulations
promulgated under the Code.
"Trust Accounts" means, collectively, the Certificate
Distribution Account, the Collection Account, the Note Distribution Account, the
Paid-Ahead Account and the Reserve Account.
"Trust Agreement" means the Amended and Restated Trust
Agreement dated as of October 1, 1997, among the Sellers and the Owner Trustee,
as the same may be amended and supplemented from time to time.
"Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including all
property and interests Granted to the Indenture Trustee), including all proceeds
thereof and the Reserve Account.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"Trustees" means, collectively, the Indenture Trustee
and the Owner Trustee.
"Uncertificated Security" means an "uncertificated security"
within the meaning of the Relevant UCC.
"United States Securities Entitlement" means a Treasury
Entitlement, a HUD Entitlement, a FHLBank Entitlement, a Funding Corporation
Entitlement, a Farm Credit Entitlement or a Sallie Mae Entitlement.
"U.S. Documentable Boat" means a vessel that meets the federal
five-ton standard and qualifies for documentation under federal law.
"Used Financed Boat" means a Financed Boat the model year of
which is earlier than the year of origination of the related Receivable.
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SECTION 1.2. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation." All references herein to Articles,
Sections, Subsections and Exhibits are references to Articles, Sections,
Subsections and Exhibits contained in or attached to this Agreement unless
otherwise specified, and each such Exhibit is part of the terms of this
Agreement.
SECTION 1.3. Methods of Allocating Payments on Receivables;
Allocations. All allocations of payments to principal and interest and
determinations of periodic charges and the like on the Simple Interest
Receivables shall be based on a year with the actual number of days in such year
and twelve months with the actual number of days in each such month. Allocations
of payments to principal and interest on the Precomputed Receivables shall be
based on the related add-on financed charge and related precomputed scheduled
payment calculated in accordance with the Precomputed Method set forth in the
related Receivable.
Each payment on a Receivable shall be applied in the manner
described in Section 6.15 of the Servicing Agreement; provided, however, that
the Servicer shall apply any Net Liquidation Proceeds on any Liquidated
Receivable to pay Accrued Interest on such Receivable and then to reduce the
Actual Principal Balance of such Receivable before applying any such amounts to
any Excluded Forced-Placed Insurance Premiums or any other amounts outstanding
with respect to such Receivable.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Receivables. In consideration of
the Issuer's delivery of the Notes and the Certificates to and upon the order of
the Sellers (allocated between the Sellers in accordance with Schedule C
hereto), each Seller does hereby sell, transfer, assign, and otherwise convey to
the Issuer, without recourse (subject to each Seller's obligations herein):
(i) all right, title, and interest of such Seller
in, to and under the Chase USA Receivables listed in Schedule
A-1 hereto (in the case of Chase USA) and in, to and under the
Chase Receivables listed in Schedule
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A-2 hereto (in the case of Chase), all proceeds thereof and
(A) in the case of any Simple Interest Receivables conveyed by
it, all amounts and monies received thereon on and after the
Cutoff Date and (B) in the case of any Precomputed Receivables
conveyed by it, all amounts and monies due thereon on and
after the Cutoff Date and any Deferred Paid-Ahead Amounts with
respect thereto (including in the case of such Seller proceeds
of the repurchase by such Seller of the related Receivables
pursuant to Section 3.2 or the purchase of Receivables by the
Servicer pursuant to Section 4.6 or 9.1), together with the
interest of such Seller in the security interests in the
Financed Boats granted by the Obligors pursuant to the
Receivables and in any repossessed Financed Boats;
(ii) all right, title and interest of such Seller
in any Net Liquidation Proceeds and in any Insurance
Policies;
(iii) all right, title and interest of such Seller
in any proceeds from Dealer repurchase obligations
relating to the Receivables; and
(iv) all proceeds (as defined in the Relevant UCC)
of the foregoing.
In connection with such sale, each Seller agrees to record and
file, at its own expense, financing statements with respect to the Receivables
conveyed by it for the sale of accounts and chattel paper meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect the sale and assignment of such Receivables to the
Issuer. The Sellers shall deliver (or cause to be delivered) to the Owner
Trustee, with copies to the Servicer, filed stamped copies of, or filing
receipts for, any such financing statements.
It is the intention of each Seller and the Issuer that the
assignment and transfer herein contemplated constitute a sale of the
Receivables, conveying good title thereto free and clear of any liens and
encumbrances, from such Seller to the Issuer and that the Receivables conveyed
by it not be part of such Seller's estate in the event of an insolvency. In the
event that such conveyance is deemed to be a pledge to secure a loan, each
Seller hereby grants to the Issuer a first priority perfected security interest
in all of such Seller's right, title and interest in, to and under the items of
property listed in clauses (i) through (iii) above, and in all proceeds (as
defined in the Relevant UCC) of the foregoing, to secure the loan deemed to be
made in connection with such pledge and, in such event, this Agreement shall
constitute a security agreement under applicable law.
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SECTION 2.2. Closing. The conveyance of the Receivables shall
take place at the offices of Orrick, Herrington & Sutcliffe LLP, 666 Fifth
Avenue, New York, New York on the Closing Date, simultaneously with the closing
of the transactions contemplated by the underwriting agreement related to the
Class A Notes, the underwriting agreement related to the Class B Notes and the
Class C Notes and the other Basic Documents. Upon the acceptance by the Sellers
of the Notes and the Certificates, the ownership of each Receivable and the
contents of the related Receivable File will be vested in the Issuer, subject
only to the lien of the Indenture.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of the
Sellers; Conditions Relating to the Receivables.
(a) Each Seller makes the following representations and
warranties as to the Receivables conveyed by it, on which (i) the Issuer shall
rely in acquiring such Receivables and (ii) the Servicer shall rely in acquiring
any Repurchased Receivables. Such representations and warranties shall speak as
of the Cutoff Date unless otherwise specified, but shall survive the sale,
transfer, and assignment of the Receivables to the Issuer and the pledge thereof
to the Indenture Trustee pursuant to the Indenture.
(i) Schedule of Receivables. The information set
forth in Schedules A-1 and A-2 hereto is true and correct in
all material respects, and the Receivables consist of all
receivables owned by such Seller which meet the selection
criteria specified herein.
(ii) Good Title. Immediately prior to the transfer
and assignment of the Receivables conveyed by it to the Issuer
herein contemplated, such Seller had good and marketable title
to each such Receivable free and clear of all Liens and rights
of others; and, immediately upon the transfer thereof, the
Issuer has either (i) good and marketable title to each such
Receivable, free and clear of all Liens and rights of others,
other than the Lien of the Indenture Trustee under the
Indenture, and the transfer has been perfected under
applicable law or (ii) a first priority perfected security
interest in each such Receivable and the proceeds thereof.
(b) Each Receivable conveyed by such Seller hereunder
satisfies the following conditions on the Cutoff Date unless otherwise
specified, on which (i) the Issuer shall rely in acquiring such Receivables and
(ii) the Servicer shall rely in
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acquiring any Repurchased Receivables, and such conditions shall survive the
sale, transfer and assignment of the Receivables to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(i) Origination. Each such Receivable (A) was
originated by a Dealer and acquired by an Originating Entity from such
Dealer in the ordinary course of business or (B) was originated by an
Originating Entity directly, and in each case was originated in one of
the states of the United States (or the District of Columbia);
(ii) Security. Each such Receivable is secured by
a Financed Boat;
(iii) Direct or Indirect Receivable. Each such
Receivable was originated (A) in the form of a retail installment sales
contract with a Dealer or a purchase money loan from an Originating
Entity through a Dealer located in one of the states of the United
States (or the District of Columbia) or (B) without the involvement of
a Dealer for the financing of a Financed Boat, and in each case was
fully and properly executed by the parties thereto;
(iv) Valid Transfer. (A) In the case of any such
Receivable originated with the involvement of a Dealer, if in the form
of a retail installment sales contract, such Receivable was purchased
by an Originating Entity from the originating Dealer and was validly
assigned by such Dealer to such Originating Entity;
(v) No Waivers. No provision of any such
Receivable has been waived, altered or modified in any
respect, except by instruments or documents contained in the
related Receivables File;
(vi) Binding Obligation. Each such Receivable is a
legal, valid and binding obligation of the related Obligor and is
enforceable in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, liquidation and other similar
laws and equitable principles relating to or affecting the enforcement
of creditors' rights;
(vii) No Defenses. As of the Cutoff Date, such
Seller had no knowledge of any facts which would give rise
to any right of rescission, setoff, counterclaim or defense
or of the same being asserted or threatened with respect to
any such Receivable;
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(viii) Insurance. The Obligor on each such
Receivable is required to maintain physical damage insurance
covering the related Financed Boat in accordance with its
terms;
(ix) Lawful Assignment. No such Receivable was
originated in or is subject to the laws of any jurisdiction whose laws
would prohibit (A) the transfer of such Receivable to the Issuer
pursuant to this Agreement, (B) the ownership of such Receivable by the
Issuer or (C) the pledge by the Issuer of such Receivable to the
Indenture Trustee;
(x) Compliance with Law. Each such Receivable
complies with all requirements of applicable federal, state
and local laws and regulations in all material respects;
(xi) Receivable in Force. No such Receivable has
been satisfied, subordinated in whole or in part or rescinded, and no
Financed Boat has been released from the security interest of such
Receivable in whole or in part;
(xii) Valid Security Interest. Each such Receivable
creates a valid and enforceable first priority security interest in
favor of the related Originating Entity in the Financed Boat covered
thereby, such security interest is assignable by the related
Originating Entity to such Seller and by such Seller to the Issuer, and
all necessary action with respect to such Receivable has been taken to
perfect the security interest in the related Financed Boat in favor of
the related Originating Entity. With respect to each Financed Boat that
is a U.S. Documentable Boat, a recorded and fully effective Preferred
Mortgage has been placed in favor of the related Originating Entity as
security for the Receivable with respect to such U.S.
Documentable Boat;
(xiii) Capacities of Parties. All parties to each
such Receivable had capacity to execute such Receivable;
(xiv) [Reserved];
(xv) No Defaults. As of the Cutoff Date, such Seller
had no knowledge that a default, breach, violation or event permitting
acceleration under any such Receivable existed; such Seller had no
knowledge that an event which with notice and the expiration of any
grace or cure period would constitute a default, breach, violation or
event permitting acceleration under such Receivable existed (except for
payment delinquencies permitted as described herein), and such Seller
has not waived any of the foregoing (except for payment delinquencies
permitted);
(xvi) No Liens. As of the Cutoff Date, such Seller
had no knowledge of any Liens or claims which have been
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filed for work, labor or materials affecting a Financed Boat securing
any such Receivable, which are or may be liens prior to or equal or
coordinate with the security interest of such Receivable;
(xvii) Equal Installments. Each such Receivable is
a fully amortizing loan with interest at the stated Contract
Rate, provides for level payments over the term of such
Receivable and is either a Simple Interest Receivable or a
Precomputed Receivable;
(xviii) Enforceability. Each such Receivable contains
customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for realization against the
related collateral (except as may be limited by creditors' rights
generally);
(xix) Obligor Not a Governmental Entity. No Obligor
to any such Receivable is the United States of America or any state or
any agency, department, instrumentality or political subdivision
thereof;
(xx) Obligor Not a Relief Act Obligor. If the
Obligor to any such Receivable is in the military (including an Obligor
who is a member of the National Guard or is in the reserves) and such
Receivable is subject to the Soldiers' and Sailors' Civil Relief Act of
1940, or the Military Reservist Relief Act, such Obligor has not made a
claim to such Seller for a Relief Act Reduction;
(xxi) One Original. There is only one original
executed copy of each such Receivable, which, prior to the execution of
this Agreement, was delivered to the Servicer on behalf of the Issuer;
(xxii) Receivable is Chattel Paper. Each such
Receivable is "chattel paper" as defined in the New York and Ohio
Uniform Commercial Codes;
(xxiii) Obligor Not Subject to Bankruptcy
Proceedings. No Obligor of any such Receivable has been identified on
the computer files of such Seller as being in bankruptcy proceedings as
of the Cutoff Date;
(xxiv) No Overdue Payments. Each such Receivable had
no payment that was more than 60 days past due as of the Cutoff Date;
(xxv) No Repossessions. Each such Receivable was
secured by a Financed Boat that, on the Cutoff Date, had not been
repossessed without reinstatement of such Receivable; and
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(xxvi) Maturity of Receivables. Each such
Receivable had a remaining maturity of not less than one
month nor greater than 236 months; and
(xxvii) Remaining Principal Balance. Each such
Receivable had a remaining principal balance of not greater than
$600,000.
SECTION 3.2. Repurchase Upon Breach or Failure of a Condition.
Each Seller, the Servicer, the Indenture Trustee or the Owner Trustee, as the
case may be, shall inform the other parties in writing, upon the discovery by
such Seller, the Servicer or an Authorized Officer of the Indenture Trustee or
the Owner Trustee of either any breach of a Seller's representations and
warranties set forth in Section 3.1(a) or the failure of any Receivable to
satisfy any of the conditions set forth in Section 3.1(b) which materially
adversely affects the interest of the Issuer in the related Receivable. Unless
the breach or failed condition shall have been cured by the last day of the
Collection Period following the Collection Period in which such discovery
occurred (or, at the related Seller's option, the last day of the Collection
Period in which such discovery occurred or in which the related Seller received
notice of such breach) the Seller who conveyed such Receivable to the Issuer
shall repurchase such Receivable (together with any Deferred Paid-Ahead Amounts
thereon) the Holders' interest in which was materially adversely affected by the
breach or failed condition, as of such last day. In consideration of the
repurchase of a Receivable, any such Seller shall remit the Repurchase Amount of
such Receivable on the Deposit Date next succeeding such last day in the manner
specified in Section 5.4. The sole remedy of the Issuer, the Indenture Trustee
or the Holders with respect either to a breach of any Seller's representations
and warranties set forth in Section 3.1(a) or to a failure of any of the
conditions set forth in Section 3.1(b) shall be to require such Seller to
repurchase Receivables pursuant to this Section 3.2. The obligation of the
Sellers to repurchase under this Section 3.2 shall not be dependent upon the
actual knowledge of the related Seller of any breached representation or
warranty. The Owner Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Receivable pursuant to this Section 3.2 or the eligibility of any Receivable
for purposes of this Agreement. For administrative convenience, if Chase is
obligated pursuant to this Section 3.2 to repurchase a Chase Receivable from the
Issuer, Chase USA, at its option, may satisfy Chase's obligation by repurchasing
such Receivable upon the same terms as if Chase had repurchased such Receivable.
SECTION 3.3. Custody of Receivable Files. To assure
uniform quality in servicing the Receivables and to reduce administrative costs,
the Issuer, upon the execution and delivery of this Agreement, agrees to appoint
the Servicer as initial custodian of the following documents or instruments (the
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"Receivable Files") which are hereby constructively delivered to the Issuer with
respect to each Receivable:
(i) the original executed Receivable; and
(ii) any and all other documents or records that the
related Seller actually maintained in such file in accordance with its
customary procedures, relating to a Receivable, an Obligor or a
Financed Boat.
The Servicer hereby agrees to act as custodian and as agent
for the Issuer hereunder. The Servicer acknowledges that it holds the Receivable
Files actually delivered by the Sellers for the benefit of the Issuer. The
Issuer shall have no responsibility to monitor the Servicer's performance as
custodian and shall have no liability in connection with the Servicer's
performance of such duties hereunder.
SECTION 3.4. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian,
shall hold, or shall cause Andrews or another third-party custodian reasonably
acceptable to the Sellers to hold, the Receivable Files on behalf of the Issuer
for the use and benefit of the Issuer and maintain such accurate and complete
accounts, records and computer systems pertaining to the Receivables as shall
enable the Trustees to comply with their obligations pursuant to this Agreement
and the other Basic Documents.
As custodian, the Servicer shall have and perform the
following powers and duties or shall cause Andrews or such other third-party
custodian to:
(i) hold the Receivable Files on behalf of the
Issuer, maintain accurate records pertaining to each Receivable to
enable it to comply with the terms and conditions of this Agreement,
maintain a current inventory thereof, conduct annual physical
inspections of Receivable Files held by it under this Agreement and
certify to the Issuer annually that it continues to maintain possession
of such Receivable Files;
(ii) implement policies and procedures in writing
and signed by an appropriate officer of the Servicer, with respect to
persons authorized to have access to the Receivable Files on the
Servicer's or any third-party custodian's premises, and the receipting
for Receivable Files taken from their storage area by an employee of
the Servicer for purposes of servicing or any other purposes; and
(iii) attend to all details in connection with
maintaining custody of the Receivable Files on behalf of the Issuer.
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In performing its duties under this Section 3.4, the Servicer
agrees to act with reasonable care, consistent with the same degree of skill and
care that it exercises with respect to similar contracts serviced by it for its
own account, except as otherwise set forth in the next succeeding paragraph. The
Servicer shall promptly report to the Issuer in writing any material failure by
it or any third-party custodian to hold the Receivable Files as herein provided
and shall promptly take appropriate action to remedy any such failure. In acting
as custodian of the Receivable Files, the Servicer agrees further not to assert
any beneficial ownership interests in the Receivables or the Receivable Files.
The Servicer agrees to indemnify the Issuer, the Sellers, the
Certificateholders, the Noteholders, the Owner Trustee and the Indenture Trustee
for any and all liabilities, obligations, losses, damages, payments, costs, or
expense of any kind whatsoever which may be imposed on, incurred by or asserted
against the Issuer, the Sellers, the Certificateholders, the Noteholders, the
Owner Trustee and the Indenture Trustee as the result of any act or omission by
the Servicer relating to the maintenance and custody of the Receivable Files;
provided, however, that the Servicer shall not be liable for any portion of any
such amount resulting from the negligence or willful misconduct of the Issuer,
the Sellers, the Noteholders, the Owner Trustee or the Indenture Trustee.
Any original documents relating to the Receivables held by the
Servicer shall be maintained in fireproof files, except those documents held by
Andrews or by another third-party custodian which does not offer fireproof
storage. The Servicer shall exercise reasonable care in handling and delivering
the documents in its files relating to the Receivables. The Servicer shall
maintain the privacy of the Obligors in accordance with all applicable
governmental rules.
The Servicer shall retain the information on its computer
systems relating to the Receivables and other data and records (including,
without limitation, computerized records) relating directly to or maintained in
connection with the servicing of the Receivables at the address of the Servicer,
or upon thirty (30) days' advance notice to the Sellers, the Owner Trustee and
the Indenture Trustee at such other place where the servicing offices of the
Servicer are located and shall be readily separable from the other files or
property of the Servicer. The Servicer shall promptly notify the Rating Agencies
upon any change of custodian.
(b) Maintenance of and Access to Records. The Servicer, in its
capacity as custodian, agrees to maintain the Receivable Files at its office in
the State of Oklahoma, or at such of its offices, or, at the Servicer's sole
expense, at the offices of Andrews or of any other third-party custodian
reasonably acceptable to the Sellers, as shall from time to time be identified
to the Issuer by written notice. The Servicer, in its capacity as custodian, may
temporarily move individual
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Receivable Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures, but shall promptly return such Receivable File as soon
as practicable after it is no longer needed for such purpose.
The Servicer, in its capacity as custodian, shall make
available to either Seller, the Indenture Trustee or the Owner Trustee, or their
respective duly authorized representatives, attorneys or auditors, the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer at such times during normal business hours as either
Seller, the Indenture Trustee or Owner Trustee shall reasonably instruct which
do not unreasonably interfere with the Servicer's normal operations or customer
or employee relations.
(c) Release of Documents. (i) Upon written instruction from
the Indenture Trustee (or, if the Notes have been paid in full, from the Owner
Trustee), the Servicer shall release any document in the Receivable Files to the
Indenture Trustee or the Owner Trustee, as the case may be, its agent or its
designee at such place or places as such Person may reasonably designate as soon
as reasonably practicable to the extent it does not unreasonably interfere with
the Servicer's normal operations or customer or employee relations. The Servicer
shall not be responsible for any loss occasioned by the failure of the Owner
Trustee or Indenture Trustee, its agent or its designee to return any document
or any delay in doing so.
(ii) The Servicer shall release the Receivables Files relating
to Repurchased Receivables to a Seller or the Servicer, as applicable, or their
respective agents or designees notified to the Servicer in writing, upon actual
knowledge of a Responsible Officer of the Servicer or written instructions from
the Indenture Trustee that the Repurchase Amount or Optional Purchase Amount has
been deposited by such Seller or the Servicer into the Collection Account, at
such place or places as such Person may reasonably designate as soon as
reasonably practicable to the extent it does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations. The cost of any
such release shall be borne by such Seller or the Servicer, whichever is the
purchaser.
SECTION 3.5. Instructions; Authority to Act. The Servicer
shall be deemed to have received proper instructions with respect to the
Receivable Files upon its receipt of written instructions signed by an
Authorized Officer of the Indenture Trustee (or, if the Notes have been paid in
full, of the Owner Trustee). A certified copy of a by-law or of a resolution of
the Board of Directors of the Owner Trustee or the Indenture Trustee shall
constitute conclusive evidence of the authority of any such Authorized Officer
to act and shall be considered in full force and effect until receipt by the
Servicer of written notice to the contrary given by the Owner Trustee or the
Indenture Trustee.
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SECTION 3.6. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 3.6
or until this Agreement shall be terminated. If the Servicer shall resign as
Servicer under Section 7.5 or if all of the rights and obligations of the
Servicer shall have been terminated under Section 8.1, the appointment of the
Servicer as custodian may be terminated by the Indenture Trustee or by the
Noteholders representing not less than a majority of the aggregate Outstanding
Amount of the Controlling Notes, in the same manner as the Indenture Trustee or
such Holders may terminate the rights and obligations of the Servicer under
Section 8.1. As soon as practicable after any termination of such appointment
pursuant to Section 7.5, the Servicer shall or shall instruct any third-party
custodian to, at the Servicer's expense, deliver the Receivable Files to the
Issuer or the Issuer's agent at such place or places as the Issuer may
reasonably designate. If the Servicer is terminated pursuant to Section 8.1, the
Servicer shall deliver (or caused to be delivered) the Receivable Files as
pursuant to Section 8.1. Notwithstanding the termination of the Servicer as
custodian, the Owner Trustee agrees that upon any such termination, the Issuer
shall provide, or cause its agent to provide, access to the Receivable Files to
the Servicer for the purpose of carrying out its duties and responsibilities
with respect to the servicing of the Receivables hereunder.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of Servicer. (a) The Servicer, as agent
for the Issuer, shall manage, administer, service and make collections on the
Receivables (other than Repurchased Receivables) and perform or cause to be
performed all contractual and customary undertakings of the holder of the
Receivables to the Obligors. The Issuer, at the request of an Authorized Officer
of the Servicer, shall furnish the Servicer with any reasonable documents or
take any action reasonably requested, necessary or appropriate to enable the
Servicer to carry out its servicing duties hereunder.
(b) In managing, administering, servicing and making
collections on the Receivables pursuant to this Agreement, the Servicer shall
exercise the same degree of skill and care that the Servicer exercises with
respect to similar receivables serviced by the Servicer for its own account,
except as otherwise specified in Sections 3.1, 3.2 and 6.8 through 6.14
(inclusive) of the Servicing Agreement.
(c) The Servicer may enter into subservicing agreements with
one or more subservicers for the servicing and administration of any or all of
the Receivables. Unless such
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subservicer has been appointed by CITSF in its capacity as Servicer and is an
Affiliate of CITSF, (i) any such subservicer must be an Eligible Servicer, and
(ii) the appointment of any such subservicer shall not be made without the prior
written consent of the Sellers, which consent shall not be unreasonably
withheld.
References in this Agreement to actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken, by the
Servicer in servicing the Receivables shall include actions taken, to be taken,
permitted to be taken, or restrictions on actions permitted to be taken, by a
subservicer on behalf of the Servicer. Each subservicing agreement will be upon
such terms and conditions as are not inconsistent with this Agreement and the
Servicing Agreement and the standard of care set forth herein and therein and as
the Servicer and the subservicer have agreed. All compensation payable to a
subservicer under a subservicing agreement shall be payable by the Servicer from
its servicing compensation or otherwise from its own funds, and none of the
Issuer, the Sellers, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders will have any liability to the subservicer
with respect thereto.
Notwithstanding any subservicing agreement or any of the
provisions of this Agreement relating to agreements or any arrangements between
the Servicer or a subservicer or any reference to actions taken through such
Persons or otherwise, the Servicer shall remain obligated and liable to the
Issuer, the Sellers, the Owner Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders for the servicing and administering of
the Receivables and the other Trust Estate property in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements.
Any subservicing agreement that may be entered into and any
other transactions or servicing arrangements relating to the Receivables and the
other Trust Estate property involving a subservicer in its capacity as such
shall be deemed to be between the subservicer and the Servicer alone, and the
Owner Trustee, the Indenture Trustee, the Certificateholders and the Noteholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the subservicer except as set
forth in the next succeeding paragraph.
Upon resignation or termination of the Servicer, the successor
Servicer may, with the prior written consent of the Sellers (which consent may
not be unreasonably withheld), thereupon assume all of the rights and
obligations of the outgoing Servicer under any existing subservicing agreement.
In such event, the successor Servicer shall be deemed to have assumed all of the
Servicer's interest therein and to have replaced the outgoing Servicer as a
party to each such
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subservicing agreement to the same extent as if such subservicing agreement had
been assigned to the successor Servicer, except that the outgoing Servicer shall
not thereby be relieved of any liability or obligations on the part of the
outgoing Servicer as a party to each such subservicing agreement. The outgoing
Servicer shall, upon request of the Issuer, but at the expense of the outgoing
Servicer, deliver, or cause to be delivered, to the successor Servicer all
documents and records relating to each such subservicing agreement and the
Receivables and other Trust Estate property then being serviced thereunder and
an accounting of amounts collected and held by the subservicer and shall
otherwise use its best efforts to effect the orderly and efficient transfer of
any subservicing agreement to the successor Servicer. In the event that the
successor Servicer elects not to assume a subservicing agreement, the outgoing
Servicer, at its expense, shall cause the subservicer to deliver to the
successor Servicer all documents and records relating to the Receivables and the
other Trust Estate property being serviced thereunder and held by such
subservicer and all amounts held (or thereafter received) by such subservicer
(together with an accounting of such amounts) and shall otherwise use its best
efforts to effect the orderly and efficient transfer of servicing of the
Receivables and the other Trust Estate property being serviced by such
subservicer to the successor Servicer.
(d) The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors or by federal, state or
local governmental authorities with respect to the Receivables, investigating
delinquencies, reporting federal income tax information to Obligors, monitoring
the collateral in cases of Obligor default and handling the repossession,
foreclosure or other liquidation of Financed Boats in appropriate instances,
filing and processing claims under insurance policies in accordance with its
customary practices, accounting for collections, furnishing monthly and annual
statements to the Issuer with respect to distributions, and making Monthly
Advances pursuant to Section 5.3 hereof.
The Servicer shall be authorized and empowered by the Issuer
to execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders, or any of them,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables or with respect to the Financed Boats.
Upon written request of the Servicer and receipt by the Issuer
of an Officer's Certificate setting forth the facts underlying such request, the
Issuer shall furnish the Servicer with any limited powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
duties hereunder, and the Issuer shall not be held liable for such actions of
the Servicer thereunder.
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(e) Notwithstanding anything herein or in the Servicing
Agreement to the contrary, none of the Sellers or the Servicer shall be
obligated to purchase any Insurance Policy on behalf of any Obligor, verify if
any Insurance Policy required under a Receivable is being maintained by any
Obligor or be obligated to pursue remedies under any Receivable or applicable
law as a result of any failure of an Obligor to maintain any such Insurance
Policy.
SECTION 4.2. Collection of Receivable Payments. Subject to
Sections 3.1, 3.2 and 6.8 through 6.14 (inclusive) of the Servicing Agreement,
the Servicer shall make reasonable efforts, consistent with the customary
servicing procedures employed by the Servicer with respect to Receivables owned
or serviced by it, to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due, and in
connection therewith shall follow such normal collection practices and
procedures as it follows with respect to comparable new or used marine
installment sale contracts and promissory notes that it services for itself. The
Servicer shall not reduce or defer scheduled payments, extend any Receivable or
otherwise modify the terms of any Receivable; provided, however, that,
consistent with its customary servicing procedures but subject to Section 6.10
of the Servicing Agreement, the Servicer may, in its discretion, arrange with an
Obligor to defer, reschedule, extend or modify the payment schedule of any
Receivable for credit related reasons that would be acceptable to the Servicer
with respect to a comparable Receivable secured by a new or used Financed Boat
that it services for itself so long as (i) the maturity of such Receivable would
not extend beyond the Final Scheduled Maturity Date and (ii) if any such
modification constitutes a refinancing, the proceeds of such refinancing shall
be used to pay the related Receivable in full. If, as a result of deferring,
rescheduling or extending of payments or any other modification, such deferring,
rescheduling, extension or modification breaches any of the terms of the
preceding sentence, then the Servicer shall be obligated to purchase such
Receivable pursuant to Section 4.6 hereof on the Deposit Date immediately
following the date on which it became aware or received written notice from the
Indenture Trustee or Owner Trustee of such failure. The Servicer may, in
accordance with its customary standards, policies and procedures, in its
discretion, waive any Administrative Fees that may be due or payable under any
Receivable.
Notwithstanding anything to the contrary in the Servicing
Agreement, in connection with the settlement by the Servicer of a defaulted
Receivable, the Servicer may forgive a portion of such Receivable, if, in its
discretion, it believes that the acceptance of the settlement proceeds from the
related Obligor would result in the Issuer's receiving a greater amount of
Collections than the Net Liquidation Proceeds that would result from
repossessing and liquidating the related Financed Boat.
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SECTION 4.3. Realization Upon Receivables. (a) The Servicer
will, consistent with customary servicing procedures and the terms of this
Agreement but subject to the terms of Sections 3.1 and 6.9 through 6.14
(inclusive) of the Servicing Agreement, act with respect to the Receivables in
such manner as it reasonably believes will maximize the receipt of principal and
interest on the Receivables and Net Liquidation Proceeds in respect of defaulted
Receivables; provided, however, that the Servicer shall not be obligated to take
any such action if the Servicer would thereby be required to incur Liquidation
Expenses in excess of the amounts set forth in Section 8.3 of the Servicing
Agreement and CFMC shall have failed to give its written consent to such
incurrence.
In the event that title to any Financed Boat is acquired in
foreclosure or by conveyance in lieu of foreclosure, the deed or certificate of
sale shall be issued to the Issuer, or, at its election, to its nominee on
behalf of the Issuer.
(b) The Servicer shall only be entitled to recover Liquidation
Expenses relating to a defaulted Receivable to the extent described in Section
8.3 of the Servicing Agreement. The Net Liquidation Proceeds realized in
connection with any such liquidation with respect to a defaulted Receivable
shall be deposited by the Servicer in the Collection Account in the manner
specified in Section 5.2 hereof. The foregoing shall be subject to the provision
that, in any case in which the Financed Boat shall have suffered damage, the
Servicer shall not expend funds in connection with the repair or the
repossession of such Financed Boat unless it shall determine in its sole
discretion that such repair and/or repossession will increase the Net
Liquidation Proceeds of the related Receivable.
(c) Subject to Section 6.13 of the Servicing Agreement, the
Servicer may sue to enforce or collect upon Receivables, including foreclosure
of any security interest in a Financed Boat, in its own name, if possible, or as
agent for the Issuer. If the Servicer elects to commence a legal proceeding to
enforce a Receivable or any insurance policy in respect thereof, the act of
commencement shall be deemed to be an automatic assignment of the Receivable to
the Servicer for purposes of collection only. If, however, in any enforcement
suit or legal proceeding it is held that the Servicer may not enforce a
Receivable on the ground that it is not a real party in interest or a holder
entitled to enforce the Receivable, the Issuer shall take such steps as the
Servicer deems necessary to enforce the Receivable, including bringing suit in
its name or the names of the Holders.
(d) The Servicer may grant to the Obligor on any Receivable
any rebate, refund or adjustment out of the Collection Account that the Servicer
in good faith believes is required because of a principal prepayment or a
principal prepayment of the entire Principal Balance of a Receivable in full.
The
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Servicer will not permit any rescission or cancellation of any Receivable,
except to the extent required by law or as set forth in this Agreement.
(e) The Servicer may enforce any due-on-sale clause in a
Receivable if such enforcement is called for under its then current servicing
policies for obligations similar to the Receivables, provided that such
enforcement is permitted by applicable law and will not adversely affect any
applicable insurance policy.
SECTION 4.4. Maintenance of Security Interests in Financed
Boats. (a) The Servicer shall take all actions that are necessary or desirable
to maintain continuous perfection and priority of the security interest created
by each Receivable in the related Financed Boat in favor of the related
Originating Entity, including, but not limited to, the notation on certificates
of title and the recording, filing and refiling of all financing statements,
continuation statements, Preferred Ship Mortgages or other instruments. In
addition, if the Servicer discovers any deficiency in the priority or
perfection of any such security interest in a Financed Boat or any other
defect in the documents constituting a part of any Receivable which deficiency
or defect can be corrected, the Servicer shall use its best efforts to correct
such deficiency or defect.
(b) In the event that the assignment of the Receivable to the
Issuer is insufficient, without a notation on the related Financed Boat's
certificate of title or the assignment of the UCC-1 financing statement or the
Preferred Mortgage, to grant to the Issuer a perfected security interest in
the related Financed Boat, the Sellers hereby agree to serve as the Issuer's
agent for the purpose of perfecting the security interest in such Financed Boat
and that the related Seller's listing as the secured party on the certificate of
title, UCC-1 financing statement or Preferred Mortgage, is in the capacity as
agent of the Issuer.
(c) If the Servicer is unable to foreclose upon a Financed
Boat because the title document or the Preferred Mortgage for such Financed
Boat does not show the Issuer as the lienholder, the related Seller shall, at
its expense, take all necessary steps to apply for a replacement title document
showing the Issuer as the secured party or shall, at its expense, file an
Assignment with respect to such Preferred Mortgage, as the case may be.
(d) In order to facilitate the Servicer's actions, as
described in Section 4.4(b) hereof, each Seller will provide the Servicer with
any necessary power of attorney permitting it to retitle the Financed Boat
related to one of its Receivables. Each Seller hereby appoints the Issuer
(acting through the Owner Trustee or the Servicer) its attorney-in-fact to
endorse, as appropriate, the certificate of title relating to any Financed Boat
in order to cause a change in the registration of legal owner of the Financed
Boat to the Issuer at such time as such certificate of title is endorsed and
delivered to the applicable state department of motor vehicles) with
appropriate fees. Each Seller
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will provide the Issuer with any necessary power of attorney for such purpose.
(e) If the Servicer is unable to retitle the Financed Boat, in
the event that the Servicer seeks to foreclose on a Financed Boat, then each
Seller, at its expense, will take all actions necessary to act with the
Servicer, to the extent permitted by law, to foreclose upon the Financed Boat,
including, as appropriate, the filing of any UCC-1 or UCC-2 financing statements
necessary to perfect the security interest in any Financed Boat.
SECTION 4.5. Covenants of Servicer. The Servicer hereby makes
the following covenants on which the Issuer shall rely in accepting the
Receivables:
(i) Security Interest to Remain in Force. The
Servicer shall not release a Financed Boat securing a Receivable from
the security interest granted by the Receivable except as contemplated
herein or in Section 6.8 of the Servicing Agreement, or as required by
the terms of such Receivable or applicable law;
(ii) No Impairment. The Servicer shall not impair
the rights of the Issuer in the Receivables or take any action
inconsistent with the Issuer's ownership of the Receivables, except as
expressly provided herein;
(iii) Amendments. The Servicer shall not increase the
number of payments under a Receivable, nor increase the principal
amount of such Receivable which is used to finance the purchase price
of the related Financed Boat, nor extend or forgive payments on a
Receivable, except as provided in Section 4.2 hereof and Sections 6.10
and 6.11 of the Servicing Agreement; and
(iv) Claims under Insurance Policies. Subject to
Section 4.1(e) herein, the Servicer shall file and process claims under
any Insurance Policy covering a Receivable if the failure to so file
and process would impair the protection or benefit to be afforded by
such insurance policies.
SECTION 4.6. Purchase of Receivables Upon Breach. Each Seller,
the Servicer, the Indenture Trustee or the Owner Trustee, as the case may be,
shall inform the other parties promptly, in writing, upon the discovery by such
Seller, the Servicer or an Authorized Officer of the Indenture Trustee or the
Owner Trustee, as the case may be, of any breach by the Servicer of its
covenants under Sections 4.2 or 4.5 which materially adversely affects the
interest of the Holders in any Receivable (for this purpose, any breach of the
covenant set forth in Section 4.5(iii) shall be deemed to materially adversely
affect the interest of the Holders in a Receivable). Except as
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otherwise specified in Section 4.2, unless the breach shall have been cured by
the last day of the Collection Period following the Collection Period in which
such discovery occurred, the Servicer shall purchase any Receivable (together
with any Deferred Paid-Ahead Amounts thereon) materially adversely affected by
such breach as of such last day. In consideration of the purchase of such
Receivable, the Servicer shall remit the Repurchase Amount on the Deposit Date
next succeeding such last day in the manner specified in Section 5.4. The sole
remedy of the Issuer, the Sellers, the Owner Trustee, the Indenture Trustee or
the Holders against the Servicer with respect to a breach pursuant to Section
4.2 or 4.5 shall be to require the Servicer to purchase Receivables pursuant to
this Section 4.6. The Owner Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section 4.6 or the eligibility of
any Receivable for purposes of this Agreement.
SECTION 4.7. Servicing Fee. The Servicing Fee for a Collection
Period shall be payable on the related Distribution Date pursuant to Section 5.5
and shall equal the sum of (i) one-twelfth of the product of the Servicing Fee
Rate and the Pool Balance as of the related Settlement Date and (ii) any
Administrative Fees paid by the Obligors during the related Collection Period.
The Servicer shall be required to pay from its own account all
expenses incurred by it in connection with its activities hereunder (including
fees and disbursements of independent accountants and auditors, taxes imposed on
the Servicer and not indemnified pursuant to Section 6.2, and other costs
incurred in connection with administering and servicing the Receivables which
are not reimbursable hereunder or under the Servicing Agreement), the annual
fees as set forth in Schedule D hereto and those customary and reasonable
disbursements approved by the Servicer of the Chase Administrator, the CITSF
Administrator (but only so long as the Servicer is the CITSF Administrator), the
Owner Trustee, the Indenture Trustee and the Paying Agent (including in its
capacity as the Authenticating Agent, the Note Registrar and the Certificate
Registrar). The Servicer shall not be required to pay any United States federal,
state and local income and franchise taxes, if any, imposed on the Issuer or any
Holder or any expenses in connection with realizing upon Receivables under
Section 4.3.
SECTION 4.8. Monthly Report. On or before each Determination
Date, the Servicer shall furnish a report (the "Monthly Report"), which shall be
in substantially the form of Exhibit B hereto (with such additional information
as the Servicer shall elect to include therein), to the Owner Trustee, the
Indenture Trustee, any Paying Agent (under the Indenture and the Trust
Agreement), the Sellers and the Rating Agencies. The determination by the
Servicer of the amount of the distributions to be made pursuant to Section 5.5
hereof shall, in the absence
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of obvious error, be presumptively deemed to be correct for all purposes
hereunder, and the Trustees and any Paying Agent shall be protected in relying
upon the same without any independent check or verification. The Servicer shall
also specify in the Monthly Report each Receivable which a Seller or the
Servicer is required to repurchase or purchase, as applicable as of the last day
of the related Collection Period and each Receivable which the Servicer shall
have determined to be a Liquidated Receivable during such Collection Period. The
Trustees and any Paying Agent shall not be required to recompute, verify or
recalculate information contained in the Monthly Report.
Each Monthly Report shall be accompanied by a certificate of a
Servicing Officer substantially in the form of Exhibit A hereto, certifying the
accuracy of the Monthly Report and that no Event of Servicing Termination or
event that with notice or lapse of time or both would become an Event of
Servicing Termination has occurred, or if such event has occurred and is
continuing, specifying the event and its status.
In addition, the Servicer shall, on request of a Trustee,
furnish such Person such reasonably pertinent underlying data on the Receivables
as can be generated by the Servicer's existing data processing system without
undue modification or expense.
SECTION 4.9. Annual Statement as to Compliance. (a) The
Servicer shall deliver to the Trustees and the Sellers within 90 days after the
end of each calendar year commencing March 31, 1998, a certificate signed by a
Responsible Officer of the Servicer, stating that (i) a review of the activities
of the Servicer during the preceding calendar year of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such preceding calendar year,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof.
(b) The Servicer shall deliver to the Trustees and the
Sellers, promptly after having obtained knowledge thereof, a certificate of a
Responsible Officer of the Servicer specifying any event which with the giving
of notice or lapse of time, or both, would become an Event of Servicing
Termination.
SECTION 4.10. Annual Report of Accountants. On or before March
31 of each year, commencing March 31, 1998, the Servicer, at its expense, shall
cause a firm of independent public accountants which is a member of the American
Institute of Certified Public Accountants to furnish a statement which opines
on, at a minimum, the Servicer's compliance with the minimum servicing standards
set forth in the Uniform Single Attestation Program for Mortgage Bankers (in
accordance with the 1995
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revisions thereto). Such examination and report of independent public
accountants will be prepared in accordance with the requirements set forth in
the Uniform Single Attestation Program for Mortgage Bankers (in accordance with
the 1995 revisions thereto). Copies of the annual statement of accountants shall
also be provided to the Sellers, the Rating Agencies and the Trustees.
SECTION 4.11. Access by Holders to Certain Documentation and
Information Regarding Receivables. The Servicer shall provide to the Holders
access to the Receivable Files in such cases where the Holders shall be required
by applicable statutes or regulations to have access to such documentation.
Access by the Holders shall be afforded without charge, but only upon reasonable
request and during normal business hours which does not unreasonably interfere
with the Servicer's normal operations or customer or employee relations. Nothing
in this Section 4.11 shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section 4.11.
SECTION 4.12. Reports to Holders and the Rating Agencies. (a)
The Indenture Trustee or the Owner Trustee, as applicable, shall provide to any
Holder who so requests in writing (addressed to the Corporate Trust Office of
such Trustee) a copy of any Servicer's Certificate described in Section 4.8, of
the annual statement described in Section 4.9, or of the annual report described
in Section 4.10. The Indenture Trustee or the Owner Trustee, as applicable, may
require the Holder to pay a reasonable sum to cover the cost of the Indenture
Trustee's or the Owner Trustee's complying with such request, as applicable.
The Indenture Trustee or the Owner Trustee, as applicable,
shall forward to the Rating Agencies the statement to Holders described in
Section 5.8 and any other reports it may receive pursuant to this Agreement to
(i) Standard & Poor's Ratings Services, Asset-Backed Surveillance Group, 25
Broadway, New York, New York 10004, (ii) Moody's Investors Service, ABS
Monitoring Dept., 99 Church Street, 4th Floor, New York, New York 10007 and
(iii) to Duff & Phelps Credit Rating Company, 17 State Street, 12th Floor, New
York, New York.
SECTION 4.13. Reports to the Securities and Exchange
Commission. The Issuer shall file or cause to be filed with the Commission any
periodic reports required to be filed under the provisions of the Exchange Act
and the rules and regulations of the Securities and Exchange Commission
thereunder.
SECTION 4.14. Maintenance of Fidelity Bond. The Servicer
shall, at its own cost and expense, during the term of its service as Servicer
maintain in force a fidelity bond in respect of its officers and employees. Such
fidelity bond shall
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protect against losses, including forgery, theft, embezzlement and fraud and
shall have such deductibles and be in such form and amount as is generally
customary among Persons which service a portfolio of marine installment sale
contracts having an aggregate principal amount of $100,000,000 or more and which
are generally regarded as servicers acceptable to institutional investors, but
in no case shall such fidelity bond be less than $5,000,000. Regardless of any
provisions contained in this Agreement which require the Servicer to maintain
fidelity bond coverage, the Servicer shall not be relieved of and from its
accountability and responsibility to the Issuer, the Sellers, the Holders and
the Trustees for the proper performance under this Agreement of the duties and
obligations to be performed hereunder by the Servicer.
SECTION 4.15. Satisfaction of Receivable. Upon payment in full
on any Receivable, the Servicer is authorized to execute an instrument in
satisfaction of such Receivable and to do such other acts and execute such other
documents as the Servicer deems necessary to discharge the Obligor thereunder
and eliminate the security interest in the Financed Boat related thereto. The
Servicer shall determine when a Receivable has been paid in full. The Servicer
shall process normal payoffs of Receivables by quoting amounts due, accepting
payoff amounts, stamping the original contracts relating to such Receivables
"Paid" and returning them to Obligors, and releasing liens as required. To the
extent that insufficient payments are received on a Receivable credited by the
Servicer as prepaid or paid in full and satisfied, the shortfall shall be paid
by the Servicer out of its own funds.
ARTICLE V
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO NOTEHOLDERS AND THE CERTIFICATEHOLDERS
SECTION 5.1. Establishment of Accounts. (a) The Sellers shall
establish and maintain:
(i) For the benefit of the Noteholders and the
Certificateholders, in the name of the Indenture Trustee, an
Eligible Deposit Account for the deposit of Collections (the
"Collection Account") bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of
the Noteholders and the Certificateholders.
(ii) For the benefit of the Noteholders, in the name
of the Indenture Trustee, an Eligible Deposit Account for the
deposit of distributions to the Noteholders (the "Note
Distribution Account"), bearing a designation clearly
indicating that the funds
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deposited therein are held for the benefit of the
Noteholders.
(iii) For the benefit of the Noteholders and the
Certificateholders, in the name of the Indenture Trustee, an
Eligible Account for deposit of Paid-Ahead Amounts (the
"Paid-Ahead Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the
benefit of the Noteholders and the Certificateholders.
Each Account shall be an Eligible Deposit Account established
initially at Chase.
(b) Should any depositary of an Account or of the Certificate
Distribution Account (including Chase (or an Affiliate thereof)) cease to be
either a Qualified Institution or a Qualified Trust Institution, as applicable,
then the Sellers shall cause the related Account to be moved to a Qualified
Institution or a Qualified Trust Institution, unless the Rating Agency Condition
is satisfied in connection with such depositary's ceasing to be a Qualified
Institution or a Qualified Trust Institution, as the case may be.
All amounts held in the Collection Account and the Paid-Ahead
Account shall be invested by the bank or trust company then maintaining the
account (at the written direction of the Sellers) in Permitted Investments that
mature not later than the Deposit Date next succeeding the date of investment
except, if the Collection Account or the Paid-Ahead Account is maintained with
the Indenture Trustee for investments on which the Indenture Trustee is the
obligor (including repurchase agreements on which the Indenture Trustee, in its
commercial capacity, is liable as principal), such investments may mature on the
next succeeding Distribution Date; provided, however, that once such amounts
have been invested by such bank or trust company, as applicable, in Permitted
Investments, such Permitted Investments must be held or maintained until they
mature on or before the dates described above. Amounts on deposit in the Note
Distribution Account shall not be invested. Investment Earnings on the
Collection Account and Paid-Ahead Account shall be paid to the
[Certificateholders] in accordance with their respective Certificate Interests.
(c) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Accounts and in all
proceeds thereof (excluding Investment Earnings) and all such funds,
investments, proceeds and income shall be part of the Owner Trust Estate. Except
as otherwise provided herein, the Accounts shall be under the sole dominion and
control of Indenture Trustee for the benefit of the Noteholders and the
Certificateholders, or the Noteholders, as the case may be.
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Section 5.2. Collections; Applications.
(a) Deposits to the Collection Account and the Paid-Ahead
Account. Subject to Sections 5.2(b) and (c) hereof, the Servicer shall deposit
in the Collection Account, no later than two Business Days after the Closing
Date, any amounts representing payments received on the Receivables on or after
the Cutoff Date through and including the Closing Date. Subject to Sections
5.2(b) and (c) hereof, the Servicer shall deposit in the Collection Account as
promptly as practicable (not later than the second Business Day) following the
receipt thereof by the Servicer, all amounts received in respect of the
Receivables, including all loan payments from Obligors, Net Liquidation Proceeds
and insurance proceeds (other than Paid-Ahead Amounts). Subject to Sections
5.2(b) and (c), the Servicer shall deposit in the Paid-Ahead Account as promptly
as practicable (not later than the second Business Day) following the receipt
thereof by the Servicer, all Paid-Ahead Amounts received in respect of the
Receivables. Subject to Section 5.2(b), the Servicer shall deposit $594,187.70,
the aggregate amount of Deferred Paid-Ahead Amounts with respect to the
Receivables as of the Cutoff Date, into the Paid-Ahead Account not later than
two Business Days after the Closing Date.
(b) Monthly Deposits to Collection Account and to
Paid-Ahead Account. Notwithstanding anything in this Agreement to the contrary,
for so long as, and only so long as,
(i) the Servicer or the direct or indirect parent
of the Servicer shall have and maintain a short-term debt
rating of at least "A-1" by Standard & Poor's, "D- 1" by Duff
& Phelps (if rated by Duff & Phelps) and either a short-term
debt rating of P-1 or a long-term debt rating of at least A2
by Moody's, or
(ii) the Servicer obtains a letter of credit, surety
bond or insurance policy (the "Servicer Letter of Credit")
under which demands for payment may be made to secure timely
remittance of monthly collections to the Collection Account
and the Paid-Ahead Account and the Trustees are provided with
a letter from each Rating Agency to the effect that the
utilization of such alternative remittance schedule and any
amendment required to be made to this Agreement in connection
therewith will not result in a qualification, reduction or
withdrawal of its then-current rating of the Notes,
the Servicer may make the deposits to the Collection Account and the Paid-Ahead
Account specified in Section 5.2(a) hereof on a monthly basis, but not later
than the Deposit Date following the last day of the Collection Period within
which such payments were processed by the Servicer, in amounts equal to the
net amounts of such deposits and payments which would have been made to the
Collection Account and the Paid-Ahead Account during such Collection Period
but for the
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provisions of this Section 5.2(b). In the event that the Servicer is permitted
to make remittances of Collections to the Collection Account and the Paid-Ahead
Account pursuant to Section 5.2(b)(ii) hereof, this Agreement may be modified,
to the extent necessary, without the consent of any Holder. The Servicer shall
notify the Trustees and the Sellers if the Servicer no longer complies with the
requirements set forth in clause (i) or (ii) above.
(c) Amounts Not Required to be Deposited. The Servicer shall
not be required to deposit in the Collection Account amounts relating to the
Receivables attributable to the following:
(i) Amounts received with respect to each
Receivable (or property acquired in respect thereof) which has
been repurchased by a Seller or purchased by the Servicer,
respectively, pursuant to this Agreement,
(ii) Investment Earnings on funds deposited in the
Collection Account or the Paid-Ahead Account (which amounts
shall be paid to the Certificateholders on each Distribution
Date),
(iii) Amounts to be reimbursed to the Servicer in
respect of nonrecoverable Monthly Advances,
(iv) Net Liquidation Proceeds of any Liquidated
Receivable to the extent such proceeds exceed its
Principal Balance, and
(v) Amounts received with respect to Excluded
Administrative Fees, Excluded Forced-Placed Insurance
Premiums and Excluded Precomputed Amounts.
(d) Permitted Withdrawals from the Collection Account and the
Paid-Ahead Account. The Indenture Trustee, or the Paying Agent on behalf of the
Indenture Trustee, will, from time to time as provided herein, make withdrawals
from the Collection Account and Paid-Ahead Account of amounts deposited in said
Accounts pursuant to this Agreement that are attributable to the Receivables for
the following purposes:
(i) to make payments and distributions in the
amounts and in the manner provided for in Section 5.5
hereof;
(ii) to pay to the Sellers or the Servicer with
respect to each Receivable or property acquired in respect
thereof that has been purchased pursuant to Section 3.2, 4.6,
or 9.1(a), all amounts received thereon and not required to be
distributed to Noteholders and Certificateholders; and
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(iii) to withdraw any amount deposited in the
Collection Account that was not required to be deposited
therein.
Since, in connection with withdrawals pursuant to clause (ii) of this Section
5.2(d), the Servicer's entitlement thereto is limited to Collections or other
recoveries on the related Receivable, the Servicer shall keep and maintain
separate accounting, on a Receivable by Receivable basis, for the purpose of
justifying any withdrawal from the Collection Account or Paid-Ahead Account
pursuant to such clauses. The Servicer shall keep and maintain an accounting for
the purpose of justifying any withdrawal from the Collection Account or
Paid-Ahead Account pursuant to clause (iii) of this Section 5.2(d).
(e) Deferred Paid-Ahead Amounts on Repurchased Receivables.
With respect to any Repurchased Receivable, the Servicer shall instruct the
Indenture Trustee in writing to withdraw from the Paid-Ahead Account or
otherwise and forward to the Seller or Servicer purchasing such Receivable any
Deferred Paid-Ahead Amounts with respect to such Repurchased Receivable.
SECTION 5.3. Monthly Advances. With respect to each Receivable
as to which there has been a Payment Shortfall during the related Collection
Period (other than a Payment Shortfall arising from a Receivable which has been
prepaid in full or which has been subject to a Relief Act Reduction during the
related Collection Period), on each Deposit Date the Servicer shall make a
Monthly Advance but only to the extent that the Servicer, in its good faith
judgment, expects to recover such Monthly Advance from subsequent Collections on
such Receivable made by or on behalf of the Obligor (but only to the extent of
expected interest collections in the case of a Simple Interest Receivable) or
from Net Liquidation Proceeds or insurance proceeds with respect to such
Receivable. The Servicer shall be reimbursed for any Monthly Advance from
subsequent collections with respect to such Receivable. If the Servicer
determines in its good faith judgment that an unreimbursed Monthly Advance shall
not ultimately be recoverable from subsequent collections or that the related
Receivable will be sold pursuant to this Agreement, the Servicer shall be
reimbursed for such Monthly Advance from collections on all Receivables subject
to and in the order of priority set forth in Section 5.5. In determining whether
a Monthly Advance is or will be nonrecoverable, the Servicer need not take into
account that it might receive any amounts in a deficiency judgment against an
Obligor. The Servicer shall not make a Monthly Advance in respect of (i) the
principal component of any scheduled payment on a Simple Interest Receivable or
(ii) a Payment Shortfall arising from a Receivable which has been prepaid in
full or which has been subject to a Relief Act Reduction during the related
Collection Period.
The Servicer shall deposit any such Monthly Advance into the
Collection Account in next-day funds or immediately
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available funds no later than 12:00 noon, New York time, on the related Deposit
Date.
SECTION 5.4. Additional Deposits. The Servicer, or the
Sellers, as the case may be, shall deposit into the Collection Account the
aggregate Repurchase Amount or the Optional Purchase Amount pursuant to Sections
3.2, 4.6, 9.1(a) and 10.2(n), as applicable. All remittances shall be made to
the Collection Account, in next-day funds or immediately available funds, no
later than 11:00 a.m., New York City time, on the Deposit Date.
SECTION 5.5. Distributions. (a) No later than 12:00 noon, New
York City time, on each Determination Date, the Servicer shall calculate the
following amounts with respect to the preceding Collection Period: (i) the
aggregate amount of Collections on the Receivables; (ii) the aggregate amount of
Monthly Advances to be remitted by the Servicer; (iii) the Paid-Ahead Amounts to
be received during the related Collection Period and Applied Paid-Ahead Amounts
allocable to such Collection Period and withdrawn from the Paid-Ahead Account;
(iv) the aggregate Repurchase Amounts of Receivables to be purchased by the
Sellers or the Servicer or the Optional Purchase Amount; (v) the aggregate
amount to be distributed as principal and interest on the Notes on the related
Distribution Date; (vi) the Servicer Payment; (vii) the amounts required to be
withdrawn from the Reserve Account for such Distribution Date in accordance with
Sections 5.5(b) and 5.6 hereof; (viii) any amounts to be deposited into the
Reserve Account pursuant to Section 5.5(b) and 5.6 hereof, (x) the aggregate
amount of unreimbursed Monthly Advances to be reimbursed to the Servicer and
(xi) the amount, if any, to be withdrawn from the Reserve Account and paid to
the Certificateholders on such Distribution Date.
(b) (i) On each Deposit Date, the Servicer shall instruct the
Indenture Trustee, in writing (based on the information contained in the Monthly
Report delivered on the related Determination Date pursuant to Section 4.8) to
withdraw from the Reserve Account and deposit in the Collection Account the
Reserve Account Transfer Amount (if any) for the related Distribution Date, and
the Indenture Trustee shall so withdraw and deposit the Reserve Account Transfer
Amount for such Distribution Date.
(ii) On each Deposit Date, the Servicer shall
instruct the Indenture Trustee, or the Paying Agent on behalf
of the Indenture Trustee, in writing (based on the information
contained in the Monthly Report delivered on the related
Determination Date pursuant to Section 4.8) to withdraw from
the Paid-Ahead Account and deposit in the Collection Account
any Applied Paid-Ahead Amounts (if any) with respect to the
related Collection Period, and the Indenture Trustee or Paying
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Agent shall so withdraw and deposit the Applied Paid-Ahead
Amounts for such Distribution Date.
(c) Not later than 11:00 a.m., New York City time, on each
Distribution Date, at the Servicer's direction, the Indenture Trustee, or the
Paying Agent on behalf of the Indenture Trustee, shall cause to be made the
following distributions, to the extent of the Available Amount then on deposit
in the Collection Account and amounts withdrawn from the Reserve Account and
deposited in the Collection Account by wire transfer of immediately available
funds, in the following order of priority and in the amounts set forth in the
Servicer's Certificate for such Distribution Date:
(i) to the Servicer, the Servicer Payment with
respect to such Distribution Date and all unpaid Servicing
Payments with respect to prior Distribution Dates, to the
extent such amounts are not deducted from the Servicer's
remittance to the Collection Account pursuant to Section 5.7;
(ii) to the Note Distribution Account, the Class A
Noteholders' Interest Distributable Amount;
(iii) except as set forth in Section 5.5(d) to the
Note Distribution Account, the Class B Noteholders' Interest
Distributable Amount;
(iv) except as set forth in Section 5.5(d) to the
Note Distribution Account, the Class C Noteholders' Interest
Distributable Amount;
(v) except as set forth in Section 5.5(d), to the
Note Distribution Account, the Noteholders' Principal
Distributable Amount;
(vi) except as set forth in Section 5.5(d), to the
Reserve Account, any remaining portion of the Available
Amount.
In the event that the Collection Account is maintained with an
institution other than the Indenture Trustee, the Servicer shall instruct and
cause such institution to make all deposits and distributions pursuant to this
Section 5.5(c) on the related Deposit Date.
(d) If the Notes have been declared immediately due and
payable as provided in Section 5.2 of the Indenture, any amounts remaining in
the Collection Account after the distributions described in clauses (i) and (ii)
of Section 5.5(c) shall be distributed as follows: (1) an amount equal to the
Outstanding Amount of the Class A Notes shall be deposited in the Note
Distribution Account, (2) after the distribution described in clause (iii) of
Section 5.5(c), an amount equal to the
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Outstanding Amount of the Class B Notes shall be deposited into the Note
Distribution Account, (3) after the distribution described in clause (iv) of
Section 5.5(c), an amount equal to the Outstanding Amount of the Class C Notes
shall be deposited into the Note Distribution Account and (4) any remaining
amounts shall be applied pursuant to clause (vi) of Section 5.5(c).
SECTION 5.6. Reserve Account. (a) The Sellers shall establish
and maintain an Eligible Deposit Account (the "Reserve Account") at Norwest Bank
Minnesota, National Association in the name of the Indenture Trustee for the
benefit of the Noteholders and Certificateholders. Pursuant to Section 2.5 of
the Trust Agreement, on the Closing Date, the Owner Trustee shall deposit the
Reserve Account Initial Deposit into the Reserve Account.
(b) Should any sole depositary of the Reserve Account cease to
be either a Qualified Institution or a Qualified Trust Institution, the Sellers
shall cause the Reserve Account to be moved to a Qualified Institution or a
Qualified Trust Institution, as applicable, unless the Sellers provide the Owner
Trustee with a letter from the Rating Agencies to the effect that the Rating
Agency Condition shall be satisfied in connection with such depositary's ceasing
to be a Qualified Institution or a Qualified Trust Institution, as the case may
be.
All amounts held in the Reserve Account shall be invested by
the bank or trust company then maintaining the account (at the written direction
of the Sellers) in Permitted Investments that mature not later than the Deposit
Date next succeeding the date of investment except, if the Reserve Account is
maintained with the Indenture Trustee, for investments on which the Indenture
Trustee is the obligor (including repurchase agreements on which the Indenture
Trustee in its commercial capacity is liable as principal), which investments
may mature on the next succeeding Distribution Date; provided, however, that
amounts on deposit in the Reserve Account may be invested in Permitted
Investments that mature later than the next succeeding Deposit Date if the
Rating Agency Condition is satisfied.
(c) With respect to the Reserve Account Property:
(i) any Reserve Account Property that constitutes
Physical Property (and that is not either a United States
Security Entitlement or a Security Entitlement) shall be
delivered to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be
held by the Indenture Trustee, pending maturity or
disposition;
(ii) any Reserve Account Property that is a United
States Security Entitlement or a Security Entitlement by the
Indenture Trustee shall mention Control over such Reserve
Account Property, pending maturity or disposition; and
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(iii) any Reserve Account Property that is an
Uncertificated Security (and that is not a United States
Security Entitlement) shall be delivered to the Indenture
Trustee in accordance with paragraph (b) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition.
The Indenture Trustee shall, at the expense of the Sellers, take such action
as is required to maintain the Indenture Trustee's security interest in any
Reserve Account Property; provided, however, that (x) the Indenture Trustee
shall not be required to prepare or file any financing statements or
continuation statements and (y) the Indenture Trustee may rely upon the written
instructions of the Sellers as to the method by which the security interest of
the Indenture Trustee may be perfected. Upon written request from the Indenture
Trustee, the Sellers shall provide such instructions and an opinion of counsel
with respect to the method of perfection of such security interest; provided,
however, that the Servicer shall not be obligated to deliver to the Indenture
Trustee an opinion of counsel with respect to the method of perfecting a
security interest in any Permitted Investment the method of perfecting an
ownership interest in which was described in that certain legal opinion of
Dorsey & Whitney LLP, special local counsel to the Indenture Trustee, dated
October __, 1997, unless there has been change in law or the interpretation
thereof from the date of such opinion with respect to the method of perfecting
a security interest in such Permitted Investment.
(d) On each Distribution Date, the Indenture Trustee shall
withdraw from the Reserve Account the excess, if any, of the amount on deposit
in the Reserve Account over the Specified Reserve Account Balance for such
Distribution Date (after giving effect to all deposits therein or withdrawals
therefrom on such Distribution Date) and pay first, to the Servicer, any amounts
due pursuant to Section 7.4(c) or Section 7.8, second, to the CITSF
Administrator, any amounts due pursuant to Section 21 of the CITSF
Administration Agreement, and third, to the Certificateholders, in accordance
with their respective Certificate Interests. Upon any distribution to the
Servicer or the Certificateholders of amounts from the Reserve Account, the
Noteholders shall have no rights in, or claims, to, such amounts. Amounts
properly distributed to the Servicer, the CITSF Administrator or the
Certificateholders from the Reserve Account shall not be available under any
circumstances to the Owner Trustee, and none of the Servicer, the CITSF
Administrator or the Certificateholders shall in any event thereafter be
required to refund any such distributed amounts.
(e) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Reserve Account and in
all proceeds thereof and all such funds, investments, proceeds and income shall
be part of the
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Owner Trust Estate. Except as otherwise provided herein, the Reserve Account
shall be under the sole dominion and control of the Indenture Trustee for the
benefit of the Noteholders and Certificateholders.
SECTION 5.7. Net Deposits. As an administrative convenience,
the Servicer shall be permitted to make deposits of Collections, Monthly
Advances, and the aggregate Repurchase Amount of Receivables purchased by the
Servicer or any Optional Purchase Amount for, or with respect to, a Collection
Period net of distributions to be made to the Sellers and Certificateholders
(to the extent of Investment Earnings and amounts received with respect to
Excluded Precomputed Amounts and Excluded Forced-Placed Insurance), or to the
Servicer (including, without limitation, the Servicer Payment, amounts received
with respect to Excluded Administrative Fees and amounts to be deducted in the
definition of "Available Amount"). The Servicer, however, shall account to the
Owner Trustee and the Indenture Trustee and to the Noteholders and the
Certificateholders as if all such deposits and distributions were made on an
aggregate basis for each type of payment or deposit. On each Distribution Date,
the Servicer shall pay to the Certificateholders directly any Investment
Earnings on funds deposited in the Collection Account and the Paid-Ahead
Account, together with any amounts received with respect to Excluded
Forced-Place Insurance Premiums and Excluded Precomputed Amounts.
SECTION 5.8. Statements to Certificateholders and Noteholders.
(a) On each Distribution Date, the Servicer shall provide to the Indenture
Trustee (for the Indenture Trustee to forward to each Noteholder of record
pursuant to the Indenture) and to the Owner Trustee (for the Owner Trustee to
forward to each Certificateholder of record pursuant to the Trust Agreement) a
statement prepared by the Servicer, substantially in the form of the Monthly
Report attached hereto as Exhibit B (or such other form that is acceptable to
the Indenture Trustee, the Owner Trustee and the Servicer), with a copy to the
Rating Agencies and the Sellers. Each such statement shall include (to the
extent applicable), among other things, the following information as to the
Notes with respect to such Distribution Date or the period since the previous
Distribution Date, as applicable:
(i) the amount of the distribution allocable
to interest with respect to each class of Notes and the
derivation of such amounts;
(ii) the amount of the distribution allocable
to principal on or with respect to each class of Notes;
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(iii) the amount of the Servicing Fee paid,
the amount of Monthly Advances being reimbursed to the
Servicer in respect of the related Collection Period, and the
total Servicer Payment;
(iv) the Pool Balance as of the close of
business on the last day of the preceding Collection Period;
(v) the Outstanding Amount and the Note Pool
Factor for each class of Notes after giving effect to all
payments reported under clause (ii) above on such date;
(vi) the amount of the Aggregate Net Losses,
if any, for the preceding Collection Period and the derivation
of such amount, the amount of Aggregate Losses for the year to
date and, with respect to the January Distribution Date for
each year, the Average Annual Balance for the preceding year;
(vii) the Class A Noteholders' Interest
Carryover Shortfall, the Class B Noteholders' Interest
Carryover Shortfall, the Class C Noteholders' Interest
Carryover Shortfall and the Noteholders' Principal Carryover
Shortfall, if any, and the change in such amounts from the
preceding statement;
(viii) the aggregate Repurchase Amounts with
respect to the Receivables, if any, that were repurchased by
either Seller or purchased by the Servicer with respect to
such Collection Period;
(ix) the balance of the Reserve Account as of
such date, after giving effect to changes therein on such
date, the Specified Reserve Account Balance on such date and
the components of calculating any such required balance;
(x) the amount of Monthly Advances included in
the Available Amount; and
(xi) the balance of the Paid-Ahead Account as
of such date, after giving effect to any changes therein on
such date.
Each amount set forth pursuant to subclauses (i) and (ii) with respect
to each class of Notes shall be expressed as a dollar amount per $1,000 of the
initial principal balance of such class of Notes.
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ARTICLE VI
THE SELLERS
SECTION 6.1. Representations of Sellers. Each Seller makes the
following representations as to itself on which the Issuer shall rely in
acquiring the Receivables. The representations shall speak as of the execution
and delivery of this Agreement, and shall survive the sale of the Receivables to
the Issuer and pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(i) Organization and Good Standing. Such Seller has
been duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, with
power and authority to own its properties and to conduct its
business as such properties are currently owned and such
business is presently conducted, and had at all relevant
times, and has, power, authority, and legal right to acquire
and own the Receivables transferred by it to the Issuer.
(ii) Power and Authority. Such Seller has the power
and authority to execute and deliver this Agreement and the
other Basic Documents to which it is a party and to carry out
their respective terms, such Seller has full power and
authority to sell and assign the property to be sold and
assigned to the Issuer by it as the Owner Trust Estate and has
duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery, and
performance of this Agreement and the other Basic Documents to
which it is a party has been duly authorized by such Seller by
all necessary action.
(iii) Valid Sale; Binding Obligations. This Agreement
effects a valid sale, transfer, and assignment of the
Receivables transferred by such Seller to the Issuer,
enforceable against creditors of and purchasers from such
Seller; this Agreement and each of the other Basic Documents
to which it is a party constitutes a legal, valid, and binding
obligation of such Seller enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at
law.
(iv) No Violation. The consummation of the
transactions contemplated by this Agreement and the
other Basic Documents and the fulfillment of the terms
hereof and thereof do not conflict with, result in any
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breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the
charter or bylaws of such Seller, or conflict with or breach
any of the material terms or provisions of, or constitute
(with or without notice or lapse of time) a default under, any
indenture, agreement, or other instrument to which such Seller
is a party or by which it is bound; nor result in the creation
or imposition of any lien upon any of its properties pursuant
to the terms of any such indenture, agreement, or other
instrument; nor violate any law or, to the best knowledge of
such Seller, any order, rule, or regulation applicable to such
Seller of any court or of any federal or state regulatory
body, administrative agency, or other governmental
instrumentality having jurisdiction over such Seller or its
properties.
(v) No Proceedings. There are no proceedings or
investigations pending, or, to the best knowledge of such
Seller, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality
having jurisdiction over such Seller or its properties: (a)
asserting the invalidity of this Agreement, any other Basic
Document, the Notes or the Certificates, (b) seeking to
prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this
Agreement or any other Basic Document, (c) seeking any
determination or ruling that might materially adversely affect
the performance by such Seller of its obligations under, or
the validity or enforceability of, this Agreement, any other
Basic Document or the Notes, or (d) relating to such Seller
and which might adversely affect the federal or state income
tax attributes of the Notes.
SECTION 6.2. Liability of Sellers; Indemnities; Payment of
Fees. Each Seller shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by such Seller in such capacity under
this Agreement and shall have no other obligations or liabilities hereunder.
Notwithstanding Section 15.1 of the Servicing Agreement, the Sellers acknowledge
that the indemnities in Section 10.2 of the Servicing Agreement shall survive
the execution of this Agreement.
The Sellers shall indemnify, defend and hold harmless the
Issuer, the Servicer, the CITSF Administrator, the Owner Trustee and the
Indenture Trustee from and against any taxes that may at any time be asserted
against any such Person with respect to, and as of the date of, the sale of the
Receivables to the Issuer or the issuance and original sale of the Notes and the
Certificates, including any sales, gross receipts, general corporation, tangible
or intangible personal property, privilege,
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or license taxes (but not including any taxes asserted with respect to ownership
of the Receivables or federal or other income taxes, including franchise taxes
measured by net income), arising out of the transactions contemplated by this
Agreement and the other Basic Documents, and costs and expenses in defending
against the same.
Subject to Section 6.4 hereof, each Seller shall indemnify,
defend, and hold harmless the Issuer, the Servicer, the CITSF Administrator, the
Owner Trustee and the Indenture Trustee from and against any loss, liability or
expense incurred by reason of (i) such Seller's wilful misfeasance, bad faith,
or negligence in the performance of its duties hereunder, or by reason of
reckless disregard of the obligations and duties hereunder and (ii) such
Seller's violation of federal or state securities laws in connection with the
registration of the sale of the Notes and the Certificates.
The Sellers agree to pay, and shall indemnify, defend, and
hold harmless the Owner Trustee, the Indenture Trustee, the Issuer, the
Servicer, the CITSF Administrator, the Certificateholders and the Noteholders
from and against, any taxes that may at any time be asserted with respect to the
transfer of the Receivables to the Issuer, including, without limitation, any
sales, gross receipts, personal or real property, privilege or license taxes
(but not including any federal, state or other taxes arising out of the creation
of the Issuer and the issuance of the Notes and Certificates or distributions
with respect thereto) and costs, expenses and reasonable counsel fees in
defending against the same.
The Sellers shall indemnify, defend, and hold harmless from
and against, and pay to the Trustees all reasonable costs, expenses, losses,
claims, damages, and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties herein contained in
accordance with the terms and conditions herein and in the Indenture and the
Trust Agreement, as the case may be, except to the extent that such costs,
expense, loss, claim, damage or liability: (a) shall be due to the willful
misfeasance, gross negligence or bad faith of such Trustee; (b) relates to any
tax other than the taxes with respect to which the Sellers shall be required to
indemnify such Trustee pursuant to this Agreement; (c) shall arise from such
Trustee's breach of any of its representations or warranties set forth in the
Trust Agreement or the Indenture, as applicable; (d) shall be one as to which
the Servicer is required to indemnify such Trustee.
Indemnification under this Section 6.2 shall include
reasonable fees and expenses of counsel and expenses of litigation. If such
Seller shall have made any indemnity payments to the Issuer, the Servicer, the
Owner Trustee or the Indenture Trustee, respectively, pursuant to this Section
6.2 and the Issuer, the Servicer, the Owner Trustee or the Indenture
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Trustee, respectively, thereafter shall collect any of such amounts from others,
the Issuer, the Servicer, the Owner Trustee or the Indenture Trustee,
respectively, shall repay such amounts to such Seller, without interest. The
indemnities under this Section 6.2 shall survive the resignation or removal of
an indemnitee, or the termination of the Trust Agreement and this Agreement.
The Sellers shall pay the disbursements of the Issuer, the
Administrators, the Owner Trustee, the Indenture Trustee, the Paying Agent, the
Authenticating Agent, the Note Registrar and the Certificate Registrar to the
extent not payable by the Servicer pursuant to Section 4.7, including, without
limitation, the fees and disbursements of counsel to the Owner Trustee and the
Indenture Trustee.
SECTION 6.3. Merger or Consolidation of Sellers. Any
corporation or other entity (i) into which either of the Sellers may be merged
or consolidated, (ii) which may result from any merger, conversion, or
consolidation to which either of the Sellers shall be a party, or (iii) which
may succeed to all or substantially all of the business of either of the
Sellers, shall be bound to perform every obligation of such Seller under this
Agreement, shall be the successor to such Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement. Such Seller shall give prior written notice (or as promptly
thereafter as is practicable) of any merger or consolidation to the Issuer, the
Owner Trustee, the Indenture Trustee, the Servicer and the Rating Agencies.
SECTION 6.4. Limitation on Liability of Sellers and Others.
Each Seller and any director, officer, employee or agent of such Seller may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder or under any other Basic Documents. No Seller shall be under
any obligation under this Agreement to appear in, prosecute, or defend any legal
action that shall be unrelated to its obligations under this Agreement or any
other Basic Document, and that in its opinion may involve it in any expense or
liability.
SECTION 6.5. Sellers May Own Notes and Certificates. Each
Seller or any of its Affiliates may in its individual or any other capacity
become the owner or pledgee of Notes or Certificates with the same rights as it
would have if it were not a Seller or an Affiliate thereof, except as otherwise
provided in the definition of "Outstanding" specified in Section 1.1. Notes or
Certificates so owned by or pledged to a Seller or any Affiliate thereof shall
have an equal and proportionate benefit under the provisions of this Agreement,
without preference, priority, or distinction as among all of the Notes or
Certificates, as applicable.
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ARTICLE VII
THE SERVICER; REPRESENTATIONS AND INDEMNITIES
SECTION 7.1. Representations of the Servicer.
The Servicer hereby makes the following representations on
which the Owner Trustee and the Indenture Trustee on behalf of the Issuer shall
rely in accepting the Receivables in trust and authenticating the Certificates
and the Notes, respectively. The representations are made as of the execution
and delivery of this Agreement (or as of a date another Person becomes Servicer
pursuant to Section 7.3 or Section 8.2), and shall survive the sale of the
Receivables to the Issuer.
(i) Organization and Good Standing. The Servicer is
a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has the
corporate power to own its assets and to transact the business in which
it is currently engaged. The Servicer is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction
in which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Servicer or on the Notes, the Certificates or the transactions
contemplated by this Agreement.
(ii) Authorization; Binding Obligations. The
Servicer has the power and authority to make, execute, deliver and
perform this Agreement and all of the transactions contemplated under
this Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement.
When executed and delivered, this Agreement will constitute the legal,
valid and binding obligation of the Servicer enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies.
(iii) No Consent Required. The Servicer is not
required to obtain the consent of any other party or any consent,
license, approval or authorization from, or registration or declaration
with, any governmental authority, bureau or agency in connection with
the execution, delivery, performance, validity or enforceability of
this Agreement the failure of which so to obtain would have a material
adverse effect on the business, properties, assets or condition
(financial or otherwise) of the Servicer
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or on the Notes, the Certificates or the transactions
contemplated by this Agreement.
(iv) No Violations. The execution, delivery and
performance of this Agreement by the Servicer will not violate any
provision of any existing law or regulation or any order or decree of
any court or the Articles of Incorporation or Bylaws of the Servicer,
or constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Servicer is a party or by which the
Servicer may be bound.
(v) Litigation. No litigation or administrative
proceeding of or before any court, tribunal or governmental body is
currently pending, or to the knowledge of the Servicer threatened,
against the Servicer or any of its properties or with respect to this
Agreement, the Notes or the Certificates which, if adversely
determined, would in the opinion of the Servicer have a material
adverse effect on the transactions contemplated by this Agreement.
SECTION 7.2. Liability of Servicer, Indemnities.
The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Servicer under the
Basic Documents and (except as set forth in the Servicing Agreement) shall have
no other obligations or liabilities hereunder. Notwithstanding Section 15.1 of
the Servicing Agreement, the Servicer acknowledges that the indemnities in
Section 10.1 of the Servicing Agreement shall survive the execution of this
Agreement.
(i) Subject to Section 7.4(a) hereof, the Servicer
shall defend and indemnify the Owner Trustee, the Indenture Trustee,
the Issuer, the Sellers, the Chase Administrator, the
Certificateholders and the Noteholders against any and all costs,
expenses, losses, damages, claims and liabilities arising out of or
resulting from any negligent action taken, or negligently failed to be
taken, by the Servicer with respect to any Financed Boat, to the extent
such loss is not reimbursed pursuant to any Insurance Policy or any
fidelity bond.
(ii) Subject to Section 7.4(a) hereof, the Servicer
shall indemnify, defend, and hold harmless the Owner Trustee, the
Indenture Trustee, the Issuer, the Sellers, the Chase Administrator,
the Certificateholders and the Noteholders from and against all costs,
expenses, losses, claims, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or liability arose out of, or
was imposed upon such Persons, through the willful misfeasance,
negligence, or bad faith of the Servicer in the performance of its
duties under this
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Agreement or by reason of reckless disregard of its obligations and
duties under this Agreement.
Indemnification under this Section 7.2 shall include
reasonable fees and expenses of counsel in any litigation appointed by the
Servicer and reasonably satisfactory to the indemnitee, provided that the
Servicer shall only be required to pay the fees and expenses of one counsel in
any single litigation (or related proceedings) for all indemnities; provided,
however, if in the written opinion of counsel reasonably satisfactory to the
Servicer, the interests of an indemnitee and the Servicer conflict such that the
Servicer and such indemnitee may not both be represented by such counsel, upon
ten days prior written notice to the Servicer, such indemnitee may hire one
other counsel and the indemnification under this Section 7.2 shall also include
the reasonable fees and expenses of such other counsel. If the Servicer shall
have made any indemnity payments, pursuant to this Section 7.2 and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts to the Servicer without interest. The indemnities
under this Section 7.2 shall survive the resignation or removal of an
indemnitee, or the termination of the Trust Agreement and this Agreement.
SECTION 7.3. Merger or Consolidation of Servicer.
Any Person into which the Servicer may be merged or
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which the Servicer shall be a party, or any
Person succeeding to the business of the Servicer (which Person assumes the
obligations of the Servicer), shall be the successor of the Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to the Servicer shall
satisfy the criteria set forth in the definition of an Eligible Servicer. The
Servicer shall give prior written notice of any such merger or consolidation to
which it is a party to the Issuer, the Owner Trustee, the Indenture Trustee, the
Sellers and the Rating Agencies.
SECTION 7.4. Limitation on Liability of Servicer and Others.
(a) Neither the Servicer, nor any of the shareholders,
Affiliates, directors, officers, employees or agents of the Servicer, shall be
under any liability to the Issuer or the Holders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such Person against any liability which
otherwise would be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties
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or by reason or reckless disregard of obligations and duties hereunder.
(b) The Servicer and any director, officer, employee or agent
of the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.
(c) Except as arises from its duties as Servicer hereunder,
the Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which arises under this Agreement and which in its opinion may
involve it in any expenses or liability; provided, however, that the Servicer
may in its discretion undertake any such action which it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Issuer payable only from the amounts distributable to the Certificateholders
pursuant to Section 5.6(d) and Section 9.1(e).
SECTION 7.5. Servicer Not To Resign. The Servicer shall not
resign from its obligations and duties under this Agreement except upon
determination that the performance of its duties shall no longer be permissible
under applicable law, compliance with which could not be realized without
material adverse impact on the Servicer's financial condition. Notice of any
such determination permitting the resignation of the Servicer shall be
communicated to the Sellers, the Trustees and the Rating Agencies at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writing at the earliest practicable time) and any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Sellers and the Trustees.
No such resignation shall become effective until a successor Servicer shall have
assumed the responsibilities and obligations of the Servicer in accordance with
Section 8.2 hereof.
SECTION 7.6. Assignment of Servicing.
The Servicer may sell, transfer, assign or convey its rights
as Servicer to any of its Affiliates (in the case of CITSF) or to any Eligible
Servicer, upon prior written notice to the Sellers, the Trustees and the Rating
Agencies (or as soon thereafter as is practicable), without the consent of the
Holders or the Trustees, provided that, with respect to assignment to a Servicer
which is not an Affiliate of CITSF, the Rating Agency Condition is satisfied and
the Servicer and the Trustees receive the prior written consent of the Sellers
(which consent shall not be unreasonably withheld).
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SECTION 7.7. Insurance.
The Servicer, or any affiliate of the Servicer, may, to the
extent permitted by law (i) enter into agreements with one or more insurers or
other Persons pursuant to which the Servicer or such affiliate will earn
commissions and fees in connection with any insurance policy purchased by an
Obligor including, without limitation, any physical damage insurance policy, or
any other insurance policy whatsoever, and (ii) in connection with the foregoing
or otherwise, to solicit, or permit and assist any insurer, any agent thereof or
any other Person (other than a lender which is not also an insurer) to solicit
(including, without limitation, providing such insurer or agent a list of
Obligors including name, address or other information) any Obligor.
SECTION 7.8. Indemnity by Issuer. The Issuer shall indemnify,
defend, and hold harmless from and against, and pay to the Servicer all
reasonable costs, expenses, losses, claims, damages, and liabilities arising out
of or incurred in connection with the acceptance or performance of the duties
herein contained in accordance with the terms and conditions herein and in the
Administration Agreements, except to the extent that such costs, expense, loss,
claim, damage or liability: (a) shall be due to the willful misfeasance,
negligence or bad faith of the Servicer; (b) relates to any tax other than the
taxes with respect to which the Servicer shall be otherwise indemnified pursuant
to this Agreement; (c) shall arise from the Servicer's breach of any of its
representations, warranties or covenants set forth herein and in the
Administration Agreements; (d) shall be one as to which the Sellers are required
to indemnify the Servicer or (e) shall be amounts payable by (and not
reimbursable to) the Servicer pursuant to this Agreement and the Administration
Agreements. Any amounts due the Servicer pursuant to this Section 7.8 shall be
payable only to the Servicer pursuant to Section 5.6(d) or 9.1(b).
SECTION 7.9. Servicer May Own Notes and Certificates. The
Servicer or any of its Affiliates may in its individual or any other capacity
become the owner or pledgee of Notes or Certificates with the same rights as it
would have if it were not the Servicer or an Affiliate thereof, except as
otherwise provided in the definition of "Outstanding" specified in Section 1.1.
Notes or Certificates so owned by or pledged to the Servicer or any Affiliate
thereof shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority, or distinction as among all of the
Notes or Certificates, as applicable.
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ARTICLE VIII
EVENTS OF SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination. Any one of the
following events which shall occur and be continuing shall constitute an event
of servicing termination hereunder (each, an "Event of Servicing Termination"):
(i) Any failure by the Servicer to deliver to the
Owner Trustee or the Indenture Trustee the Servicer's
Certificate for the related Collection Period, or any failure
by the Servicer to deliver to the Owner Trustee or the
Indenture Trustee, for deposit in any Trust Account, any
proceeds or payments required to be so delivered under the
terms of the Notes or this Agreement (or, in the case of a
payment or deposit to be made not later than the Deposit Date,
the failure to make such payment or deposit on such Deposit
Date), which failure continues unremedied for a period of five
Business Days after (A) discovery by the Servicer or (B)
receipt of written notice (1) to the Servicer by the Indenture
Trustee or the Owner Trustee or (2) to the Indenture Trustee
or the Owner Trustee, as applicable, and the Servicer by the
Noteholders representing not less than 25% of the Outstanding
Amount of the Controlling Notes;
(ii) Failure on the part of the Servicer to duly
observe or perform in any material respect any other covenant
or agreement of the Servicer set forth in this Agreement,
which failure shall (a) materially adversely affect the rights
of the Issuer or the Holders, and (b) continue unremedied for
a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have
been given (1) to the Servicer by the Indenture Trustee or the
Owner Trustee, or (2) to the Indenture Trustee or the Owner
Trustee, as applicable, and the Servicer by the Noteholders
representing not less than 25% of the Outstanding Amount of
the Controlling Notes;
(iii) A court or other governmental authority having
jurisdiction in the premises shall have entered a decree or
order for relief in respect of the Servicer in an involuntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Servicer, as the
case may be, or for any substantial liquidation of its
affairs, and such order remains undischarged and unstayed for
at least 60 days; or
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(iv) The Servicer shall have commenced a voluntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall have
consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented
to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or sequestrator (or
other similar official) of the Servicer or for any substantial
part of its property, or shall have made any general
assignment for the benefit of its creditors, or shall have
failed to, or admitted in writing its inability to, pay its
debts as they become due, or shall have taken any corporate
action in furtherance of the foregoing.
Upon the occurrence of any Event of Servicing Termination as
described above, and in each and every case and for so long as such Event of
Servicing Termination shall not have been remedied, either the Indenture Trustee
or the Noteholders representing not less than a majority of the Outstanding
Amount of the Controlling Notes, by notice given in writing to the Servicer
(and to the Indenture Trustee, if given by Noteholders) may terminate all of the
rights and obligations of the Servicer under this Agreement. In addition, the
Sellers may terminate all rights and obligations of the Servicer hereunder at
any time after a calendar year, or in the case of 1997, the last three months
of such year, during which Aggregate Losses on the Receivables exceed 1.20% of
the Average Annual Balance for such calendar year or, in the case of 1997,
partial calendar year; provided, however, that such termination of the Servicer
shall not be effective unless Chase, Chase USA or another party satisfying the
Rating Agency Condition assumes the Servicer's servicing obligations and duties
under this Agreement. If the Sellers do not exercise their right to terminate
the Servicer as a result of Aggregate Losses exceeding such threshold by giving
written notice of termination to the Servicer, within six months after the end
of any calendar year, they will be deemed to have waived their right to
terminate the Servicer based on this paragraph with respect to such calendar
year (but such waiver shall not affect the Sellers' right to terminate the
Servicer if the Aggregate Losses on the Receivables exceed the amount specified
above in a subsequent calendar year).
On or after the receipt by the Servicer of such written notice
and the appointment of Chase pursuant to Section 8.2, all responsibilities,
duties and liabilities of the Servicer under this Agreement, whether with
respect to the Certificates, the Notes or the Receivables or otherwise, shall
pass to and be vested in Chase pursuant to Section 8.2; and, without limitation,
the Indenture Trustee or the Owner Trustee shall be hereby authorized and
empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the
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purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivable Files, or otherwise. In connection with such
termination, the predecessor Servicer shall, upon request of Chase, deliver to
Chase, at predecessor Servicer's expense, all data and records (including,
without limitation, computerized records) created or used for the servicing of
the Receivables and all Collections then held by the predecessor Servicer for
deposit or thereafter received by the predecessor Servicer with respect to a
Receivable. In addition to delivering such data, records and monies, the
predecessor Servicer shall, at predecessor Servicer's expense, use reasonable
efforts to effect the orderly and efficient transfer of the servicing of the
Receivables to Chase, including, without limitation, directing the Obligors to
remit all payments in respect of the Receivables to an account or address
designated by Chase. In connection with any termination pursuant to the
penultimate sentence of the immediately preceding paragraph, the Servicer shall
pay the expense of any servicing systems conversion required as a result of such
termination, including, but not limited to, the expenses of formatting all
information into a format acceptable to the successor Servicer. The Servicer
shall be entitled to receive any other amounts which are payable to the Servicer
under this Agreement (including amounts payable to it with respect to the period
ending on the date of the termination of the Servicer hereunder), on the
Distribution Date relating to the Collection Period in which the Servicer was
terminated (or if funds are not sufficient therefor, on each subsequent
Distribution Date until paid in full). The Indenture Trustee and the Owner
Trustee shall give written notice of any termination of the Servicer to their
related Holders, and the Indenture Trustee shall give such notice to the Rating
Agencies. Neither Chase nor any successor Servicer shall be deemed to be in
default hereunder by reason of its failure to make, or any delay in making, any
distribution hereunder or any portion thereof which was caused by (i) the
failure of the predecessor Servicer to deliver, or any delay in delivering cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the predecessor Servicer.
SECTION 8.2. Appointment of Successor. Upon the Servicer's
receipt of notice of termination pursuant to Section 8.1 or resignation pursuant
to Section 7.5, Chase shall be the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement, and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the Servicer by the terms and provisions of this Agreement. As
compensation therefor, Chase shall be entitled to such compensation (whether
payable out of the Collection Account or otherwise) as the Servicer would have
been entitled to under this Agreement if no such notice of termination or
resignation had been given. Notwithstanding the above, if Chase shall be
unwilling so to act, or shall be legally unable so to act, the Sellers shall
appoint, or petition a court of competent jurisdiction to appoint any Eligible
Servicer, as
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successor Servicer under this Agreement, provided, that the appointment of any
such successor Servicer is required to satisfy the Rating Agency Condition. In
connection with such appointment, the Sellers may make such arrangements for the
compensation of such successor Servicer out of payments on Receivables as they
and such successor Servicer shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Servicer under this
Agreement. The Sellers and such successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Unless Chase shall be prohibited by law from so acting, Chase shall
not be relieved of its duties as successor Servicer under this Section 8.2 until
the newly appointed successor Servicer shall have assumed the responsibilities
and obligations of the Servicer under this Agreement.
SECTION 8.3. Notification to Noteholders and
Certificateholders. Upon any Event of Servicing Termination, or appointment of a
successor Servicer pursuant to this Article VIII, the Owner Trustee shall give
prompt written notice thereof to Certificateholders and the Indenture Trustee
shall give prompt written notice thereof to the Noteholders, at their respective
addresses of record, and to the Rating Agencies.
SECTION 8.4. Waiver of Past Defaults. The Noteholders
representing at least a majority of the Outstanding Amount of the Controlling
Notes may, on behalf of all such Holders, waive any default by the Servicer in
the performance of its obligations hereunder and its consequences, except a
default in the failure to make any required deposits to or payments from any of
the Trust Accounts in accordance with this Agreement. Upon any such waiver of a
past default, such default shall cease to exist, and any Event of Servicing
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived; provided, however, that the Indenture Trustee or the Owner
Trustee shall only be required to give such notice if a Responsible Officer
thereof has actual knowledge of the related event.
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receivables; Trust
Termination. (a) Subsequent to the last day of any Collection Period as of which
the Pool Balance shall be equal to or less than 5% of the Cutoff Date Pool
Balance, the Servicer shall have the option to purchase the Owner Trust Estate
(including the rights of the Trust to any Liquidated Receivables and any
Deferred Paid-Ahead Amounts, but excluding the Collection Account, the Reserve
Account
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and the Note Distribution Account) by depositing the Optional Purchase Amount on
the Deposit Date subsequent to any such last day. The effective date of such
purchase shall be the last day of the Collection Period preceding such Deposit
Date. To exercise such option, the Servicer shall notify the Indenture Trustee,
the Owner Trustee, the Sellers, the Note Registrar and the Certificate Registrar
in writing, no later than the 25th day of the Collection Period preceding such
Deposit Date, shall pay the aggregate Optional Purchase Amount on the related
Deposit Date and shall succeed to all interests in, to and under such portion of
the Owner Trust Estate. The payment shall be made in the manner specified in
Section 5.4, and shall be distributed pursuant to Section 5.5; provided, that,
in no event shall the Optional Purchase Amount so deposited, when added to the
amounts on deposit (or required to be deposited) in the Collection Account on
such date and available for distribution to Noteholders on the related
Distribution Date, be less than the amount required to pay all accrued and
unpaid interest on the Notes and the Outstanding Amount of the Notes, after
giving effect to the Servicer Payment.
(b) Upon any sale of the assets of the Issuer pursuant to
Article V of the Indenture, the Servicer shall instruct the Indenture Trustee in
writing to deposit the proceeds from such sale after all payments and reserves
therefrom (including the expenses of such sale) have been made (the "Sale
Proceeds") in the Collection Account. On the Distribution Date on which the Sale
Proceeds are deposited in the Collection Account (or, if such proceeds are not
so deposited on a Distribution Date, on the Distribution Date immediately
following such deposit), the Servicer shall instruct the Indenture Trustee in
writing to make, and the Indenture Trustee shall make, the following deposits
and distributions (after the application on such Distribution Date of the
Available Amount pursuant to Section 5.5) from the Sale Proceeds and any funds
remaining on deposit in the Reserve Account (including the proceeds of any sale
of investments therein):
(i) to the Note Distribution Account, (A) any
portion of the Class A Noteholders' Interest Distributable
Amount not otherwise deposited into the Note Distribution
Account on such Distribution Date and (B) the Outstanding
Amount of the Class A Notes (after giving effect to the
reduction in the Outstanding Amount of the Class A Notes
resulting from the deposits made in the Note Distribution
Account on such Distribution Date) (for distribution to the
Class A Noteholders pro rata based on their respective unpaid
principal amounts);
(ii) to the Note Distribution Account, (A) any
portion of the Class B Noteholders' Interest Distributable
Amount not otherwise deposited into the Note Distribution
Account on such Distribution Date and (B) the Outstanding
Amount of the Class B Notes (after giving effect to the
reduction of the Outstanding Amount of the Class B Notes
resulting from the deposits made in the Note Distribution
Account on such Distribution Date);
(iii) to the Note Distribution Account, (A) any
portion of the Class C Noteholders' Interest Distributable
Amount not otherwise deposited into the Note Distribution
Account on such Distribution Date and (B) the Outstanding
Amount of the Class C Notes resulting from the deposits made
in the Note Distribution Account on such Distribution Date);
(iv) to the Servicer, any amounts payable to the
Servicer pursuant to Section 7.4(c) or 7.8; and
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(v) to the CITSF Administrator any amounts payable
to the CITSF Administrator pursuant to Section 21 of the
CITSF Administration Agreement.
Any Sale Proceeds remaining after the deposits described above
shall be paid to the Certificateholders in accordance with their respective
Certificate Interests.
(c) Notice of any termination of the Issuer shall be given by
the Servicer to the Sellers, the Owner Trustee, the Indenture Trustee and the
Rating Agencies as soon as practicable after the Servicer has received notice
thereof. The Owner Trustee and the Indenture Trustee shall give written notice
of termination to each Noteholder and Certificateholder of record, as
applicable.
(d) Following the satisfaction and discharge of the Indenture
and the payment in full of the principal of and interest on the Notes, the
Certificateholders shall succeed to the rights of the Noteholders hereunder and
the Owner Trustee shall succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
(e) After the payment to the Indenture Trustee, the Owner
Trustee, the Noteholders and the Servicer of all amounts required to be paid
under this Agreement, the Indenture and the Trust Agreement, any amounts on
deposit in the Reserve Account, the Paid-Ahead Account (except as provided in
Section 9.1(a) or (b)) or the Collection Account shall be paid to the
Certificateholders in accordance with their respective Certificate Interests
and any other assets remaining in the Owner Trust Estate shall be distributed
to the Sellers in accordance with their respective Depositor Allocation
Percentages.
(f) Promptly after any repurchase of a Receivable by a Seller
pursuant to Section 3.2 hereof, purchase of a Receivable by the Servicer
pursuant to Section 4.6 hereof or purchase of a portion of the Owner Trust
Estate by the Servicer pursuant to Section 9.1(a) hereof, the Owner Trustee, the
Issuer and the Indenture Trustee shall execute such documents as are presented
to it by such Seller or the Servicer and are reasonably necessary to convey such
Repurchased Receivable to such Seller or the Servicer (and, in the case of
Section 9.1, to convey to the Servicer such portion of the Owner Trust Estate),
and transfer all right, title and interest in and to such Repurchased Receivable
and the Receivables Files related thereto (and in the case of Section 9.1, such
portion of the Owner Trust Estate) (including any Paid-Ahead Amounts and any
other payments in respect of such Receivable or the related Financed Boat
received after effective date of such purchase or repurchase.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment. This Agreement may be amended by the
Sellers, the Servicer and the Issuer, with the prior consent of the Indenture
Trustee and the Owner Trustee and prior notice to the Rating Agencies but
without prior notice to or the consent of any of the Holders, (i) to cure any
ambiguity, to correct or supplement any provisions in this Agreement which may
be inconsistent with any other provisions herein, to evidence a succession to
the Servicer or a Seller pursuant to this Agreement or to add any other
provisions with respect to matters or questions arising under this Agreement
that shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Officer's Certificate
and/or an Opinion of Counsel reasonably acceptable and delivered to the Owner
Trustee and the Indenture Trustee, materially adversely affect the interests of
the Issuer or any of the Holders, provided, further, that the Servicer shall
deliver written notice of such changes to each Rating Agency prior to the
execution of any such amendment, or (ii) to effect a transfer or assignment in
compliance with Section 10.6(a) of this Agreement. Notwithstanding the
foregoing, no amendment modifying the provisions of Section 5.5 shall become
effective without satisfaction of the Rating Agency Condition.
This Agreement may also be amended from time to time by the
Sellers, the Servicer, the Issuer, the Owner Trustee and the Indenture Trustee,
with the consent of the Noteholders representing at least a majority of the
Outstanding Amount of the Notes and the Certificate Interest of the
Certificates, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Noteholders or the Certificateholders (including
effecting a transfer or assignment in compliance with Section 10.6(a) of this
Agreement); provided, however, that no such amendment, except with the consent
of Noteholders representing 100% of the Outstanding Amount or
Certificateholders representing 100% of the Certificate Balance then
outstanding, as applicable, shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
the Receivables, or distributions that shall be required to be made for the
benefit of any Certificateholder or Noteholder, or (b) reduce the aforesaid
percentage of the Certificate Interest of the Certificates or the Outstanding
Amount of the Notes required to consent to any such amendment.
Promptly after the execution of any amendment or consent
referred to in this Section 10.1, the Owner Trustee shall furnish a copy of such
amendment or consent to the Indenture Trustee and each Certificateholder and to
the Rating Agencies.
It shall not be necessary for the consent of the
Indenture Trustee, the Certificateholders or the Noteholders
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pursuant to this Section 10.1 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders or Noteholders
shall be subject to such reasonable requirements as the Indenture Trustee or the
Owner Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Indenture Trustee and the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Indenture Trustee and the Owner
Trustee shall not be obligated to enter into any such amendment which affects
the Indenture Trustee's and the Owner Trustee's own rights, duties or immunities
under this Agreement.
Satisfaction of the Rating Agency Condition is required prior
to the execution of any amendment to this Agreement, other than an amendment
permitted pursuant to clause (i) of the first paragraph of this Section 10.1.
The Issuer hereby agrees not to enter into an indenture or
supplemental indenture for the purpose of amending the Indenture without the
prior written consent of the CITSF Administrator. The Sellers hereby agree not
to amend the Trust Agreement without the prior written consent of the CITSF
Administrator.
SECTION 10.2. Protection of Title to Owner Trust Estate.
(a) After the Closing Date, the Servicer, pursuant to the
power-of-attorney granted by the Sellers pursuant to Section 10.11, shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the interests of the
Issuer and the Indenture Trustee in the related Receivables and in the proceeds
thereof. The Servicer shall deliver (or cause to be delivered) to the Owner
Trustee and the Indenture Trustee, with copies to the Sellers, file-stamped
copies of, or filing receipts for, any document filed as provided above, as soon
as available following such filing.
(b) Neither of the Sellers shall change its name, identity, or
corporate structure in any manner that would, could, or might make any financing
statement or continuation statement filed by it or by the Servicer in accordance
with paragraph (a) above seriously misleading within the meaning of Section
9-402(7) (or any comparable section) of the Relevant UCC, unless it shall have
given the Owner Trustee, the Indenture Trustee and the Servicer at least 30 days
prior written notice thereof.
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(c) Each Seller shall give the Owner Trustee, the Indenture
Trustee and the Servicer at least 60 days prior written notice of any relocation
of its principal executive office if, as a result of such relocation, the
applicable provisions of the Relevant UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement. The Servicer shall at all times maintain each office
from which it shall service Receivables, and its principal executive office,
within the United States of America.
(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including archives) that shall
refer to a Receivable indicate clearly, by numerical code or otherwise, that
such Receivable is owned by the Issuer and has been pledged to the Indenture
Trustee. Indication of the Issuer's and Indenture Trustee's interest in a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, the Receivable shall have been paid in full, repurchased or
assigned pursuant hereto.
(f) If at any time either of the Sellers or the Servicer shall
propose to sell, grant a security interest in, or otherwise transfer any
interest in a new or used marine product receivable to any prospective
purchaser, creditor, or other transferee, such Seller or the Servicer, as the
case may be, shall give to such prospective purchaser, creditor, or other
transferee computer tapes, records, or print-outs (including any restored from
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit either Seller, the Indenture
Trustee and the Owner Trustee and their respective agents upon reasonable notice
at any time during normal business hours which does not unreasonably interfere
with the Servicer's normal operations or customer or employee relations to
inspect, audit, and make copies of and abstracts from the Servicer's records
regarding the Receivables.
(h) Upon request, the Servicer shall furnish to the
Owner Trustee or the Indenture Trustee, within five Business
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Days, a list of all Receivables by contract number and name of Obligor then held
by the Issuer, together with a reconciliation of such list to the Schedules of
Receivables and to each of the Servicer Certificates indicating removal of
Receivables from the Owner Trust Estate.
(i) The Sellers shall deliver to the Owner Trustee and the
Indenture Trustee upon the execution and delivery of this Agreement, an Opinion
of Counsel stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Issuer and the
Indenture Trustee in the Receivables, and reciting the details of such filings.
(j) The Servicer shall deliver to the Owner Trustee and
Indenture Trustee on or before March 31 of each year, commencing with March 31,
1998, an Opinion of Counsel, dated as of such date, either (a) stating that, in
the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Issuer and the Indenture Trustee in the Receivables,
and reciting the details of such filings or referring to prior opinions of
Counsel in which such details are given, or (b) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interest. Notwithstanding the provisions of Section 10.4, such Opinion of
Counsel may be sent by regular non-certified mail, and such mailed opinion shall
be deemed delivered when so mailed.
(k) The Sellers shall, to the extent required by applicable
law, cause the Notes to be registered with the Securities and Exchange
Commission pursuant to Section 12(b) or Section 12(g) of the Exchange Act
within the time periods specified in such sections.
(l) For the purpose of facilitating the execution of this
Agreement and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
(m) Before amending the Servicing Agreement or consenting to
the assignment of the obligations of any of the parties thereto, the Sellers
shall provide the Rating Agencies with written notice thereof.
(n) The Sellers shall cause an Assignment to be filed with
the Secretary of Transportation with respect to each Financed Boat that is a
U.S. Documentable Boat and is related to a Designated Receivable, in each case
no later than 120 days after the Closing Date, evidencing the ultimate
assignment of the related Preferred Mortgage from the related Originating
Entity to the
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Trust. On such 120th day, the Sellers shall deliver to the Indenture Trustee
an Opinion of Counsel reasonably acceptable to the Indenture Trustee (with
copies to the Rating Agencies) to the effect that, assuming the proper
recordation filing of such Assignments, such Assignments are effective in
transferring to the Trust a perfected security interest in the related
Financed Boats.
If following such 120-day period the Trust does not
have a perfected security interest in any Financed Boat that is both a
U.S. Documentable Boat and related to a Designated Receivable, such
failure materially and adversely affects the interest of the Issuer in
such Receivable and such failure continues for 30 days after the related
Seller discovers or receives written notice of such failure, such Seller
shall repurchase such Receivable as of the last day of the Collection
Period in which such 30-day period shall have lapsed. In consideration
of the repurchase of a Receivable, any such Seller shall remit the
Repurchase Amount of such Receivable on the Deposit Date next succeeding
such last day in the manner specified in Section 5.4. The sole remedy of
the Issuer, the Indenture Trustee or the Holders with respect to any
breach of this Section 10.2(m) shall be to require such Seller to
repurchase the related Receivables. For administrative convenience, if
Chase is obligated pursuant to this Section 10.2(m) to repurchase a
Chase Receivable from the Issuer, Chase USA, at its option, may satisfy
Chase's obligations by repurchasing such Receivable upon the same terms
as if Chase had repurchased such Receivable.
SECTION 10.3. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
reference to its conflict of laws provisions, and the obligations, rights,
remedies of the parties hereunder shall be determined in accordance with such
laws.
SECTION 10.4. Notices. All demands, notices, and
communications under this Agreement shall be in writing, personally delivered or
mailed by certified mail, return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of (i) Chase USA, to Chase
Manhattan Bank USA, National Association, 802 Delaware Avenue, Wilmington,
Delaware 19801, Attention: Controller and (ii) in the case of Chase, The Chase
Manhattan Bank, c/o Chase Financial Corporation, 250 West Huron, Cleveland, Ohio
44113, Attention: Chief Financial Officer (cc: General Counsel), or at such
other address as shall be designated by either of the Sellers in a written
notice to the Indenture Trustee, (b) in the case of the Servicer, The CIT
Group/Sales Financing, Inc., 650 CIT Drive, Livingston, New Jersey 07039, Attn:
President, with a copy to: The CIT Group/Sales Financing, Inc., 715 South
Metropolitan Avenue, Suite 150, Oklahoma City, Oklahoma 73108-2090, Attn: Senior
Vice President, or at such other address as shall be designated by the Servicer
in a written notice to the Indenture Trustee, (c) in the case of the Indenture
Trustee, at Sixth Street and Marquette Avenue, Minneapolis, Minnesota
55479-0070, Attention: Corporate Trust Office, and, (d) in the case of the
Issuer and the Owner Trustee, at c/o Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration. Any notice required or permitted to be mailed to
a Holder shall be given by first class mail, postage prepaid, at the address of
record of such Holder. Any notice to a Holder so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Holder shall receive such notice.
SECTION 10.5. Severability of Provisions. If any one or more
of the covenants, agreements, provisions, or terms of this Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or of
the Certificates or of the Notes or the rights of the Holders thereof.
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SECTION 10.6. Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 6.3, 7.3, 7.5, 7.6 and
8.2 and subject to the terms of the Servicing Agreement, neither of the Sellers
nor the Servicer may assign all, or a portion of, its rights, obligations and
duties under this Agreement unless such transfer or assignment satisfies the
Rating Agency Condition. In the event of a transfer or assignment pursuant to
this Section 10.6, the Rating Agencies shall be provided with notice of such
transfer or assignment.
SECTION 10.7. Certificates and Notes Nonassessable and Fully
Paid. The interests represented by the Certificates and Notes shall be
nonassessable for any losses or expenses of the Issuer or for any reason
whatsoever, and, upon authentication thereof by the Indenture Trustee and the
Owner Trustee pursuant to the Trust Agreement and the Indenture, respectively,
each Certificate and Note shall be deemed fully paid.
SECTION 10.8. Third-Party Beneficiaries. This Agreement inures
to the benefit of and is binding upon the parties hereto, and their respective
successors and permitted assigns. The Administrators, the Owner Trustee,
individually and on behalf of the Certificateholders, and the Indenture Trustee,
individually and on behalf of the Noteholders are third-party beneficiaries to
this Agreement and are entitled to the rights and benefits hereunder and may
enforce the provisions hereof as it were a party hereto. Except as otherwise
provided in this Agreement, no other person will have any right or obligation
hereunder.
SECTION 10.9. Assignment to Indenture Trustee. Each Seller
hereby acknowledges and consents to any mortgage, pledge, assignment and grant
of a security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and interest of
the Issuer in, to and under the Receivables and the other property constituting
the Owner Trust Estate and/or the assignment of any or all of the Issuer's
rights and obligations hereunder to the Indenture Trustee.
SECTION 10.10. Limitation of Liability of Owner Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been countersigned by Wilmington Trust Company not
in its individual capacity but solely in its capacity as Owner Trustee of the
Issuer, and in no event shall Wilmington Trust Company in its individual
capacity or, except as expressly provided in the Trust Agreement, as beneficial
owner of the Issuer, have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all purposes
of this Agreement, in the performance of its duties or obligations hereunder or
in the performance of
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any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been acknowledged and accepted by Norwest Bank Minnesota, National
Association not in its individual capacity but solely as Indenture Trustee, and
in no event shall Norwest Bank Minnesota, National Association have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
SECTION 10.11. Power-of-Attorney. Each of the Sellers do
hereby make, constitute and appoint the CITSF, as Servicer hereunder, and any
successor Servicer hereunder, as its attorney-in-fact to execute on behalf of
such Seller any of the financing statements and continuation statements required
to be executed by the Servicer pursuant to Section 10.2 or other documents or
financing statements required to be executed or filed in order to realize on a
Financed Boat or to comply with the Servicer's obligations under Section 4.4
hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers as of the day and year first above
written.
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION,
as Seller
By:
----------------------------
Name: Keith Schuck
Title: Vice President
THE CHASE MANHATTAN BANK,
as Seller
By:
----------------------------
Name: Robert Krug
Title: Vice President
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer
By:
----------------------------
Name:
Title:
CHASE MANHATTAN MARINE OWNER TRUST,
1997-A,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee on behalf
of the Issuer
By:
----------------------------
Name:
Title:
<PAGE>
Acknowledged and Accepted:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
not in its individual capacity,
but solely in its capacity
as Indenture Trustee
By:
--------------------------------
Name: Marianna Stershic
Title: Assistant Vice President
<PAGE>
SCHEDULE A-1
LIST OF CHASE USA RECEIVABLES
Delivered to the Owner Trustee and the Indenture Trustee
on the Closing Date.
<PAGE>
SCHEDULE A-2
LIST OF CHASE RECEIVABLES
Delivered to the Owner Trustee and the Indenture Trustee
on the Closing Date.
<PAGE>
SCHEDULE B
ALLOCATION OF NOTES
Chase Chase USA
Class A-1 $20,649,200.00 $21,150,800.00
Class A-2 $27,466,400.00 $28,133,600.00
Class A-3 $24,996,400.00 $25,603,600.00
Class A-4 $18,426,200.00 $18,873,800.00
Class A-5 $14,474,200.00 $14,825,800.00
Class A-6 $11,707,800.00 $11,992,200.00
Class B $ 5,261,100.00 $ 5,388,900.00
Class C $ 8,552,142.45 $ 8,759,886.80
ALLOCATION OF CERTIFICATES
Chase Chase USA
Certificates 49.40% 50.60%
<PAGE>
SCHEDULE C
ALLOCATION OF FEES AND EXPENSES TO SERVICER
<PAGE>
EXHIBIT A
THE CIT GROUP/SALES FINANCING, INC.
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he/she is the [title] of The
CIT Group/Sales Financing, Inc., a corporation organized under the laws of
Delaware ("CITSF"), and that as such he/she is duly authorized to execute and
deliver this certificate on behalf of CITSF pursuant to Section 4.8 of the Sale
and Servicing Agreement, dated as of October 1, 1997 (as amended, supplemented
or otherwise modified and in effect from time to time, the "Agreement"), among
CITSF as Servicer, Chase Manhattan Bank USA National Association, as a Seller,
The Chase Manhattan Bank, as a Seller, and the Chase Manhattan Marine Owner
Trust 1997-A, as Issuer (all capitalized terms used but not defined herein shall
have the meanings set forth in the Agreement), and further certifies that:
1. The Monthly Report for the period from __________
to __________ attached to this certificate is complete and
accurate in accordance with the requirements of Section 4.8 of
the Agreement; and
2. As of the date hereof, no Event of Servicing Termination or
event that with notice or lapse of time or both would become an Event of
Servicing Termination has occurred. [If an Event of Servicing Termination has
occurred, such Event of Servicing Termination shall be specified and its current
status reported.]
IN WITNESS WHEREOF, we have affixed hereunto our signatures
this ___ day of ________________, 199_.
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer
By:
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
[FORM OF MONTHLY REPORT]
<PAGE>
EXHIBIT C
FORM OF AMENDED AND RESTATED
SERVICING AGREEMENT
<PAGE>
- --------------------------------------------------------------------------------
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
Class A-1 [____]% Asset Backed Notes
Class A-2 [____]% Asset Backed Notes
Class A-3 [____]% Asset Backed Notes
Class A-4 [____]% Asset Backed Notes
Class A-5 [_____]% Asset Backed Notes
Class A-6 [_____]% Asset Backed Notes
Class B [____]% Asset Backed Notes
Class C [____]% Asset Backed Notes
INDENTURE
Dated as of October 1, 1997
Norwest Bank Minnesota, National Association
as Indenture Trustee
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.................................................. 2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act............ 2
SECTION 1.3 Usage of Terms............................................... 3
SECTION 1.4 Calculations of Interest..................................... 3
ARTICLE II
THE NOTES
SECTION 2.1 Form......................................................... 3
SECTION 2.2 Execution, Authentication and Delivery....................... 4
SECTION 2.3 Temporary Notes.............................................. 4
SECTION 2.4 Registration of Transfer and Exchange........................ 5
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes................... 7
SECTION 2.6 Persons Deemed Owner......................................... 8
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest........ 8
SECTION 2.8 Cancellation................................................. 9
SECTION 2.9 Release of Collateral........................................ 10
SECTION 2.10 Book-Entry Notes............................................. 10
SECTION 2.11 Notices to Clearing Agency................................... 11
SECTION 2.12 Definitive Notes............................................. 11
SECTION 2.13 Authenticating Agent......................................... 12
SECTION 2.14 Appointment of Paying Agent.................................. 13
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest............................ 15
SECTION 3.2 Maintenance of Office or Agency.............................. 15
SECTION 3.3 Money for Payments To Be Held in Trust....................... 15
SECTION 3.4 Existence.................................................... 16
SECTION 3.5 Protection of Trust Estate................................... 17
SECTION 3.6 Opinions as to Trust Estate.................................. 17
SECTION 3.7 Performance of Obligations; Servicing of Receivables......... 18
SECTION 3.8 Negative Covenants........................................... 19
SECTION 3.9 Annual Statement as to Compliance............................ 20
SECTION 3.10 The Issuer May Consolidate, Etc. Only on Certain Terms....... 20
SECTION 3.11 Successor or Transferee...................................... 22
SECTION 3.12 No Other Business............................................ 22
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SECTION 3.13 No Borrowing................................................. 22
SECTION 3.14 Servicer's Obligations....................................... 22
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities............ 22
SECTION 3.16 Capital Expenditures......................................... 23
SECTION 3.17 Restricted Payments.......................................... 23
SECTION 3.18 Notice of Events of Default.................................. 23
SECTION 3.19 Further Instruments and Acts................................. 23
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture...................... 23
SECTION 4.2 Application of Trust Money................................... 25
SECTION 4.3 Repayment of Moneys Held by Paying Agent..................... 25
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default............................................ 25
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment........... 26
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement
by the Indenture Trustee................................... 26
SECTION 5.4 Remedies; Priorities......................................... 29
SECTION 5.5 Optional Preservation of the Receivables..................... 30
SECTION 5.6 Limitation of Suits.......................................... 30
SECTION 5.7 Unconditional Rights of Noteholders to Receive
Principal and Interest..................................... 31
SECTION 5.8 Restoration of Rights and Remedies........................... 31
SECTION 5.9 Rights and Remedies Cumulative............................... 31
SECTION 5.10 Delay or Omission Not a Waiver............................... 32
SECTION 5.11 Controlling Noteholders...................................... 32
SECTION 5.12 Waiver of Past Defaults...................................... 32
SECTION 5.13 Undertaking for Costs........................................ 33
SECTION 5.14 Waiver of Stay or Extension Laws............................. 33
SECTION 5.15 Action on Notes.............................................. 34
SECTION 5.16 Performance and Enforcement of Certain Obligations........... 34
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of the Indenture Trustee.............................. 34
SECTION 6.2 Rights of the Indenture Trustee.............................. 36
SECTION 6.3 Individual Rights of the Indenture Trustee................... 37
SECTION 6.4 The Indenture Trustee's Disclaimer........................... 38
SECTION 6.5 Notice of Defaults........................................... 38
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SECTION 6.6 Reports by the Indenture Trustee to Holders.................. 38
SECTION 6.7 Compensation and Indemnity................................... 38
SECTION 6.8 Replacement of the Indenture Trustee......................... 39
SECTION 6.9 Successor Indenture Trustee by Merger........................ 40
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.......................................... 40
SECTION 6.11 Eligibility; Disqualification................................ 42
SECTION 6.12 Preferential Collection of Claims Against the Issuer......... 43
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 The Issuer To Furnish the Indenture Trustee Names and
Addresses of the Noteholders............................... 44
SECTION 7.2 Preservation of Information; Communications to the
Noteholders................................................ 44
SECTION 7.3 Reports by the Issuer........................................ 44
SECTION 7.4 Reports by the Indenture Trustee............................. 44
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money.......................................... 45
SECTION 8.2 Accounts..................................................... 45
SECTION 8.3 General Provisions Regarding Accounts........................ 47
SECTION 8.4 Release of Trust Estate...................................... 48
SECTION 8.5 Opinion of Counsel........................................... 48
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders....... 49
SECTION 9.2 Supplemental Indentures with Consent of the Noteholders...... 50
SECTION 9.3 Effect of Supplemental Indenture............................. 52
SECTION 9.4 Conformity with Trust Indenture Act.......................... 52
SECTION 9.5 Reference in Notes to Supplemental Indentures................ 52
SECTION 9.6 Execution of Supplemental Indentures......................... 52
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption.................................................. 53
SECTION 10.2 Form of Redemption Notice................................... 53
SECTION 10.3 Notes Payable on Redemption Date............................ 53
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<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc.................... 54
SECTION 11.2 Form of Documents Delivered to the Indenture Trustee......... 56
SECTION 11.3 Actions of Noteholders....................................... 57
SECTION 11.4 Notices, etc., to the Indenture Trustee, the Issuer, and
Rating Agencies............................................ 57
SECTION 11.5 Notices to Noteholders; Waiver............................... 58
SECTION 11.6 Alternate Payment and Notice Provisions...................... 58
SECTION 11.7 Conflict with Trust Indenture Act............................ 59
SECTION 11.8 Effect of Headings and Table of Contents..................... 59
SECTION 11.9 Successors and Assigns....................................... 59
SECTION 11.10 Separability................................................. 59
SECTION 11.11 Benefits of Indenture........................................ 59
SECTION 11.12 Legal Holidays............................................... 59
SECTION 11.13 GOVERNING LAW................................................ 60
SECTION 11.14 Counterparts................................................. 60
SECTION 11.15 Recording of Indenture....................................... 60
SECTION 11.16 Trust Obligation............................................. 60
SECTION 11.17 No Petition.................................................. 60
SECTION 11.18 Inspection................................................... 61
Exhibit A - Schedule of Receivables
Exhibit B - Form of Class A Note
Exhibit C - Form of Class B Note
Exhibit D - Form of Class C Note
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<PAGE>
CROSS REFERENCE TABLE(1)
TIA Section Indenture Section
310 (a)(1)....................................................... 6.11
(a)(2)....................................................... 6.11
(a)(3)....................................................... 6.10
(a)(4)....................................................... N.A.(2)
N.A.(2)
(a)(5)....................................................... 6.11
(b) ....................................................... 6.8;
6.11
(c) ....................................................... N.A.
311 (a) ....................................................... 6.12
(b) ....................................................... 6.12
(c) ....................................................... N.A.
312 (a) ....................................................... 7.1;
....................................................... 7.2
(b) ....................................................... 7.2
(c) ....................................................... 7.2
313 (a) ....................................................... 7.4
(b)(1)....................................................... 7.4
(b)(2)....................................................... 7.4
(c) ....................................................... 7.4
(d) ....................................................... 7.3
314 (a) ....................................................... 7.3
(b) ....................................................... 3.6
(c)(1)....................................................... 11.1
(c)(2)....................................................... 11.1
(c)(3)....................................................... 11.1
(d) ....................................................... 11.1
(e) ....................................................... 11.1
(f) ....................................................... N.A.
315 (a) ....................................................... 6.1
(b) ....................................................... 6.5;
....................................................... 11.5
(c) ....................................................... 6.1
(d) ....................................................... 6.1
(e) ....................................................... 5.13
316 (a) (last sentence).......................................... 1.1
(a)(1)(A).................................................... 5.11
(a)(1)(B).................................................... 5.12
(a)(2)....................................................... N.A.
(b) ....................................................... 5.7
(c) ....................................................... N.A.
317 (a)(1)....................................................... 5.3
(a)(2)....................................................... 5.3
(b) ....................................................... 3.3
- --------
(1) Note: This Cross Reference Table shall not, for any purpose,
be deemed to be part of this Indenture.
v
<PAGE>
CROSS REFERENCE TABLE(3)
TIA Section Indenture Section
318 (a) ....................................................... 11.7
- --------
(2) N.A. means Not Applicable.
vi
<PAGE>
INDENTURE dated as of October 1, 1997, between CHASE MANHATTAN MARINE
OWNER TRUST 1997-A, a Delaware business trust (the "Issuer"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association, solely as
trustee and not in its individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's Class A-1 [____]%
Asset Backed Notes (the "Class A-1 Notes"), Class A-2 [____]% Asset Backed Notes
(the "Class A-2 Notes"), Class A-3 [____]% Asset Backed Notes (the "Class A-3
Notes"), Class A-4 [____]% Asset Backed Notes (the "Class A-4 Notes"), Class A-5
[____]% Asset Backed Notes (the "Class A-5 Notes"), Class A-6 [____]% Asset
Backed Notes (the "Class A-6 Notes"), Class B [____]% Asset Backed Notes (the
"Class B Notes") and Class C [____]% Asset Backed Notes (the "Class C Notes"
and, together with the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A- 6 Notes and the
Class B Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date,
as Indenture Trustee for the benefit of the Noteholders and (only to the extent
expressly provided herein) the Certificateholders, all of the Issuer's right,
title and interest in, to and under (a) the Receivables listed in Schedule A
hereto, all proceeds thereof and (i) with respect to the Simple Interest
Receivables, all amounts and monies received thereon after the Cutoff Date and
(ii) with respect to the Precomputed Receivables, all amounts and monies due
thereon on and after the Cutoff Date (including in the case of each Seller
proceeds of the repurchase by such Seller of the related Receivables pursuant to
Section 3.2 or 10.2(n) of the Sale and Servicing Agreement or the purchase of
Receivables by the Servicer pursuant to Section 4.6 or 9.1 of the Sale and
Servicing Agreement); (b) the security interests in the Financed Boats granted
by the Obligors pursuant to the Receivables and in any repossessed Financed
Boats; (c) Net Liquidation Proceeds and in any proceeds of any extended
warranties, theft and physical damage, credit life or credit disability policies
relating to the Financed Boats or the Obligors; (d) any proceeds from Dealer
repurchase obligations relating to the Receivables; (e) funds on deposit from
time to time in the Trust Accounts (including without limitation the Reserve
Account and the Paid-Ahead Account), and in all investments and proceeds thereof
(other than all investment income on funds on deposit in the Trust Accounts);
(f) the Sale and Servicing Agreement; and (g) all present and future claims,
demands, causes and choses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion, voluntary or involuntary, into cash or other liquid property,
all cash
- --------------
(3) Note: This Cross Reference Table shall not, for any purpose,
be deemed to be part of this Indenture.
<PAGE>
proceeds, accounts, accounts receivable, notes, drafts, contract rights,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction except as set
forth herein, and to secure compliance with the provisions of this Indenture,
all as provided in this Indenture.
The Indenture Trustee, as trustee on behalf of the Holders of the
Notes, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the Holders of the Notes and (only to the extent expressly provided
herein) Holders of the Certificates may be adequately and effectively protected.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. Capitalized terms are used in this Indenture
as defined in Section 1.1 to the Sale and Servicing Agreement dated as of
October 1, 1997, among the Issuer and CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION and THE CHASE MANHATTAN BANK, as Sellers and THE CIT GROUP/SALES
FINANCING, INC., as Servicer (the "Sale and Servicing Agreement").
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
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<PAGE>
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.3 Usage of Terms. With respect to all terms in this
Indenture, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Indenture; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation." All references herein to Articles,
Sections, Subsections and Exhibits are references to Articles, Sections,
Subsections and Exhibits contained in or attached to this Indenture unless
otherwise specified, and each such Exhibit is part of the terms of this
Indenture.
SECTION 1.4 Calculations of Interest. All calculations of interest made
hereunder shall be made on the basis of a year of 360 days of twelve 30-day
months.
ARTICLE II
THE NOTES
SECTION 2.1 Form. The Class A Notes of each class, the Class B Notes
and the Class C Notes, in each case, together with the Indenture Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibits B, C and D, respectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined to be appropriate by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note. Each Note shall be dated the date of its
authentication. The Notes shall be issuable as registered Notes in the minimum
denomination of $1,000 and in integral multiples thereof (except, if applicable,
for one Note representing a residual portion of each class which may be issued
in a denomination other than an integral multiple of $1,000).
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind
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<PAGE>
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the date of authentication and delivery of such Notes
or did not hold such offices at such date. No Note shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Note a certificate of authentication substantially in the
form provided for herein executed by the Indenture Trustee by the manual
signature of one of its authorized signatories, and such certificate upon any
Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder. The terms of the Notes set
forth in Exhibits B, C and D are part of the terms of this Indenture.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers or by any
other authorized signatory of the Issuer. The signature of any such Authorized
Officer on the Notes may be manual or facsimile.
The Indenture Trustee shall, upon written order of the Sellers,
authenticate and deliver Class A-1 Notes for original issue in an aggregate
principal amount of $41,800,000.00, Class A-2 Notes for original issue in an
aggregate principal amount of $55,600,000.00, Class A-3 Notes for original issue
in the aggregate principal amount of $50,600,000.00, Class A-4 Notes for
original issue in the aggregate principal amount of $37,300,000.00, Class A-5
Notes for original issue in the aggregate principal amount of $29,300,000.00,
Class A-6 Notes for original issue in the aggregate principal amount of
$23,700,000.00, Class B Notes for original issue in the aggregate principal
amount of $10,650,000.00 and Class C Notes for original issue in the aggregate
principal amount of $17,312,029.25. The respective aggregate principal amount of
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class A-5
Notes, Class A-6 Notes, Class B Notes and Class C Notes outstanding at any time
may not exceed such amounts, except as provided in Section 2.5.
SECTION 2.3 Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and at the direction of the Issuer, the Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the Definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
4
<PAGE>
If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
SECTION 2.4 Registration of Transfer and Exchange. The Issuer shall
cause to be kept a register (the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, the Note Registrar shall
provide for the registration of the Notes and the registration of transfers of
the Notes. Chase shall initially be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. In the event that,
subsequent to the date of issuance of the Notes, Chase notifies the Indenture
Trustee that it is unable to act as Note Registrar, the Indenture Trustee shall
act, or the Indenture Trustee shall, with the consent of the Issuer, appoint
another bank or trust company, having an office or agency located in The City of
New York and which agrees to act in accordance with the provisions of this
Indenture applicable to it, to act, as successor Note Registrar under this
Indenture.
The Indenture Trustee may revoke such appointment and remove Chase as
Note Registrar if the Indenture Trustee determines in its sole discretion that
Chase failed to perform its obligations under this Indenture in any material
respect. Chase shall be permitted to resign as Note Registrar upon 30 days'
written notice to the Indenture Trustee, the Sellers and the Servicer; provided,
however, that such resignation shall not be effective and Chase shall continue
to perform its duties as Note Registrar until the Indenture Trustee has
appointed a successor Note Registrar with the consent of the Issuer.
If a Person other than the Indenture Trustee is appointed by the Issuer
as the Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to
conclusively rely upon a certificate executed on behalf of the Note Registrar by
an Executive Officer thereof as to the names and addresses of the Noteholders
and the principal amounts and number of such Notes.
An institution succeeding to the corporate agency business of the Note
Registrar shall continue to be the Note Registrar without
5
<PAGE>
the execution or filing of any paper or any further act on the part of the
Indenture Trustee or such Note Registrar.
The Note Registrar shall maintain in The City of New York an office or
offices or agency or agencies where Notes may be surrendered for registration of
transfer or exchange. The Note Registrar initially designates its corporate
trust office located at 450 West 33rd Street, New York, New York 10001-2697 as
its office for such purposes. The Note Registrar shall give prompt written
notice to the Indenture Trustee, the Sellers, the Servicer and to the
Noteholders of any change in the location of such office or agency.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(1) of the Uniform Commercial Code are met, the
Issuer shall execute, the Indenture Trustee shall authenticate and (if the Note
Registrar is different than the Indenture Trustee, then the Note Registrar
shall) deliver to the Noteholder, in the name of the designated transferee or
transferees, one or more new Notes, in any authorized denominations, of the same
class and a like aggregate principal amount.
At the option of the Holder, the Notes may be exchanged for other Notes
in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, if the requirements
of Section 8-401(1) of the UCC are met, the Issuer shall execute and the
Indenture Trustee shall authenticate and (if the Note Registrar is different
than the Indenture Trustee, then the Note Registrar shall) deliver to the
Noteholder, the Notes which the Noteholder making the exchange is entitled to
receive.
All Notes issued upon any registration of transfer or exchange of the
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the City of New York or the city
in which the Corporate Trust Office is located, or by a member firm of a
national securities exchange, and (ii) accompanied by such other documents as
the Indenture Trustee may require. Each Note surrendered for registration of
transfer or exchange shall be cancelled by the Note Registrar and disposed of
6
<PAGE>
by the Indenture Trustee or Note Registrar in accordance with its customary
practice.
No service charge shall be made to a Holder for any registration of
transfer or exchange of the Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.5 not involving any transfer.
The preceding provisions of this section notwithstanding, the Issuer
shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of the Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment in full with respect to
such Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Note Registrar, or the Note Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Note Registrar and the Indenture
Trustee such security or indemnity as may be required by them to hold the
Issuer, the Note Registrar and the Indenture Trustee harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the Indenture Trustee
that such Note has been acquired by a bona fide purchaser, and provided that the
requirements of Section 8-405 of the UCC are met, the Issuer shall execute and
the Indenture Trustee shall authenticate and (if the Note Registrar is different
from the Indenture Trustee, the Note Registrar shall) deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note of like class, tenor and denomination; provided that if any such destroyed,
lost or stolen Note, but not a mutilated Note, shall have become or within seven
days shall be due and payable, or shall have been called for redemption, instead
of issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen
Note when so due or payable or upon the Redemption Date without surrender
thereof. If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the Issuer,
the Note Registrar and the Indenture Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer, the Note Registrar or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that
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may be imposed in relation thereto and any other reasonable expenses (including
the fees and expenses of the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 2.5 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Note Registrar and any agent of the Issuer, the Indenture Trustee or the Note
Registrar may treat the Person in whose name any Note is registered (as of the
day of determination) as the owner of such Note for the purpose of receiving
payments of principal of and interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and neither the
Issuer, the Indenture Trustee or the Note Registrar nor any agent of the Issuer,
the Indenture Trustee or the Note Registrar shall be bound by notice to the
contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest at the following Interest Rates:
Note Interest Rate
Class A-1 _____%
Class A-2 _____%
Class A-3 _____%
Class A-4 _____%
Class A-5 _____%
Class A-6 _____%
Class B _____%
Class C _____%
and such interest shall be payable on each Distribution Date as specified
therein. Any installment of interest or principal, if any, payable on any Note
which is punctually paid or duly provided for by the Issuer on the applicable
Distribution Date shall be paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered on the preceding Record Date, by check
mailed first-class, postage prepaid, to such Person's address as it appears on
the Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to the Notes registered on
the Record Date in the name
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of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payment will be made by wire transfer in immediately available funds to
the account designated by such nominee, except for the final installment of
principal payable with respect to such Note on a Distribution Date or on a Note
Final Scheduled Distribution Date (and except for the Redemption Price for any
Note called for redemption pursuant to Section 10.1 which shall be payable as
provided below). The funds represented by any such checks returned undelivered
shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments no
later than 12 noon, New York City time, on each Distribution Date as provided in
the form of the Notes, set forth in Exhibits B, C and D. The outstanding
principal amount of the Notes, to the extent not previously paid, will be
payable on the Final Scheduled Distribution Date specified for such class in
the table below.
Note Final Scheduled
Distribution Date
Class A-1 Notes January 17, 2000
Class A-2 Notes March 15, 2002
Class A-3 Notes January 17, 2005
Class A-4 Notes April 16, 2007
Class A-5 Notes October 15, 2009
Class A-6 Notes April 16, 2012
Class B Notes August 15, 2013
Class C Notes October 16, 2017
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the date on which an Event
of Default shall have occurred and be continuing, if the Indenture Trustee or
the Holders of the Notes representing not less than a majority of the
Outstanding Amount of the Controlling Notes have declared the Notes to be
immediately due and payable in the manner provided in Section 5.2. All principal
payments on each class of Notes shall be made pro rata to the Noteholders of
such class entitled thereto. The Indenture Trustee shall notify the Person in
whose name a Note is registered at the close of business on the Record Date
preceding the Distribution Date on which the Issuer expects that the final
installment of principal of and interest on such Note will be paid. Such notice
shall be (i) transmitted by facsimile on such Record Date if Book-Entry Notes
are outstanding or (ii) mailed as provided in Section 10.2 not later than three
Business Days after such Record Date if Definitive Notes are outstanding and
shall specify that such final installment will be payable only upon presentation
and surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment.
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SECTION 2.8 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Note Registrar, be delivered to the Note Registrar and
shall be promptly cancelled by the Note Registrar. The Issuer may at any time
deliver to the Note Registrar for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Note Registrar. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Notes may be held or disposed of by the Note
Registrar in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct that they be destroyed or
returned to it; provided that such direction is timely and the Notes have not
been previously disposed of by the Note Registrar.
SECTION 2.9 Release of Collateral. Subject to Section 11.1, the
Indenture Trustee shall release property from the lien of this Indenture only
upon request of the Issuer accompanied by an Officer's Certificate, an Opinion
of Counsel and Independent Certificates in accordance with the TIA ss.ss.314(c)
and 314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates
to the effect that the TIA does not require any such Independent Certificates.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to The Depository Trust Company (the initial Clearing Agency) by,
or on behalf of, the Issuer. Such Notes shall initially be registered on the
Note Register in the name of Cede & Co., the nominee of the initial Clearing
Agency (except for a Class C Note registered in the name of Chase Securities
Inc. in an amount of $29.25) and no Note Owner will receive a Definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.12. Unless and until Definitive Notes have been issued to Note Owners
pursuant to Section 2.12:
(a) the provisions of this Section shall be in full force and effect;
(b) the Note Registrar, the Paying Agent and the Indenture Trustee
shall be entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the Notes and
the giving of instructions or directions hereunder) as the sole Holder of the
Notes, and shall have no obligation to the Note Owners;
(c) to the extent that the provisions of this Section conflict with any
other provisions of this Indenture, the provisions of this Section shall
control;
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(d) the rights of the Note Owners shall be exercised only through the
Clearing Agency (or to the extent the Note Owners are not Clearing Agency
Participants, through the Clearing Agency Participants through which such Note
Owners own Book-Entry Notes) and shall be limited to those established by law
and agreements among such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants, and all references in this Indenture to actions by
the Noteholders shall refer to actions taken by the Clearing Agency upon
instructions from the Clearing Agency Participants, and all references in this
Indenture to distributions, notices, reports and statements to the Noteholders
shall refer to distributions, notices, reports and statements to the Clearing
Agency, as registered holder of the Notes, as the case may be, for distribution
to the Note Owners in accordance with the procedures of the Clearing Agency.
Pursuant to the Note Depository Agreement, unless and until Definitive Notes are
issued pursuant to Section 2.12, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Notes to such Clearing
Agency Participants; and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of the Holders of the Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Clearing Agency
shall be deemed to represent such percentage only to the extent that it has
received instructions to such effect from the Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required percentage of
the beneficial interest in the Notes and has delivered such instructions to the
Indenture Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to the Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to the Holders of the Notes to the
Clearing Agency, and shall have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (a) the Sellers advise the Indenture
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Notes, and the
Sellers are unable to locate a qualified successor, (b) the Sellers at their
option advise the Indenture Trustee in writing that they elect to terminate the
book-entry system through the Clearing Agency, or (c) after the occurrence of an
Event of Default or an Event of Servicing Termination, the Note Owners
representing beneficial interests aggregating not less than a majority of the
Outstanding Amount of the Notes advise the Indenture Trustee and the Clearing
Agency through the Clearing Agency Participants in writing, and if the Clearing
Agency shall so notify the Indenture Trustee that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Note Owners, then the
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Clearing Agency shall notify all the Note Owners of the occurrence of any such
event and of the availability of Definitive Notes to the Note Owners requesting
the same. Upon surrender to the Note Registrar of the typewritten Note or Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
re-registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate and (if the Note Registrar is different than the Indenture
Trustee, then the Note Registrar shall) deliver the Definitive Notes in
accordance with the instructions of the Clearing Agency. None of the Issuer, the
Note Registrar or the Indenture Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of the Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes
as the Noteholders.
SECTION 2.13 Authenticating Agent.
(a) The Indenture Trustee may appoint one or more authenticating agents
(each, an "Authenticating Agent") with respect to the Notes which shall be
authorized to act on behalf of the Indenture Trustee in authenticating the Notes
in connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Notes. The Indenture Trustee hereby appoints Chase as
Authenticating Agent for the authentication of the Notes upon any registration
of transfer or exchange of such Notes. Whenever reference is made in this
Indenture to the authentication of the Notes by the Indenture Trustee or the
Indenture Trustee's certificate of authentication, such reference shall be
deemed to include authentication on behalf of the Indenture Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Indenture Trustee by an Authenticating Agent. Each Authenticating Agent,
other than Chase, shall be acceptable to the Issuer.
(b) Any institution succeeding to the corporate agency business of an
Authenticating Agent shall continue to be an Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Indenture
Trustee or such Authenticating Agent.
(c) An Authenticating Agent may at any time resign by giving written
notice of resignation to the Indenture Trustee and the Issuer. The Indenture
Trustee may at any time terminate the agency of an Authenticating Agent by
giving notice of termination to such Authenticating Agent and to the Issuer.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time an Authenticating Agent shall cease to be acceptable to the
Indenture Trustee or the Issuer, the Indenture Trustee promptly may appoint a
successor Authenticating Agent with the consent of the Issuer. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
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Authenticating Agent shall be appointed unless acceptable to the Issuer.
(d) The Servicer shall pay the Authenticating Agent from time to time
reasonable compensation for its services under this Section 2.13 pursuant to
Section 4.7 of the Sale and Servicing Agreement.
(e) The provisions of Sections 6.1, 6.2, 6.3, 6.4, 6.7 and 6.9 shall be
applicable, mutatis mutandis, to any Authenticating Agent.
(f) Pursuant to an appointment made under this Section 2.13, the Notes
may have endorsed thereon, in lieu of the Indenture Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Notes referred to in the within mentioned Indenture.
------------------------------------,
as Indenture Trustee
By:
--------------------------------
Authorized Officer
or
---------------------------------------
as Authenticating Agent
for the Indenture Trustee,
---------------------------------------
Authorized Officer
SECTION 2.14 Appointment of Paying Agent.
(a) The Indenture Trustee may appoint a Paying Agent with respect to
the Notes. The Indenture Trustee hereby appoints Chase as the initial Paying
Agent. The Paying Agent shall have the revocable power to withdraw funds from
the Accounts and make distributions to the Noteholders, the Servicer and the
Owner Trustee pursuant to Section 5.5 of the Sale and Servicing Agreement. The
Indenture Trustee may revoke such power and remove the Paying Agent if the
Indenture Trustee determines in its sole discretion that the Paying Agent shall
have failed to perform its obligations under this Indenture in any material
respect or for other good cause. Chase shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Sellers and the Indenture Trustee. In
the event that Chase shall
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no longer be the Paying Agent, the Indenture Trustee shall appoint a successor
to act as Paying Agent (which shall be a bank or trust company and may be the
Indenture Trustee) with the consent of the Sellers, which consent shall not be
unreasonably withheld. If at any time the Indenture Trustee shall be acting as
the Paying Agent, the provisions of Sections 6.1, 6.3 and 6.4 shall apply,
mutatis mutandis, to the Indenture Trustee in its role as Paying Agent.
The Indenture Trustee will cause each Paying Agent other than itself
and Chase to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) of which it has actual
knowledge in the making of any payment required to be made with respect
to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
the Notes if at any time it ceases to meet the standards required to be
met by the Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
(b) Chase in its capacity as initial Paying Agent hereunder agrees that
it (i) will hold all sums held by it hereunder for payment to the Noteholders in
trust for the benefit of the Noteholders entitled thereto until such sums shall
be paid to such Noteholders and (ii) shall comply with all requirements of the
Code regarding the withholding by the Indenture Trustee of payments in respect
of United States federal income taxes due from Note Owners.
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(c) An institution succeeding to the corporate agency business of the
Paying Agent shall continue to be the Paying Agent without the execution or
filing of any paper or any further act on the part of the Indenture Trustee or
such Paying Agent.
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly and
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture. Without limiting the foregoing, subject
to Section 8.2(c), the Issuer will cause to be distributed all amounts on
deposit in the Note Distribution Account on a Distribution Date deposited
therein pursuant to the Sale and Servicing Agreement (i) for the benefit of the
Class A-1 Notes, to the Holders of the Class A-1 Notes, (ii) for the benefit of
the Class A-2 Notes, to the Holders of the Class A-2 Notes, (iii) for the
benefit of the Class A-3 Notes, to the Holders of the Class A-3 Notes, (iv) for
the benefit of the Class A-4 Notes, to the Holders of the Class A-4 Notes, (v)
for the benefit of the Class A-5 Notes, to the Holders of the Class A-5 Notes,
(vi) for the benefit of the Class A-6 Notes, to the Holders of the Class A-6
Notes, (vii) for the benefit of the Class B Notes to the Holders of the Class B
Notes and (viii) for the benefit of the Class C Notes, to the Holders of the
Class C Notes. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will maintain
in The City of New York, an office or agency where Notes may be surrendered for
registration of transfer or exchange. The Issuer hereby initially appoints the
Note Registrar to serve as its agent for the foregoing purposes. The Issuer will
give prompt written notice to the Indenture Trustee of the location, and of any
change in the location, of any such office or agency. If at any time the Issuer
shall fail to maintain any such office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Issuer hereby
appoints the Indenture Trustee as its agent to receive all such surrenders,
notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As provided in
Sections 8.2(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.2(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by a Paying Agent, and no
amounts so withdrawn from the Collection Account and the
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Note Distribution Account for payments on the Notes shall be paid over to the
Issuer except as provided in this Section 3.3.
On or before each Distribution Date and Redemption Date, at the
direction of the Servicer in accordance with Section 5.5 of the Sale and
Servicing Agreement, the Indenture Trustee or the Paying Agent shall deposit in
the Note Distribution Account an aggregate sum sufficient to pay the amounts
then becoming due under the Notes, such sum to be held in trust for the benefit
of the Persons entitled thereto and (unless the Paying Agent is the Indenture
Trustee or deposit was made by the Indenture Trustee) shall promptly notify the
Indenture Trustee of its action or failure so to act.
The Issuer may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such a
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by the Indenture Trustee or any Paying Agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on its request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided that the Indenture Trustee or
such Paying Agent, before being required to make any such repayment, shall at
the expense of the Issuer cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Issuer. The Indenture Trustee shall also
adopt and employ, at the expense of the Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to the Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.4 Existence. Except as otherwise permitted by the provisions
of Section 3.10, the Issuer will keep in full effect its existence, rights and
franchises as a business trust under the
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laws of the State of Delaware (unless it becomes, or any successor to the Issuer
hereunder is or becomes, organized under the laws of any other state or of the
United States of America, in which case the Issuer will keep in full effect its
existence, rights and franchises under the laws of such other jurisdiction) and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.5 Protection of Trust Estate. The Issuer will from time to
time prepare (or shall cause to be prepared), execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(a) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
(b) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture;
(c) enforce the rights of the Indenture Trustee and the
Noteholders in any of the Collateral; or
(d) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Trust
Estate against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be filed by the Indenture Trustee pursuant to this
Section.
SECTION 3.6 Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as
are necessary to perfect and make effective the lien and security interest of
this Indenture and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien and
security interest effective.
(b) On or before March 31 of each calendar year, commencing with March
31, 1998, the Issuer shall furnish to the Indenture Trustee an Opinion of
Counsel either stating that, in the opinion
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of such counsel, such action has been taken with respect to the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and with respect to the execution and
filing of any financing statements and continuation statements as are necessary
to maintain the perfection of the lien and security interest created by this
Indenture and reciting the details of such action or stating that in the opinion
of such counsel no such action is necessary to maintain the perfection of such
lien and security interest. Such Opinion of Counsel shall also describe the
recording, filing, rerecording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and the execution and
filing of any financing statements and continuation statements that will, in the
opinion of such counsel, be required to maintain the perfection of the lien and
security interest of this Indenture until March 31 in the following calendar
year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables. (a)
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, any other Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Servicer and the Administrators to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Basic
Documents and in the instruments and agreements included in the Trust Estate,
including but not limited to preparing (or causing to be prepared) and filing
(or causing to be filed) all UCC financing statements and continuation
statements required to be filed by the terms of this Indenture and the Sale and
Servicing Agreement in accordance with and within the time periods provided for
herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of an Event of
Servicing Termination under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee and the Rating Agencies thereof in
accordance with Section 11.4, and shall specify in such notice the action, if
any, the Issuer is taking in respect of such default. If an Event of Servicing
Termination shall arise from the failure of the Servicer to perform
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any of its duties or obligations under the Sale and Servicing Agreement with
respect to the Receivables, the Issuer shall take all reasonable steps available
to it to remedy such failure.
(e) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees that, unless such action is
specifically permitted hereunder or under the other Basic Documents, it will
not, without the prior written consent of the Indenture Trustee or the Holders
of at least a majority of Outstanding Amount of the Notes, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
supplement, termination, waiver or surrender of, the terms of any Collateral or
the Basic Documents, or waive timely performance or observance by the Servicer
or the Sellers under the Sale and Servicing Agreement; provided that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Noteholders, or (ii) reduce the aforesaid percentage of
the Notes which are required to consent to any such amendment, without the
consent of the Holders of all the Outstanding Notes. If any such amendment,
modification, supplement or waiver shall be so consented to by the Indenture
Trustee or such Holders, the Issuer agrees, promptly following a request by the
Indenture Trustee to do so, to execute and deliver, in its own name and at its
own expense, such agreements, instruments, consents and other documents as the
Indenture Trustee may deem necessary or appropriate under the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(a) except as expressly permitted by this Indenture or the
other Basic Documents, sell, transfer, exchange or otherwise dispose of
any of the properties or assets of the Issuer, including those included
in the Trust Estate, unless directed to do so by the Indenture Trustee;
(b) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(c) (i) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect to
the Notes under this Indenture except as may be expressly permitted
hereby, (ii) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise
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upon or burden the Trust Estate or any part thereof or any interest
therein or the proceeds thereof (other than tax liens, mechanics' liens
and other liens that arise by operation of law, in each case on a
Financed Boat and arising solely as a result of an action or omission
of the related Obligor) or (iii) permit the lien of this Indenture not
to constitute a valid first priority (other than with respect to any
such tax, mechanics' or other lien) security interest in the Trust
Estate.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will deliver
to the Indenture Trustee on or before March 31 of each year, commencing March
31, 1998, and otherwise in compliance with the requirements of TIA Section
314(a)(4), an Officer's Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that
(a) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(b) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants in all material respects under this Indenture throughout such
year, or, if there has been a default in the compliance of any such
condition or covenant, specifying each such default known to such
Authorized Officer and the nature and status thereof.
SECTION 3.10 The Issuer May Consolidate, Etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other Person,
unless
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all the Notes and
the performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture
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Trustee) to the effect that such transaction will not have any material
adverse tax consequence to the Trust, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been
taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation or merger and such supplemental indenture comply
with this Section 3.10 and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
(b) Except as otherwise expressly permitted by this Indenture or the
other Basic Documents, the Issuer shall not convey or transfer all or
substantially all of its properties or assets, including those included in the
Trust Estate, to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America
or any State thereof, (B) expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee,
in form satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all the Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein, (C) expressly agree by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of the Holders of the
Notes, (D) unless otherwise provided in such supplemental indenture,
expressly agree to indemnify, defend and hold harmless the Issuer
against and from any loss, liability or expense arising under or
related to this Indenture and the Notes and (E) expressly agree by
means of such supplemental indenture that such Person (or if a group of
persons, then one specified Person) shall prepare (or cause to be
prepared) and make all filings with the Commission (and any other
appropriate Person) required by the Exchange Act in connection with the
Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
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(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to
the effect that such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been
taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officers' Certificate and an Opinion of Counsel each stating that
such conveyance or transfer and such supplemental indenture comply with
this Section 3.10 and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act).
SECTION 3.11 Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer in accordance with Section 3.10(b), Chase Manhattan Marine Owner
Trust 1997-A will be released from every covenant and agreement of this
Indenture to be observed or performed on the part of the Issuer with respect to
the Notes immediately upon the delivery of written notice to the Indenture
Trustee from the Person acquiring such assets and properties stating that Chase
Manhattan Marine Owner Trust 1997-A is to be so released.
SECTION 3.12 No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the other Basic
Documents, issuing the Notes and the Certificates, making payments thereon, and
such other activities that are necessary, suitable or desirable to accomplish
the foregoing or are incidental to the purposes as set forth in Section 2.3 of
the Trust Agreement.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for money borrowed in respect of the Notes or in accordance
with the Basic Documents.
SECTION 3.14 Servicer's Obligations. The Issuer shall use its best
efforts to cause the Servicer to comply with the Sale and Servicing Agreement.
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SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Sale and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuming another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty) other than the purchase of the Receivables and
related property pursuant to the Sale and Servicing Agreement.
SECTION 3.17 Restricted Payments. The Issuer shall not, directly or
indirectly, (a) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer, (b) redeem, purchase, retire, or otherwise acquire for
value any such ownership or equity interest or security or (c) set aside or
otherwise segregate any amounts for any such purpose; provided that the Issuer
may make, or cause to be made, distributions to the Servicer, the Sellers, the
Owner Trustee, the Indenture Trustee and the Certificateholders as permitted by,
and to the extent funds are available for such purpose under, the Basic
Documents. The Issuer will not, directly or indirectly, make payments to or
distributions from the Collection Account or the Paid-Ahead Account except in
accordance with this Indenture and the other Basic Documents.
SECTION 3.18 Notice of Events of Default. The Issuer agrees to give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default, any Event of Servicing Termination and each default on the part of
either Seller of its obligations under the Sale and Servicing Agreement.
SECTION 3.19 Further Instruments and Acts. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (a)
rights of registration of transfer and exchange, (b) substitution of mutilated,
destroyed, lost or stolen Notes, (c) rights of Noteholders to receive payments
of principal thereof and interest thereon, (d) Sections 3.2, 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13, 3.15, 3.16 and 3.18, (e) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee
under Sections 4.2 and 4.4) and (f) the rights of Noteholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them, and the Indenture Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(i) either
(A) All Notes theretofore authenticated and delivered
(other than (1) the Notes that have been destroyed, lost or
stolen and that have been replaced or paid as provided in
Section 2.5 and (2) the Notes for which payment money has
theretofore been deposited in trust or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.3) have
been delivered to the Indenture Trustee for cancellation; or
(B) all Notes not theretofore delivered to the
Indenture Trustee for cancellation:
(1) have become due and payable,
(2) will become due and payable at their
respective Final Scheduled Distribution Dates
within one year, or
(3) are to be called for redemption within
one year under arrangements satisfactory to the
Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and
at the expense, of the Issuer,
and the Issuer, in the case of clauses (1), (2) or (3) of
Section 4.1(i)(B), has irrevocably deposited or caused to be
irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the United
States of America (which will mature prior to the date such
amounts are payable), in trust for such
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purpose, in an amount sufficient to pay and discharge the
entire unpaid principal and accrued interest on such Notes not
theretofore delivered to the Indenture Trustee for
cancellation when due on their respective Final Scheduled
Distribution Dates or Redemption Date (if the Notes shall have
been called for redemption pursuant to Section 10.1);
(ii) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer; and
(iii) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate, an Opinion of Counsel and (if required by the
TIA or the Indenture Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable requirements
of Section 11.1 and each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Section 4.1(i)(B) shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to the
extent required herein or in the Sale and Servicing Agreement or required by
law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.3 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
ARTICLE V
REMEDIES
SECTION 5.1 Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
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(a) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for a
period of five days;
(b) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes
due and payable;
(c) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of
which is elsewhere in this Section specifically dealt with) which
default materially and adversely affects the rights of the Noteholders,
and which default shall continue or not be cured for a period of 30
days (or for such longer period, not in excess of 90 days, as may be
reasonably necessary to remedy such default; provided that such default
is capable of remedy within 90 days or less and the Servicer on behalf
of the Issuer delivers an Officer's Certificate to the Indenture
Trustee to the effect that the Issuer has commenced, or will promptly
commence and diligently pursue, all reasonable efforts to remedy such
default) after there shall have been given, by registered or certified
mail, to the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the Holders representing not less than 25% of the
Outstanding Amount of the Controlling Notes, a written notice
specifying such default and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; and
(d) an Insolvency Event shall have occurred for the Issuer.
The Issuer shall deliver to the Indenture Trustee, within five days
after the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (c), its status and what action
the Issuer is taking or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default shall occur and be continuing, then and in every such case the
Indenture Trustee or the Holders of the Notes representing not less than a
majority of the Outstanding Amount of the Controlling Notes may declare all the
Notes to be immediately due and payable, by a notice in writing to the Issuer
(and to the Indenture Trustee if given by the Controlling Noteholders), and upon
any such declaration the unpaid principal amount of such Notes, together with
accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the
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money due has been obtained by the Indenture Trustee as hereinafter in this
Article V provided, the Holders of the Notes representing a majority of the
Outstanding Amount of the Controlling Notes, by written notice to the Issuer and
the Indenture Trustee, may rescind and annul such declaration and its
consequences; provided, that, no such rescission shall affect any subsequent
default or impair any right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by the
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable, the Issuer will, upon demand of the Indenture
Trustee, pay to it, for the benefit of the Holders of the Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the rate borne by the Notes, and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been
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appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in the case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee (including any
claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence, bad
faith or willful misconduct) and of the Noteholders allowed in such
proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of the Notes in any election of a
trustee, a standby trustee or person performing similar functions in
any such proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Holders of the Notes allowed in any
judicial proceedings relative to the Issuer, its creditors and its
property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
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(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(g) In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such proceedings.
SECTION 5.4 Remedies; Priorities. (a) If an Event of Default shall have
occurred and be continuing and the Notes have been accelerated under Section
5.2, the Indenture Trustee may do one or more of the following (subject to
Section 5.5):
(i) institute proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Indenture Trustee and the Holders of the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
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provided that the Indenture Trustee may not sell or otherwise liquidate
the Trust Estate following an Event of Default, unless (A) the Holders
of 100% of the Outstanding Amount of the Notes consent thereto, (B) the
proceeds of such sale or liquidation distributable to the Noteholders
are sufficient to discharge in full all amounts then due and unpaid
upon such Notes for principal and interest, or (C)(1) there has been an
Event of Default described in Section 5.1(a) or (b), (2) the Indenture
Trustee determines that the Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the
Notes as they would have become due if the Notes had not been declared
due and payable, and (3) the Indenture Trustee obtains the consent of
Holders of 66-2/3% of the Outstanding Amount of the Controlling Notes.
In determining such sufficiency or insufficiency with respect to clause
(B) and (C), the Indenture Trustee may, but need not, obtain and rely
upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of such proposed action
and as to the sufficiency of the Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out such money or property (and other amounts
including amounts held on deposit in the Reserve Account and Paid-Ahead Account)
held as Collateral for the benefit of the Noteholders in the following order:
FIRST: to the Indenture Trustee for amounts due under
Section 6.7; and
SECOND: to the Collection Account for distribution
pursuant to Section 9.1(b) of the Sale and Servicing
Agreement.
SECTION 5.5 Optional Preservation of the Receivables. If the Notes have
been declared to be due and payable under Section 5.2 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Indenture Trustee shall take such desire into
account when determining whether to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, the Indenture
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment
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of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
(b) the Holders representing not less than 25% of the
Outstanding Amount of the Controlling Notes have made written request
to the Indenture Trustee to institute such proceeding in respect of
such Event of Default in its own name as the Indenture Trustee
hereunder;
(c) such Holder or Holders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with such request;
(d) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such proceedings; and
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders representing not less than a majority of the Outstanding Amount
of the Controlling Notes;
it being understood and intended that no one or more Holders of the Notes shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of the Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of the
Notes, each representing less than a majority of the Outstanding Amount of the
Notes, the Indenture Trustee in its sole discretion may determine what action,
if any, shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such
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Proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Indenture Trustee or to such Noteholder, then and in
every such case the Issuer, the Indenture Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and the Noteholders shall continue as through
no such proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.11 Controlling Noteholders. The Holders of a majority of the
Outstanding Amount of the Controlling Notes shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee with respect to the Notes or exercising any trust or power
conferred on the Indenture Trustee; provided that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) subject to the express terms of Section 5.4, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall be
by the Holders of the Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(c) if the conditions set forth in Section 5.5 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee
by Holders of the Notes representing less than 100% of the Outstanding
Amount of the Notes to sell or liquidate the Trust Estate shall be of
no force and effect;
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(d) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction; and
(e) such direction shall be in writing;
provided, further, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of the Notes of not less than a majority of the Outstanding Amount of
the Controlling Notes may, on behalf of all such Holders, waive any past Default
or Event of Default and its consequences except a Default (a) in payment of
principal of or interest on any of the Notes or (b) in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Controlling Note then outstanding. In the case of any such
waiver, the Issuer, the Indenture Trustee and the Holders of the Notes shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto. The
Issuer shall give prompt written notice of any waiver to the Rating Agencies.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
the Indenture Trustee, the filing by any party litigant in such Proceeding of an
undertaking to pay the costs of such Proceeding, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such Proceeding, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes, or, (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in
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this Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer.
SECTION 5.16 Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee to do so, the Issuer
agrees to take all such lawful action as the Indenture Trustee may request to
compel or secure the performance and observance by the Sellers and the Servicer,
as applicable, of each of their respective obligations to the Issuer under or in
connection with the Sale and Servicing Agreement in accordance with the terms
thereof, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Sale and
Servicing Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of either
Seller or the Servicer thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by the Sellers or the
Servicer of each of their respective obligations under the Sale and Servicing
Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and, at the direction (which direction shall be in
writing or by telephone (confirmed in writing promptly thereafter)) of the
Holders of 66-2/3% of the Outstanding Amount of the Controlling Notes shall,
foreclose upon its security interest in the Issuer's rights under the Sale and
Servicing Agreement and exercise all rights, remedies, powers, privileges and
claims of the Issuer against the Sellers or the Servicer under or in connection
with the Sale and Servicing Agreement, including the right or power to take any
action to compel or secure performance or observance by
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the Sellers or the Servicer of each of their respective obligations to the
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of the Indenture Trustee. (a) The Indenture Trustee,
both prior to and after the occurrence of an Event of Default, shall undertake
to perform such duties and only such duties as are specifically set forth in
this Indenture and the Sale and Servicing Agreement. If an Event of Default
known to the Indenture Trustee has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture and
the Sale and Servicing Agreement and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
The Indenture Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders, or other instruments furnished
to the Indenture Trustee that shall be specifically required to be furnished
pursuant to any provision of this Indenture or the Sale and Servicing Agreement,
shall examine them to determine whether they conform to the requirements of this
Indenture or the Sale and Servicing Agreement; provided, however, that the
Indenture Trustee shall not be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument furnished by the Servicer to the Indenture Trustee pursuant to
this Indenture or the Sale and Servicing Agreement.
(b) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own bad faith or wilful malfeasance; provided, however,
that:
(i) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default, the Indenture Trustee
undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and the Sale and Servicing
Agreement, and no implied covenants or obligations shall be read into
this Indenture or the Sale and Servicing Agreement against the
Indenture Trustee, and in the absence of bad faith on its part or
manifest error, the Indenture Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Indenture
Trustee and conforming to the requirements of this Indenture or the
Sale and Servicing Agreement; and
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(ii) The Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts nor shall the Indenture Trustee be liable with respect
to any action it takes or omits to take in good faith in accordance
with this Indenture or in accordance with a direction received by it
pursuant to Section 5.11.
(c) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(d) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(e) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or indemnity satisfactory to it against such risk or liability is
not assured to it, and none of the provisions contained in this Indenture shall
in any event require the Indenture Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer (including its
obligations as custodian) under this Indenture except during such time, if any,
as the Indenture Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of the Sale and Servicing Agreement.
(f) The Indenture Trustee shall not be charged with knowledge of an
Event of Default until such time as a Responsible Officer shall have actual
knowledge or have received written notice thereof.
(g) Except for actions expressly authorized by this Indenture or, based
upon an Opinion of Counsel, in the best interests of the Noteholders, the
Indenture Trustee shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or to impair the value of any
Receivable.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 6.2 Rights of the Indenture Trustee. (a) The Indenture Trustee
may conclusively rely on any document believed by it to be genuine and to have
been signed or presented by the proper person. The Indenture Trustee need not
investigate any fact or matter stated in the document.
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(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Opinion of Counsel. The Indenture Trustee shall not be liable for any
action it takes, suffers or omits to take in good faith in reliance on the
Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder. The Indenture Trustee shall have no duty to monitor
the performance of the Issuer.
(d) The Indenture Trustee shall not be personally liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the written
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the written advice or opinion of
such counsel. A copy of such written advice or Opinion of Counsel shall be
provided to the Sellers, the Servicer and the Rating Agencies.
(f) [Reserved].
(g) Prior to the occurrence of an Event of Default and after the curing
of all Events of Default that may have occurred, the Indenture Trustee shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, or other paper or document, unless
requested in writing to do so by Holders of the Notes evidencing not less than
25% of the Outstanding Amount of the Notes; provided, however, that if the
payment within a reasonable time to the Indenture Trustee of the costs,
expenses, or liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Indenture Trustee, not reasonably
assured to the Indenture Trustee by the security afforded to it by the terms of
this Indenture, the Indenture Trustee may require reasonable indemnity against
such cost, expense, or liability or payment of such expenses as a condition
precedent to so proceeding. The reasonable expense of every such examination
shall be paid by the Issuer or by the Sellers at the direction of the Issuer or,
if paid by the Indenture Trustee, shall be reimbursed by the Issuer or by the
Sellers at the direction of the Issuer upon demand. Nothing in this clause (g)
shall affect the obligation of the Issuer or the Sellers to observe any
applicable law prohibiting disclosure of information regarding the Obligors.
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SECTION 6.3 Individual Rights of the Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of the Notes and may otherwise deal with the Issuer or its Affiliates with the
same rights it would have if it were not the Indenture Trustee. Any Paying
Agent, the Note Registrar, co-registrar or co-paying agent may do the same with
like rights. However, the Indenture Trustee must comply with Sections 6.11 and
6.12.
SECTION 6.4 The Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, shall not be accountable for the
Issuer's use of the proceeds from the Notes, and shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing
and if it is either actually known or written notice of the existence thereof
has been delivered to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to each Noteholder notice of the Default within 90
days after such knowledge or notice occurs. Except in the case of a Default in
accordance with the provisions of Section 313(c) of the TIA in payment of
principal of or interest on any Note (including payments pursuant to the
mandatory redemption provisions of such Note), the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interest of the
Noteholders.
SECTION 6.6 Reports by the Indenture Trustee to Holders. Within the
prescribed period of time for tax reporting purposes after the end of each
calendar year during the term of this Indenture, the Indenture Trustee shall
deliver to each Noteholder such information as may be reasonably required to
enable such Holder to prepare its United States federal, state and local income
or franchise tax returns for such calendar year.
SECTION 6.7 Compensation and Indemnity. The Issuer shall cause the
Servicer pursuant to Section 4.7 of the Sale and Servicing Agreement to pay to
the Indenture Trustee from time to time reasonable compensation for its
services. The Indenture Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuer shall cause the
Servicer and the Sellers pursuant to Sections 4.7 and 6.2, respectively, of the
Sale and Servicing Agreement to reimburse the Indenture Trustee for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Indenture Trustee's agents, counsel, accountants and experts.
The Issuer shall cause the Sellers pursuant to the Sale and Servicing Agreement
to indemnify the Indenture Trustee
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against any and all loss, liability or expense (including the fees of either
in-house counsel or outside counsel, but not both) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Indenture Trustee shall notify the Issuer, the Servicer and the
Sellers promptly of any claim for which it may seek indemnity.
The Sellers' payment obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.1(d) with respect to the Issuer, the expenses are intended to constitute
expenses of administration under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.8 Replacement of the Indenture Trustee. (a) The Indenture
Trustee may give notice of its intent to resign at any time by so notifying the
Issuer and the Noteowners. The Holders of a majority in Outstanding Amount of
the Notes may remove the Indenture Trustee by so notifying the Indenture Trustee
and the Issuer may appoint a successor Indenture Trustee. Such resignation or
removal shall become effective as described below. The Issuer shall remove the
Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
(b) If the Indenture Trustee gives notice of its intent to resign or is
removed or if a vacancy exists in the office of the Indenture Trustee for any
reason (the Indenture Trustee in such event being referred to herein as the
retiring Indenture Trustee), the Issuer shall promptly appoint a successor
Indenture Trustee.
(c) A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer and
thereupon the resignation or removal of the Indenture Trustee shall become
effective, and the successor Indenture Trustee, without any further act, deed or
conveyance shall have all the rights, powers and duties of the Indenture Trustee
under this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as the Indenture Trustee to the successor
Indenture Trustee.
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(d) If a successor Indenture Trustee does not take office within 60
days after the retiring Indenture Trustee gives notice of its intent to resign
or is removed, the retiring Indenture Trustee, the Issuer or the Holders of a
majority in Outstanding Amount of the Notes may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
(e) If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
(f) Any resignation or removal of the Indenture Trustee and appointment
of a successor Indenture Trustee pursuant to any of the provisions of this
Section shall not become effective until acceptance of appointment by the
successor Indenture Trustee pursuant to Section 6.8(c) and payment of all fees
and expenses owed to the outgoing Indenture Trustee.
(g) Notwithstanding the resignation or removal of the Indenture Trustee
pursuant to this Section, the Issuer's, the Servicer's and the Sellers'
obligations under Section 6.7 shall continue for the benefit of the retiring
Indenture Trustee. The Indenture Trustee shall not be liable for the acts or
omissions of any successor Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee. The Indenture
Trustee shall provide the Issuer and the Rating Agencies prior written notice of
any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor Indenture Trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor Indenture Trustee may authenticate such Notes
either in the name of any predecessor Indenture Trustee hereunder or in the name
of the successor Indenture Trustee; and in all such cases such certificate of
authentication shall have the same full force as is provided anywhere in the
Notes or in this Indenture with respect to the certificate of authentication of
the Indenture Trustee.
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. (a) Notwithstanding any other provisions of this Indenture,
at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Issuer may
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at the time be located, the Indenture Trustee shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Issuer, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Issuer, or any part
hereof, and, subject to the other provisions of this Section, such power,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. The Sellers will pay all reasonable fees and expenses of
any co-trustee or co-trustees or separate trustee or separate trustees. The
appointment of any separate trustee or co-trustee shall not absolve the
Indenture Trustee of its obligations under this Indenture. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
an Indenture Trustee under Section 6.11, and no notice to the Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.8.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed the Indenture Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Issuer or the
Trust Estate or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder, including
acts or omissions of predecessor or successor trustees; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment,
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either jointly with the Indenture Trustee or separately, as may be provided
therein, subject to all the provisions of this Indenture, specifically including
every provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee (with a copy given to the
Issuer).
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall
at all times satisfy the requirements of TIA ss.310(a) and be an approved
assignee of Preferred Mortgages under the Ship Mortgage Statutes. The Indenture
Trustee shall have a combined capital and surplus of at least $100,000,000 as of
the last day of the most recent fiscal quarter for such institution and shall be
subject to examination or supervision by federal or state authorities. The
long-term unsecured debt of the Indenture Trustee shall at all times be rated
not lower than "BBB-" by Standard & Poor's, "BBB-" by Duff & Phelps (if rated by
Duff & Phelps) and Baa3 by Moody's or such other ratings as are acceptable to
the Rating Agencies. The Indenture Trustee shall comply with TIA ss.310(b),
including the optional provision permitted by the second sentence of TIA
ss.310(b)(9); provided that there shall be excluded from the operation of TIA
ss.310(b)(1) any indenture or indentures under which other securities of the
Issuer are outstanding if the requirements for such exclusion set forth in the
TIA ss.310(b)(1) are met.
(b) If a Default occurs, the Indenture Trustee, within 90 days after
ascertaining the occurrence of such Default, shall resign with respect to the
Class A Notes, the Class B Notes and/or the Class C Notes in accordance with
Section 6.8 of this Indenture (and shall remain Indenture Trustee for no more
than one class of Notes), and the Issuer shall appoint a successor Indenture
Trustee for one, two or three of such classes, as applicable, so that there will
be separate Indenture Trustees for the Class A Notes, the Class B Notes and the
Class C Notes.
In the event the Indenture Trustee fails to comply with the terms of the
preceding sentence, the Indenture Trustee shall comply with TIA ss.ss.
3.10(b)(ii) and (iii). The appointment hereunder of a successor Trustee with
respect to any class of Notes shall not alter the voting rights of the Class A
Noteholders, the Class B Noteholders and the Class C Noteholders hereunder and
under the Basic Documents. However, so long as any amounts remain unpaid with
respect to the Controlling Notes, only the Indenture Trustee for the
Controlling Noteholders shall have the right to exercise remedies under this
Indenture and the Basic Documents, to make deposits to and withdrawals from the
Trust Accounts and to
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make distributions to Noteholders from the Note Distribution Account.
In the case of the appointment hereunder of a successor Indenture
Trustee with respect to any class of Notes pursuant to this Section 6.11(b), the
Issuer, the retiring Indenture Trustee and the successor Indenture Trustee with
respect to such class of Notes shall execute and deliver an indenture
supplemental hereto wherein each successor Indenture Trustee shall accept such
appointment and which (i) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, the successor Indenture
Trustee all the rights, powers, trusts and duties of the retiring Indenture
Trustee with respect to the Notes of the class to which the appointment of such
successor Indenture Trustee relates, (ii) if the retiring Indenture Trustee is
not retiring with respect to all classes of Notes, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Indenture Trustee with respect to the
Notes of each class as to which the retiring Indenture Trustee is not retiring
shall continue to be vested in the Indenture Trustee, and (iii) shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Indenture Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Indenture Trustees co-trustees of
the same trust and that each such Indenture Trustee shall be trustee of a trust
or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Indenture Trustee; and upon the removal of the
retiring Indenture Trustee shall become effective to the extent provided
therein.
SECTION 6.12 Preferential Collection of Claims Against the Issuer. The
Indenture Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss.311(a) to the extent indicated therein.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 The Issuer To Furnish the Indenture Trustee Names and
Addresses of the Noteholders. The Issuer will furnish or cause to be furnished
to the Indenture Trustee (a) not more than five days after each Record Date, a
list, in such form as the Indenture Trustee may reasonably require, of the names
and
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addresses of the Holders as of such Record Date and (b) at such other times as
the Indenture Trustee may request in writing, within 14 days after receipt by
the Issuer of any such request, a list of similar form and content as of a date
not more than 10 days prior to the time such list is furnished, provided that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished.
SECTION 7.2 Preservation of Information; Communications to the
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.1 and the names and addresses of the Noteholders received by the
Indenture Trustee in its capacity as the Note Registrar. The Indenture Trustee
may destroy any list furnished to it as provided in such Section 7.1 upon
receipt of a new list so furnished.
(b) The Noteholders may communicate pursuant to TIA ss.312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss.312(c).
SECTION 7.3 Reports by the Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission
may from time to time by rules and regulations prescribe) which the
Issuer may be required to file with the Commission pursuant to Section
13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
ss.313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this Section 7.3(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
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SECTION 7.4 Reports by the Indenture Trustee. If required by
TIAss.313(a), within 60 days after each March 31, beginning with March 31, 1998,
the Indenture Trustee shall mail to each Noteholder as required by TIAss.313(c)
a brief report dated as of such date that complies with TIAss.313(a). The
Indenture Trustee also shall comply with TIAss.313(b). A copy of each report at
the time of its mailing to Noteholders shall be filed by the Indenture Trustee
with the Commission and each stock exchange, if any, on which the Notes are
listed. The Issuer shall notify the Indenture Trustee if and when the Notes are
listed on any stock exchange. On each Distribution Date, the Indenture Trustee
shall include with each payment to each Noteholder a copy of the statement for
the related Collection Period provided to the Indenture Trustee pursuant to
Section 5.8 of the Sale and Servicing Agreement.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money. Except as otherwise provided herein,
the Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply
all such money received by it as provided in this Indenture and the Sale and
Servicing Agreement. Except as otherwise provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Trust Estate, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Indenture and any right to proceed thereafter as provided in
Article V.
SECTION 8.2 Accounts. (a) On or prior to the Closing Date, the Issuer
shall cause the Sellers to establish and maintain, in the name of the Indenture
Trustee, for the benefit of the Noteholders and/or the Certificateholders, as
applicable, the Accounts as provided in Article V of the Sale and Servicing
Agreement.
(b) Before each Distribution Date, the Servicer and the Sellers are
required to deposit the Available Amount with respect to the preceding
Collection Period in the Collection Account pursuant to Sections 5.2 and 5.4 of
the Sale and Servicing Agreement. On each Deposit Date, the Indenture Trustee
shall withdraw the Reserve Account Transfer Amount for the related Distribution
Date from the Reserve Account and deposit it in the Collection Account in
accordance with Section 5.5(b) of the Sale and Servicing Agreement. On or before
each Distribution Date, the
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Indenture Trustee or the Paying Agent on behalf of the Indenture Trustee shall
transfer the Noteholders' Distributable Amount for such Distribution Date from
the Collection Account to the Note Distribution Account in accordance with
Section 5.5(c) of the Sale and Servicing Agreement.
(c) Not later than 12:00 noon, New York City time, on each Distribution
Date, the Indenture Trustee or the Paying Agent on behalf of the Indenture
Trustee shall distribute all amounts on deposit in the Note Distribution Account
to Noteholders to the extent of amounts due and unpaid on the Notes for
principal and interest in the following amounts and in the following order of
priority:
(i) to accrued and unpaid interest on the Class A Notes;
provided that if there are not sufficient funds in the Note
Distribution Account to pay the entire amount of accrued and unpaid
interest then due on the Class A Notes, the amount in the Note
Distribution Account shall be applied to the payment of such interest
on the Class A Notes pro rata on the basis of the total such interest
due on the Class A Notes;
(ii) unless otherwise provided in clause (xii) below, to
accrued and unpaid interest on the Class B Notes;
(iii) unless otherwise provided in clause (xii) below, to
accrued and unpaid interest on the Class C Notes;
(iv) unless otherwise provided in clause (xii) below, to the
Holders of the Class A-1 Notes until the Outstanding Amount of the
Class A-1 Notes is reduced to zero;
(v) unless otherwise provided in clause (xii) below, to the
Holders of the Class A-2 Notes until the Outstanding Amount of the
Class A-2 Notes is reduced to zero;
(vi) unless otherwise provided in clause (xii) below, to the
Holders of the Class A-3 Notes until the Outstanding Amount of the
Class A-3 Notes is reduced to zero;
(vii) unless otherwise provided in clause (xii) below, to the
Holders of the Class A-4 Notes until the Outstanding Amount of the
Class A-4 Notes is reduced to zero;
(viii) unless otherwise provided in clause (xii) below, to the
Holders of the Class A-5 Notes until the Outstanding Amount of the
Class A-5 Notes is reduced to zero;
(ix) unless otherwise provided clause (xii) below, to the
Holders of the Class A-6 Notes until the Outstanding Amount of the
Class A-6 Notes until the Class A-6 Notes is reduced to zero;
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(x) unless otherwise provided in clause (xii) below, to the
Holders of the Class B Notes until the Outstanding Amount of the Class
B Notes is reduced to zero;
(xi) unless otherwise provided in clause (xii) below, to the
Holders of the Class C Notes until the Outstanding Amount of the Class
C Notes is reduced to zero; and
(xii) if the Notes have been declared immediately due and
payable as provided in Section 5.2, any amounts remaining in the Note
Distribution Account after the applications described in Section
8.2(c)(i) shall be applied to the repayment of principal on each of the
Class A Notes pro rata on the basis of the respective unpaid principal
amount of each such Note, and any remaining amounts will be distributed
pursuant to clauses (ii), (x), (iii) and (xi) of Section 8.2(c) in that
order.
SECTION 8.3 General Provisions Regarding Accounts. (a) In accordance
with Section 5.1(b) and Section 5.6(b) of the Sale and Servicing Agreement, all
funds in the Collection Account, the Reserve Account and the Paid-Ahead Account
shall be invested in Permitted Investments upon written direction of the
Sellers. All income or other gain from investments of moneys deposited in such
Accounts shall be paid as provided in the Sale and Servicing Agreement, and any
loss resulting from such investments shall be charged to such account. The
Sellers will not direct the Indenture Trustee to make any investment of any
funds or to sell any investment held in any of such Accounts unless the security
interest Granted and perfected in such account will continue to be perfected in
such investment or the proceeds of such sale, in either case without any further
action by any Person.
(b) Subject to Section 6.1(b), the Indenture Trustee shall not in any
way be held liable by reason of any insufficiency in any of the Accounts
resulting from any loss on any Permitted Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Permitted Investments issued by the Indenture Trustee, in its commercial
capacity as principal obligor and not as trustee, in accordance with their
terms.
(c) If (i) the Sellers shall have failed to give investment directions
for any funds on deposit in the Collection Account, as the case may be, to the
Indenture Trustee by 11:00 a.m., New York City time (or such other time as may
be agreed by the Sellers and the Indenture Trustee) on any Business Day, or (ii)
a Default or Event of Default shall have occurred and be continuing with respect
to the Notes but the Notes shall not have been declared due and payable pursuant
to Section 5.2, or, if such Notes shall have been declared due and payable
following an Event of Default, amounts collected or receivable from the Trust
Estate are being applied in accordance with Section 5.5 as if there had not been
such a declaration, then the Indenture Trustee shall, to the fullest
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extent practicable, invest and reinvest funds in such Accounts in one or more
Permitted Investments. The Indenture Trustee shall not be liable for losses in
respect of such investments in Permitted Investments that comply with the
requirements of the Basic Documents except for losses attributable to the
Indenture Trustee's failure to make payments on such Permitted Investments
issued by the Indenture Trustee, in its commercial capacity as principal obligor
and not as trustee, in accordance with their terms.
SECTION 8.4 Release of Trust Estate. (a) Subject to the payment of its
fees and expenses pursuant to Section 6.7, the Indenture Trustee may, and when
required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article VIII
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding, and all sums due the Indenture Trustee pursuant to Section 6.7 have
been paid, release any remaining portion of the Trust Estate that secured the
Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Note Distribution
Account. The Indenture Trustee shall release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Reserve Account, Paid-Ahead
Account or the Collection Account only to such time as (x) there are no Notes
Outstanding and (y) all sums due to the Indenture Trustee pursuant to Section
6.7 have been paid. The Indenture Trustee shall release property from the lien
of this Indenture pursuant to this Section 8.4(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA ss.ss.
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1.
SECTION 8.5 Opinion of Counsel. The Indenture Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.4(a), accompanied by copies of any instruments involved,
and the Indenture Trustee may also require as a condition of such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders;
provided, however that such Opinion of Counsel shall not be required to express
an opinion
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as to the fair value of the Trust Estate. Counsel rendering any such opinion may
rely, without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies by the Issuer, when authorized by an Issuer Request, the Issuer
and the Indenture Trustee at any time and from time to time, may enter into one
or more indentures supplemental hereto (which shall conform to the provisions of
the Trust Indenture Act as in force at the date of the execution thereof), in
form satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of the Notes, or to surrender any right
or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not materially and adversely
affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the
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administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA; and
(viii) to effect the appointment of a successor Indenture
Trustee in accordance with Section 6.11(b).
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to the Rating Agencies by the Issuer, as evidenced to the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided that such
action shall not, as evidenced by an Opinion of Counsel, materially and
adversely affect the interests of any Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of the Noteholders.
The Issuer and the Indenture Trustee, when authorized by the Issuer, also may,
with prior notice to the Rating Agencies and with the consent of the Holders of
a majority of the Outstanding Amount of the Notes, by Act of such Holders
delivered to the Issuer and the Indenture Trustee, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount
thereof or the interest rate thereon or the Redemption Price with
respect thereto, change the provision of this Indenture relating to the
application of collections on, or the proceeds of the sale of, the
Trust Estate to payment of principal of or interest on the Notes, or
change any place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of the provisions of this Indenture
requiring the application of funds available
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therefor, as provided in Article V, to the payment of any such amount
due on the Notes on or after the respective due dates thereof (or, in
the case of redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of all the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Indenture Trustee to sell or liquidate the
Trust Estate pursuant to Section 5.4;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or any of the other Basic Documents cannot
be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of the Notes to the
benefit of any provisions for the mandatory redemption of the Notes
contained herein; or
(vii) permit the creation of any Lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein
or in the Basic Documents, terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Note
of the security provided by the lien of this Indenture.
The Indenture Trustee may determine whether any Notes would be affected
by any supplemental indenture and any such determination shall be conclusive
upon the Holders of all Notes, whether theretofore or thereafter authenticated
and delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Noteholders under this Section to
approve the particular form of any proposed supplemental
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indenture, but it shall be sufficient if such Noteholders shall approve the
substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be an be deemed to be part of the terms and
conditions of this Indenture and the Notes affected thereby for any and all
purposes.
SECTION 9.4 Conformity with Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall comply in all respects with the TIA.
SECTION 9.5 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so require, new Notes so modified as to conform, in the opinion of
the Indenture Trustee and the Issuer, to any such supplemental indenture may be
prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
SECTION 9.6 Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article IX or the modifications thereby of the trusts created by this
Indenture the Indenture Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Indenture
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Trustee's own rights, duties or immunities under this Indenture or otherwise.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption. The Class C Notes are subject to redemption in
whole, but not in part, on any Distribution Date upon the exercise by the
Servicer of its option to purchase the Receivables pursuant to Section 9.1(a) of
the Sale and Servicing Agreement. Such Notes shall be redeemed for the
Redemption Price; provided that the Issuer has available funds sufficient to pay
the Redemption Price. The Servicer shall furnish notice of such election to the
Indenture Trustee and the Note Registrar not later than the 25th day of the
month prior to the Redemption Date and the Issuer shall deposit or cause the
Servicer to deposit with the Indenture Trustee in the Collection Account the
Redemption Price of the Class C Notes to be redeemed, whereupon all such Class C
Notes shall be due and payable on the Redemption Date.
SECTION 10.2 Form of Redemption Notice. Notice of redemption under
Section 10.1 shall be given by the Indenture Trustee by facsimile or by
first-class mail, postage prepaid, transmitted or mailed prior to the applicable
Redemption Date to each Holder of Class C Notes, as of the close of business on
the Record Date preceding the applicable Redemption Date, at such Holder's
address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable and that payments shall be made
only upon presentation and surrender of such Class C Notes and the
place where such Class C Notes are to be surrendered for payment of the
Redemption Price (which shall be the office or agency to be maintained
as provided in Section 3.2); and
(iv) that interest on the Class C Notes shall cease to accrue
on the Redemption Date.
Notice of redemption of the Class C Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any defect therein, to any Holder of any Class C Notes
shall not impair or affect the validity of the redemption of any other Class C
Notes.
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SECTION 10.3 Notes Payable on Redemption Date. The Class C Notes to
be redeemed shall, following notice of redemption as required by Section 10.2,
on the Redemption Date become due and payable at the Redemption Price and
(unless the Issuer shall default in the payment of the Redemption Price) no
interest shall accrue on the Redemption Price for any period after the date to
which accrued interest is calculated for purposes of calculating the Redemption
Price.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee (i) an Officer's Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, and
(iii) (if required by the TIA) an Independent Certificate from a firm of
certified public accountants or other experts meeting the applicable
requirements of this Section, except that, in the case of any such application
or request as to which the furnishing of such documents is specifically required
by any provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Indenture Trustee that is to be
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made the basis for the release of any property or securities subject to the lien
of this Indenture, the Issuer shall, in addition to any obligation imposed in
Section 11.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such deposit)
to the Issuer of the Collateral or other property or securities to be so
deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(i), the Issuer shall also deliver to the Indenture Trustee an
Independent Certificate as to the same matters, if the fair value to
the Issuer of the securities to be so deposited and of all other such
securities made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set
forth in the certificates delivered pursuant to clause (i) and this
clause (ii), is 10% or more of the Outstanding Amount of the Notes, but
such a certificate need not be furnished with respect to any securities
so deposited, if the fair value thereof to the Issuer as set forth in
the related Officer's Certificate is less than $25,000 or less than one
percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any
Repurchased Receivables or Liquidated Receivables, whenever any
property or securities are to be released from the lien of this
Indenture, the Issuer shall also furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will
not impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii), the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the
property or securities and of all other property other than Repurchased
Receivables and Liquidated Receivables, or securities released from the
lien of this Indenture since the commencement of the then current
calendar year, as set forth in the certificates required by clause
(iii) and this clause (iv), equals 10% or more of the Outstanding
Amount of the Notes, but such certificate need not be furnished in the
case of any release of property or securities if the fair value thereof
as set forth in the related Officer's Certificate is less than
55
<PAGE>
$25,000 or less than one percent of the then Outstanding Amount of
the Notes.
(v) Notwithstanding Section 2.9 or any provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise
dispose of the Receivables as and to the extent permitted or required
by the Basic Documents and (B) make cash payments out of the Trust
Accounts as and to the extent permitted or required by the Basic
Documents.
SECTION 11.2 Form of Documents Delivered to the Indenture Trustee. In
any case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person my certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate to legal
matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the matters
upon which his or her certificate or opinion is based are erroneous. Any such
certificate of an Authorized Officer or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Servicer, either Seller or the
Issuer, stating that the information with respect to such factual matters is in
the possession of the Servicer, such Seller or the Issuer, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application,
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document (x) as a condition of the granting of such
application, or (y) as evidence of the Issuer's compliance with any term hereof,
it is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in each case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however,
56
<PAGE>
be construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.3 Actions of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by the
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by an agent
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee and, when required, to the Issuer or the
Servicer. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Indenture and
conclusive in favor of the Indenture Trustee, the Issuer and the Servicer, if
made in the manner provided in this Section 11.3.
(b) The fact and date of the execution by any Noteholder of any such
instrument or writing may be proved in any reasonable manner which the Indenture
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Noteholder shall bind every Holder of every Note issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof, in respect of anything done, or omitted to be done, by the Indenture
Trustee, the Issuer or the Servicer in reliance thereon, regardless of whether
notation of such action is made upon such Note.
(d) The Indenture Trustee may require such additional proof of any
matter referred to in this Section 11.3 as it shall deem necessary.
SECTION 11.4 Notices, etc., to the Indenture Trustee, the Issuer, and
Rating Agencies. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to or filed with:
(a) The Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if personally delivered
or mailed certified mail, return receipt requested and shall be deemed
to have been duly given upon receipt by the Indenture Trustee at its
Corporate Trust Office, or
(b) The Issuer by the Indenture Trustee or any Noteholder
shall be sufficient for every purpose hereunder if personally
delivered or mailed certified mail, return receipt to the Issuer
addressed to: Chase Manhattan Marine Owner Trust 1997-A, in care
of Wilmington Trust Company, 1100 North
57
<PAGE>
Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration or at any other address previously furnished in writing
to the Indenture Trustee by the Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the
Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed certified mail, return receipt requested to (i) in the case of
Moody's, at the following address: Moody's Investors Service, 99 Church Street,
New York, New York 10004, (ii) in the case of S&P, at the following address:
Standard & Poor's Ratings Service, 26 Broadway (15th Floor), New York, New York
10004, Attention of Asset Backed Surveillance Department or (iii) in the case of
Duff & Phelps, at the following address: Duff & Phelps Credit Rating Company, 17
State Street, 12th Floor, New York, New York 10004; or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to the Noteholders when such notice is required to
be given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other right or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
58
<PAGE>
SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder
that is different from the methods provided for in this Indenture for such
payments or notices, provided that such methods are reasonable and consented to
by the Indenture Trustee (which consent shall not be unreasonably withheld). The
Issuer will furnish to the Indenture Trustee a copy of each such agreement, and
the Indenture Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this indenture by any of the provisions of the TIA, such required
provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns. All agreements of the Indenture Trustee in this Indenture shall bind
its successors.
SECTION 11.10 Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not be affected or impaired
thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders and (only to the
extent expressly provided herein) the Certificateholders, and any other party
secured hereunder, and any other person with an ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect
59
<PAGE>
as if made on the date on which nominally due, and no interest shall accrue for
the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE 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.
SECTION 11.14 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture or to satisfy any provision of the TIA.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity. For all purposes of this Indenture, in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17 No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Issuer or join in any
institution against the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection
60
<PAGE>
with any obligations relating to the Notes, this Indenture or any of the other
Basic Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports, and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees and independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its Obligations hereunder.
SECTION 11.19 Subordination. The Issuer and the Noteholder agree that
the Class B Notes are subordinated to the Class A Notes, and that the Class C
Notes are subordinated to the Class A Notes and the Class B Notes, in each case
in the manner set forth in this Indenture.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
CHASE MANHATTAN MARINE
OWNER TRUST 1997-A
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:
---------------------------------
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By:
---------------------------------
Name: Marianna Stershic
Title: Assistant Vice
President
61
<PAGE>
EXHIBIT A
SCHEDULE OF RECEIVABLES
Delivered to the Owner Trustee and the Indenture Trustee
on the Closing Date.
<PAGE>
EXHIBIT B
FORM OF CLASS A NOTE
REGISTERED $________________(1)
No. R-____ CUSIP NO. [________]
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
[____]% CLASS A-[__] ASSET BACKED NOTES
Chase Manhattan Marine Owner Trust 1997-A, a trust organized and
existing under the laws of the State of Delaware (including any successor, the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or its
registered assigns, the principal sum of DOLLARS
($_____________), partially payable on each Distribution Date in an amount equal
to the result obtained by multiplying (i) a fraction, the numerator of which is
$__________ and the denominator of which is $[________] by (ii) the aggregate
amount, if any, payable from the Note Distribution Account in respect of
principal on the Class A-[__] Notes pursuant to Section 3.1 of the Indenture;
provided that the entire unpaid principal amount of this Note shall be due and
payable on the earlier of the [__________] Distribution Date and the Redemption
Date, if any, pursuant to Section 10.1 of the Indenture. The Issuer will pay
interest on this Note at the rate per annum shown above, on each Distribution
Date until the principal of this Note is paid or made available for payment, on
the principal amount of this Note outstanding on the preceding Distribution Date
(after giving effect to all payments of principal made on the preceding
Distribution Date), subject to certain limitations contained in Sections 2.7,
3.1 and 8.2 of the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to but excluding the then current Distribution Date or, if no interest
has yet been paid, from October __, 1997. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. Such principal of
<PAGE>
and interest on this Note shall be paid in the manner specified in
the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: __________, 199_
CHASE MANHATTAN MARINE OWNER TRUST
1997-A
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
------------------------------------
Name:
Title:
B-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within
mentioned Indenture.
Dated: ________ __, 199_
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------
Authorized Signatory
B-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [____]% Class A-[__] Asset Backed Notes (herein called the
"Class A-[__] Notes" or the "Notes"), all issued under an Indenture dated as of
October 1, 1997 (such Indenture, as supplemented or amended, is herein called
the "Indenture"), between the Issuer and Norwest Bank Minnesota, National
Association, not in its individual capacity but solely as trustee (the
"Indenture Trustee", which term includes any successor Indenture Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are not otherwise defined herein and that are defined in the
Indenture shall have the meanings assigned to them in or pursuant to the
Indenture.
The Notes and the other Class A-[__] Notes, the Class B Notes and the
Class C Notes are and will be secured by the collateral pledged as security
therefor as provided in the Indenture.
The Issuer shall pay interest on overdue installments of interest at
the Interest Rate applicable thereto to the extent lawful.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Indenture Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Indenture Trustee and the Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
It is the intent of the Sellers, the Noteholders and the Note Owners,
the Issuer, the Certificateholders and the Certificate Owners, that the Notes
will be classified as indebtedness of the Issuer for all United States tax
purposes. The Noteholders, by
<PAGE>
acceptance of a Note, agree to treat, and to take no action inconsistent with
the treatment of, the Notes as indebtedness of the Issuer for such tax purposes.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that they
will not at any time institute against the Issuer or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States Federal
or State bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture or any of the other Basic Documents.
This Note and the Indenture 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
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither Chase Manhattan Bank USA, National
Association nor The Chase Manhattan Bank, in its individual capacity, nor any
owner of a beneficial interest in the Issuer, nor any of their respective
partners, beneficiaries, agents, officers, directors, employees, successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on, or performance of, or omission
to perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Indenture Trustee for the
sole purposes of binding the interests of the Indenture Trustee in the assets of
the Issuer. The Holder of this Note by the acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ___________________________________________, attorney, to transfer
said Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ****/
--------------------- -------------------------------
Signature Guaranteed:
- --------
****/ NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
<PAGE>
(1) Denominations of $1,000 and integral multiples of $1,000 in
excess thereof.
<PAGE>
EXHIBIT C
FORM OF CLASS B NOTE
REGISTERED $_________________(1)
No. R-______________ CUSIP NO. [________]
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
[____]% CLASS B ASSET BACKED NOTES
Chase Manhattan Marine Owner Trust 1997-A, a trust organized and
existing under the laws of the State of Delaware (including any successor, the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or its
registered assigns, the principal sum of DOLLARS
($________________), partially payable on each Distribution Date in an amount
equal to the result obtained by multiplying (i) a fraction, the numerator of
which is $_____________ and the denominator of which is $[________] by the (ii)
the aggregate amount, if any, payable from the Note Distribution Account in
respect of principal on the Class B Notes pursuant to Section 3.1 of the
Indenture; provided that the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the [________ ____] Distribution Date and
the Redemption Date, if any, pursuant to Section 10.1 of the Indenture. No
payments of principal of the Class B Notes will be made until the principal of
the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4
Notes, the Class A-5 Notes and the Class A-6 Notes have been paid in full. The
Issuer will pay interest on this Note at the rate per annum shown above, on each
Distribution Date until the principal of this Note is paid or made available for
payment, on the principal amount of this Note outstanding on the preceding
Distribution Date (after giving effect to all payments of principal made on the
preceding Distribution Date), subject to certain limitations contained in
Sections 2.7, 3.1 and 8.2 of the Indenture. Interest on this Note will accrue
for each Distribution Date from the most recent Distribution Date on which
interest has been paid to but excluding the then current
<PAGE>
Distribution Date or, if no interest has yet been paid, from October __, 1997.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Such principal of and interest on this Note shall be paid in the manner
specified in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: , 199
CHASE MANHATTAN MARINE OWNER TRUST
1997-A
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Owner Trustee under the Trust
Agreement
By:
----------------------------------------
Name:
Title:
C-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ________ __, 199_
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Indenture
Trustee
By:
--------------------------------------
Authorized Signatory
C-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [____]% Class B Asset Backed Notes (herein called the "Class B
Notes" or the "Notes"), all issued under an Indenture dated as of October 1,
1997 (such Indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and Norwest Bank Minnesota, National
Association, not in its individual capacity but solely as trustee (the
"Indenture Trustee", which term includes any successor Indenture Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder the of the Issuer, the Indenture Trustee and the Holders
of the Notes. The Notes are subject to all terms of the Indenture. All terms
used in this Note that are not otherwise defined herein and that are defined in
the Indenture shall have the meanings assigned to them in or pursuant to the
Indenture.
The Notes and the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes and the
Class C Notes are and will be secured by the collateral pledged as security
therefor as provided in the Indenture.
The Issuer shall pay interest on overdue installments of interest at
the Class B Interest Rate to the extent lawful.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Indenture Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Indenture Trustee or the
Owner Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except that any such Person may have
expressly agreed (it being understood that the Indenture Trustee and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
It is the intent of the Sellers, the Noteholders, the Note Owners, the
Issuer, the Certificateholders and the Certificate
<PAGE>
Owners that, the Notes will be classified as indebtedness of the Issuer for all
United States tax purposes. The Noteholders, by acceptance of a Note, agree to
treat, and to take no action inconsistent with the treatment of, the Notes for
such tax purposes as indebtedness of the Issuer.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that they
will not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture or any of the other Basic Documents.
This Note and the Indenture 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
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither Chase Manhattan Bank USA, National
Association nor The Chase Manhattan Bank, in its individual capacity, nor any
owner of a beneficial interest in the Issuer, nor any of their respective
partners, beneficiaries, agents, officers, directors, employees, successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on, or performance of, or omission
to perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Indenture Trustee for the
sole purpose of binding the interests of the Indenture Trustee in the assets of
the Issuer. The Holder of this Note by the acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________________, attorney, to transfer said Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated: ***/
----------------- --------------------------------------
Signature Guaranteed:
- --------
***/ NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
(1) Denominations of $1,000 and integral multiples of $1,000 in
excess thereof.
<PAGE>
EXHIBIT D
FORM OF CLASS C NOTE
REGISTERED $________________ (1)
No. R-_____________________ CUSIP NO. [________]
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
[____]% CLASS C ASSET BACKED NOTES
Chase Manhattan Marine Owner Trust 1997-A, a trust organized and
existing under the laws of the State of Delaware (including any successor, the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or its
registered assigns, the principal sum of
DOLLARS ($ ), partially payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction, the numerator of which is $_____________ and the denominator of which
is $[________] by the (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class C Notes pursuant to
Section 3.1 of the Indenture; provided that the entire unpaid principal amount
of this Note shall be due and payable on the earlier of the [________ ____]
Distribution Date and the Redemption Date, if any, pursuant to Section 10.1 of
the Indenture. No payments of principal of the Class C Notes will be made until
the principal of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes,
the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes and the Class B
Notes have been paid in full. The Issuer will pay interest on this Note at the
rate per annum shown above, on each Distribution Date until the principal of
this Note is paid or made available for payment, on the principal amount of this
Note outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Sections 2.7, 3.1 and 8.2 of the Indenture.
Interest on this Note will accrue for each Distribution Date from the most
recent Distribution Date on which interest has been paid to but excluding
<PAGE>
the then current Distribution Date or, if no interest has yet been paid, from
October __, 1997. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified in the Indenture.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Dated: ________ __, 199_
CHASE MANHATTAN MARINE OWNER TRUST
1997-A
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Owner Trustee under the Trust
Agreement
By:
-------------------------------------
Name:
Title:
D-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Dated: ________ __, 199_
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Indenture
Trustee
By:
--------------------------------------
Authorized Signatory
D-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [____]% Class C Asset Backed Notes (herein called the "Class C
Notes" or the "Notes"), all issued under an Indenture dated as of October 1,
1997 (such Indenture, as supplemented or amended, is herein called the
"Indenture"), between the Issuer and Norwest Bank Minnesota, National
Association, not in its individual capacity but solely as trustee (the
"Indenture Trustee", which term includes any successor Indenture Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder the of the Issuer, the Indenture Trustee and the Holders
of the Notes. The Notes are subject to all terms of the Indenture. All terms
used in this Note that are not otherwise defined herein and that are defined in
the Indenture shall have the meanings assigned to them in or pursuant to the
Indenture.
The Notes and the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes and the
Class B Notes are and will be secured by the collateral pledged as security
therefor as provided in the Indenture.
The Issuer shall pay interest on overdue installments of interest at
the Class C Interest Rate to the extent lawful.
Each Holder or Note Owner, by acceptance of a Note, or, in the case of
a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Indenture Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Indenture Trustee or the
Owner Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except that any such Person may have
expressly agreed (it being understood that the Indenture Trustee and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
It is the intent of the Sellers, the Noteholders, the Note Owners, the
Issuer, the Certificateholders and the Certificate
<PAGE>
Owners that, the Notes will be classified as indebtedness of the Issuer for all
United States tax purposes. The Noteholders, by acceptance of a Note, agree to
treat, and to take no action inconsistent with the treatment of, the Notes for
such tax purposes as indebtedness of the Issuer.
Each Noteholder or Note Owner, by acceptance of a Note, or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that they
will not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture or any of the other Basic Documents.
This Note and the Indenture 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
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither Chase Manhattan Bank USA, National
Association nor The Chase Manhattan Bank, in its individual capacity, nor any
owner of a beneficial interest in the Issuer, nor any of their respective
partners, beneficiaries, agents, officers, directors, employees, successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on, or performance of, or omission
to perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Indenture Trustee for the
sole purpose of binding the interests of the Indenture Trustee in the assets of
the Issuer. The Holder of this Note by the acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _______________________________, attorney, to transfer said Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated: _________________ ___________________________________________***/
Signature Guaranteed:
- --------
***/ NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular without alteration, enlargement or any change
whatsoever.
(1) Denominations of $1,000 and integral multiples of $1,000 in
excess thereof.
<PAGE>
CERTIFICATE OF TRUST
OF
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
THIS Certificate of Trust of Chase Manhattan Marine Owner Trust 1997-A (the
"Trust"), dated as of July 17, 1997, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. C. ss.3801 et
seq.).
1. Name. The name of the business trust formed hereby is Chase Manhattan
Marine Owner Trust 1997-A.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate
Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective as of the
date filed.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the date first-above written.
WILMINGTON TRUST COMPANY,
as trustee
By: /s/ Emmett R. Harmon
----------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE>
OH&S DRAFT
10/7/97
EX-4.3(B)
================================================================================
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
AMENDED AND RESTATED
TRUST AGREEMENT
among
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
and
THE CHASE MANHATTAN BANK,
as Depositors
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of October 1, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.1 Capitalized Terms........................................................... 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name........................................................................ 2
SECTION 2.2 Office...................................................................... 2
SECTION 2.3 Purposes and Powers......................................................... 2
SECTION 2.4 Appointment of Owner Trustee................................................ 3
SECTION 2.5 Initial Capital Contribution of Trust
Estate.................................................................... 3
SECTION 2.6 Declaration of Trust........................................................ 3
SECTION 2.7 Title to Issuer Property.................................................... 3
SECTION 2.8 Situs of Issuer............................................................. 3
SECTION 2.9 Representations and Warranties of each
Depositor................................................................. 4
SECTION 2.10 Liability of Certificateholders............................................. 4
SECTION 2.11 [Reserved].................................................................. 4
SECTION 2.12 Deduction and Loss Allocations.............................................. 5
SECTION 2.13 Special Allocations......................................................... 5
SECTION 2.14 Amended and Restated Trust Agreement........................................ 5
<CAPTION>
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
<S> <C> <C>
SECTION 3.1 Initial Ownership........................................................... 5
SECTION 3.2 The Certificates............................................................ 6
SECTION 3.3 Execution, Authentication and Delivery
of Certificates........................................................... 6
SECTION 3.4 Registration of Transfer and Exchange
of Certificates........................................................... 6
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen
Certificates.............................................................. 9
SECTION 3.6 Persons Deemed Certificateholders........................................... 10
SECTION 3.7 Access to List of Certificateholders'
Names and Addresses....................................................... 10
SECTION 3.8 Maintenance of Office or Agency............................................. 10
SECTION 3.9 Appointment of Paying Agent................................................. 10
SECTION 3.10 [Reserved].................................................................. 11
SECTION 3.11 [Reserved].................................................................. 11
SECTION 3.12 [Reserved].................................................................. 11
SECTION 3.13 Authenticating Agent........................................................ 11
SECTION 3.14 Actions of Certificateholders............................................... 13
<PAGE>
<CAPTION>
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
<S> <C> <C>
SECTION 4.1 Prior Notice to Certificateholders with
Respect to Certain Matters................................................ 13
SECTION 4.2 Action by Certificateholders with
Respect to Certain Matters................................................ 14
SECTION 4.3 Action by Certificateholders with
Respect to Bankruptcy..................................................... 14
SECTION 4.4 Restrictions on Certificateholders'
Power..................................................................... 14
SECTION 4.5 Majority Control............................................................ 15
<CAPTION>
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
<S> <C> <C>
SECTION 5.1 Establishment of Certificate
Distribution Account...................................................... 15
SECTION 5.2 Application of Funds in Certificate
Distribution Account...................................................... 15
SECTION 5.3 Method of Payment........................................................... 16
SECTION 5.4 No Segregation of Monies; No Interest....................................... 16
SECTION 5.5 Accounting and Reports to the
Noteholders, Certificateholders, the
Internal Revenue Service and Others....................................... 17
SECTION 5.6 Signature on Returns; Tax Matters
Partner................................................................... 17
SECTION 5.7 Capital Accounts............................................................ 17
<CAPTION>
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
<S> <C> <C>
SECTION 6.1 General Authority........................................................... 18
SECTION 6.2 General Duties.............................................................. 18
SECTION 6.3 Action upon Instruction..................................................... 19
SECTION 6.4 No Duties Except as Specified in this
Agreement or in Instructions.............................................. 19
SECTION 6.5 No Action Except under Specified
Documents or Instructions................................................. 20
SECTION 6.6 Restrictions................................................................ 20
SECTION 6.7 Doing Business in Other Jurisdictions....................................... 21
<CAPTION>
ARTICLE VII
CONCERNING OWNER TRUSTEE
<S> <C> <C>
SECTION 7.1 Acceptance of Trusts and Duties............................................. 21
SECTION 7.2 Furnishing of Documents..................................................... 23
SECTION 7.3 Representations and Warranties.............................................. 23
SECTION 7.4 Reliance; Advice of Counsel................................................. 24
SECTION 7.5 Not Acting in Individual Capacity........................................... 25
ii
<PAGE>
SECTION 7.6 Owner Trustee May Own Certificates and
Notes..................................................................... 25
<CAPTION>
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
<S> <C> <C>
SECTION 8.1 Owner Trustee's Fees and Expenses........................................... 25
SECTION 8.2 Indemnification............................................................. 26
SECTION 8.3 Payments to Owner Trustee................................................... 26
<CAPTION>
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
<S> <C> <C>
SECTION 9.1 Termination of Trust Agreement.............................................. 27
<CAPTION>
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
<S> <C> <C>
SECTION 10.1 Eligibility Requirements for Owner
Trustee................................................................... 28
SECTION 10.2 Resignation or Removal of Owner
Trustee................................................................... 29
SECTION 10.3 Successor Owner Trustee..................................................... 29
SECTION 10.4 Merger or Consolidation of Owner
Trustee................................................................... 30
SECTION 10.5 Appointment of Co-Trustee or Separate
Trustee................................................................... 30
<CAPTION>
ARTICLE XI
MISCELLANEOUS
<S> <C> <C>
SECTION 11.1 Supplements and Amendments.................................................. 32
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders........................................................ 33
SECTION 11.3 Limitations on Rights of Others............................................. 33
SECTION 11.4 Notices..................................................................... 33
SECTION 11.5 Severability................................................................ 34
SECTION 11.6 Separate Counterparts....................................................... 34
SECTION 11.7 Successors and Assigns...................................................... 34
SECTION 11.8 No Recourse................................................................. 34
SECTION 11.9 [Reserved].................................................................. 34
SECTION 11.10 Headings.................................................................... 35
SECTION 11.11 GOVERNING LAW............................................................... 35
EXHIBITS
Exhibit A - Form of Certificate
Exhibit B - Form of Certificate of Trust
</TABLE>
iii
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of October 1, 1997,
among CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION ("Chase USA"), a national
banking association, THE CHASE MANHATTAN BANK ("Chase"), a New York banking
corporation (each, in such capacity, a "Depositor" and together the
"Depositors"), and Wilmington Trust Company, a Delaware banking corporation, as
the owner trustee (the "Owner Trustee").
ARTICLE I
DEFINITIONS
SECTION 1.1 Capitalized Terms. Capitalized terms are used in this
Agreement as defined in Section 1.1 to the Sale and Servicing Agreement among
the trust established by this Agreement and Chase USA and Chase, as Sellers, and
The CIT Group/Sales Financing, Inc., as Servicer, dated as of October 1, 1997,
as the same may be amended and supplemented from time to time (the "Sale and
Servicing Agreement").
(a) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(b) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder," and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(d) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
<PAGE>
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The trust created hereby shall be known as "Chase
Manhattan Marine Owner Trust 1997-A" (hereinafter, the "Issuer") in which name
the Owner Trustee may conduct the business of such trust, make and execute
contracts and other instruments on behalf of such trust and sue and be sued.
SECTION 2.2 Office. The office of the Issuer shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders and the
Depositors.
SECTION 2.3 Purposes and Powers. The purpose of the Issuer is, and the
Issuer shall have the power and authority, to engage in the following
activities:
(a) to issue the Notes pursuant to the Indenture and
the Certificates pursuant to this Agreement, and to sell,
transfer or exchange the Notes and the Certificates;
(b) to acquire the property and assets set forth in the Sale
and Servicing Agreement from the Depositors pursuant to the terms
thereof, to make payments or distributions on the Notes and
Certificates, to make deposits to and withdrawals from the Reserve
Account and other accounts established under this Agreement and the
Sale and Servicing Agreement;
(c) to assign, grant, transfer, pledge, mortgage and convey
the Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholders pursuant to the terms of the Sale
and Servicing Agreement any portion of the Trust Estate released from
the Lien of, and remitted to the Issuer pursuant to, the Indenture;
(d) to enter into and perform its obligations under the
Basic Documents to which it is a party;
(e) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(f) subject to compliance with the Basic Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Certificateholders and the Noteholders.
Issuer is hereby authorized to engage in the foregoing activities.
Issuer shall not engage in any activity other than in connection
2
<PAGE>
with the foregoing or other than as required or authorized by the terms of this
Agreement or the other Basic Documents.
SECTION 2.4 Appointment of Owner Trustee. The Depositors hereby appoint
the Owner Trustee as trustee of the Issuer effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
SECTION 2.5 Initial Capital Contribution of Trust Estate. The
Depositors hereby sell, assign, transfer, convey and set over to the Owner
Trustee, as of the date hereof, the Reserve Account Initial Deposit. The Owner
Trustee hereby acknowledges receipt in trust from the Depositors, as of the date
hereof, of the foregoing contribution, which shall constitute the initial Owner
Trust Estate and shall be deposited in the Reserve Account pursuant to Section
5.6(a) of the Sale and Servicing Agreement. The Depositors shall pay the
organizational expenses of the Issuer as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Issuer under the Basic Documents. It is the
intention of the parties hereto that the Issuer constitute a business trust
under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business trust. It is the intention of the parties
hereto that, solely for United States income and franchise tax purposes, the
Issuer shall be treated as a partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, the Issuer will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Issuer as a partnership for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and to the extent not inconsistent
herewith, in the Business Trust Statute with respect to accomplishing the
purposes of the Issuer. The Owner Trustee shall file the Certificate of Trust
with the Secretary of State of Delaware.
SECTION 2.7 Title to Issuer Property. Legal title to all the Owner
Trust Estate shall be vested at all times in the Issuer as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case the title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
SECTION 2.8 Situs of Issuer. The Issuer will be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Issuer shall be located in the State of Delaware or the
State of New York. Payments will be received by the Issuer only in Delaware or
New
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York, and payments will be made by the Issuer only from Delaware or New York.
The only office of the Issuer will be at its office in Delaware.
SECTION 2.9 Representations and Warranties of each Depositor. Each
Depositor hereby represents and warrants to the Owner Trustee that:
(i) Such Depositor (i) has been duly organized and is
validly existing and in good standing under the laws of the
jurisdiction of its organization, and (ii) has power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is presently conducted, and had at
all relevant times, and has, power, authority and legal right to
acquire and own the Receivables transferred by it to the Issuer.
(ii) Such Depositor has the power and authority to execute
and deliver this Agreement and to carry out its terms; such Depositor
has full power and authority to sell and assign the property to be sold
and assigned to and deposited with the Issuer by it, and such Depositor
has duly authorized such sale and assignment and deposit to the Issuer
by all necessary action; and the execution, delivery and performance of
this Agreement has been duly authorized by such Depositor by all
necessary action.
(iii) The consummation of the transactions contemplated by
this Agreement and the other Basic Documents and the fulfillment of the
terms hereof, do not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, the articles of association or charter, as
the case may be, or bylaws of such Depositor, or conflict with or
breach any of the material terms or provisions of or constitute (with
or without notice or lapse of time) a default under any indenture,
agreement or other instrument to which such Depositor is a party or by
which it is bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument; nor violate any law or, to the best of
such Depositor's knowledge, any order, rule or regulation applicable to
such Depositor of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over such Depositor or its properties.
SECTION 2.10 Liability of Certificateholders. No Certificateholder
shall have any personal liability for any liability or obligation of the Issuer.
SECTION 2.11 [Reserved].
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SECTION 2.12 Deduction and Loss Allocations. (a) All items of deduction
and loss of the Issuer shall be allocated to the Certificateholders in
accordance with their respective Certificate Interests.
(b) To the extent that an allocation of the gross amount of deductions
and losses to the Certificateholders pursuant to Section 2.12(a) above would
cause the Capital Accounts of the Certificateholders to be reduced below zero,
such excess deductions and losses shall be allocated to the Certificateholders
on a pro rata basis until each of their Capital Accounts has been reduced to
zero. If any amount of gross deduction or loss has not been allocated pursuant
to the preceding sentence because all of the Certificateholders' Capital
Accounts have been reduced to zero, the amount of such remaining unallocated
deductions or losses shall be allocated to the Certificateholders in accordance
with their respective Certificate Interests.
(c) If any deductions or losses have been allocated to the
Certificateholders under Section 2.12(b) above, an amount of gross income shall
be allocated to such Certificateholders under this Section 2.12(c) in subsequent
taxable years sufficient to offset the amount of any deductions or losses
previously allocated to such Certificateholders under Section 2.12(b) above and,
thereafter, allocations of gross income and deductions shall be made in
accordance with Section 2.12(a) of this Agreement.
SECTION 2.13 Special Allocations. In the event any Certificateholder
unexpectedly receives any adjustments, allocations or distributions described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Issuer
income and gain shall be specially allocated to such Certificateholder in an
amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the deficit, if any, in the balance of the Capital Account
of such Certificateholder as quickly as possible. This Section 2.13 is intended
to comply with the qualified income offset provision in Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations.
SECTION 2.14 Amended and Restated Trust Agreement. This Agreement
amends and restates in its entirety the Trust Agreement dated as of July 17,
1997 among the Depositors and the Owner Trustee.
ARTICLE III
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1 Initial Ownership. Upon the formation of the Issuer by the
contribution by the Depositors pursuant to Section 2.5 and until the issuance of
the Certificates, the Depositors shall be the sole beneficiaries of the Trust.
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SECTION 3.2 The Certificates. Upon initial issuance, the Certificates
shall each be in the form of Exhibit A, which is incorporated by
reference, and shall be issued as provided in Section 3.10 and in the
aggregate representing 100% of the Certificate Interest. The
Certificates shall be executed on behalf of the Issuer by manual or
facsimile signature of an Authorized Officer or other authorized
signatory of the Owner Trustee. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the
Issuer, shall be validly issued and entitled to the benefit of this
Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of
authentication and delivery of such Certificates. No Certificate shall
entitle the Holder to any benefit under this Agreement, or shall be
valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in
Exhibit A, executed by the Owner Trustee or Chase, as the Owner
Trustee's authentication agent, by manual or facsimile signature; such
authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder.
All Certificates shall be dated the date of their authentication. A
transferee of a Certificate shall become a Certificateholder, and shall
be entitled to the rights and subject to the obligations of a
Certificateholder hereunder, upon due registration of such Certificate in such
transferee's name pursuant to Section 3.4.
SECTION 3.3 Execution, Authentication and Delivery of Certificates.
Concurrently with the transfer of the Receivables to the Issuer pursuant to the
Sale and Servicing Agreement, the Owner Trustee shall cause the Certificates in
the aggregate representing 100% of the Certificate Interest to be executed on
behalf of the Issuer, authenticated and delivered to or upon the written order
of each Depositor signed by its chairman of the board, its president or any vice
president, without further action by such Depositor, in authorized
denominations.
SECTION 3.4 Registration of Transfer and Exchange of Certificates. The
Owner Trustee shall cause to be kept at the office or agency to be maintained
pursuant to Section 3.8 by a certificate registrar (the "Certificate
Registrar"), a register (the "Certificate Register") in which, subject to such
reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. Chase shall be the initial Certificate
Registrar. In the event that, subsequent to the date of issuance of the
Certificates, Chase notifies the Owner Trustee that it is unable to act as the
Certificate Registrar, the Owner Trustee shall act, or the Owner Trustee shall,
with the consent of each Depositor, appoint another bank or trust company,
having an office or agency located in The City of New York and which agrees to
act in accordance with the provisions of this
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Agreement applicable to it, to act, as successor Certificate Registrar under
this Agreement.
The Owner Trustee may revoke such appointment and remove Chase as the
Certificate Registrar if the Owner Trustee determines in its sole discretion
that Chase failed to perform its obligations under this Agreement in any
material respect. Chase shall be permitted to resign as the Certificate
Registrar upon 30 days' written notice to the Owner Trustee, each Depositor and
the Issuer; provided, however, that such resignation shall not be effective and
Chase shall continue to perform its duties as the Certificate Registrar until
the Owner Trustee has appointed a successor Certificate Registrar with the
consent of each Depositor.
An institution succeeding to the corporate agency business of the
Certificate Registrar shall continue to be the Certificate Registrar without the
execution or filing of any paper or any further act on the part of the Owner
Trustee or such Certificate Registrar.
The Certificates have not been registered or qualified under the
Securities Act, or any state securities laws or "Blue Sky" laws. No transfer,
sale, pledge or other disposition of any Certificate shall be made unless such
disposition is made pursuant to an effective registration statement under the
Securities Act and effective registration or qualification under applicable
state securities laws or "Blue Sky" laws, or is made in a transaction which does
not require such registration or qualification. In the event that a transfer is
to be made in reliance upon an exemption from the Securities Act, the Owner
Trustee, in order to assure compliance with the Securities Act, shall not be
required to register such transfer unless (a) the Certificateholder desiring to
effect such disposition delivers to the Owner Trustee an Opinion of Counsel
satisfactory to it that (i) such transfer may be made pursuant to an exemption
from the Securities Act and (ii) such transfer will not cause the Issuer to be
treated as an association (or publicly traded partnership) taxable as a
corporation for U.S. federal income tax purposes, (b) the Rating Agency
Condition is satisfied and (c) the related transferee or assignee agrees to take
positions for tax purposes consistent with the tax positions agreed to be taken
by the Certificateholders hereunder, which Opinions of Counsel shall not be an
expense of the Owner Trustee.
None of the Depositors or the Owner Trustee are obligated under this
Agreement to register the Certificates under the Securities Act or any other
securities law or to take any action not otherwise required under this Agreement
to permit the transfer of Certificates without such registration or
qualification. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, promptly reimburse the Owner Trustee, each
Depositor for costs and expenses incurred in connection with any liability that
results if the transfer is not so exempt or is not made in accordance with such
applicable federal and state laws.
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The Certificates may not be acquired by or for the account of (i) an
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) which is subject to the
provisions of Title I of ERISA, (ii) a plan (as defined in Section 4975(e)(1) of
the Code other than a governmental or church plan described in Section
4975(g)(2) or (3) of the Code), or (iii) any entity whose underlying assets
include "plan assets" by reason of any such plan's investment in the entity
(excluding any investment company that is registered under the Investment
Company Act of 1940, as amended) (each, a "Benefit Plan"). By accepting and
holding a Certificate, the Holder thereof shall be deemed to have represented
and warranted that it is not a Benefit Plan, and that no assets of a Benefit
Plan were used to acquire the Certificate. The foregoing restrictions shall not
apply to acquisitions or holdings of Certificates with assets of the general
account of an insurance company, to the extent that the acquisition or holding,
respectively, of such Certificates (i) is and will be permissible under Section
401(c) of ERISA and final regulations thereunder or another exemption under
ERISA and (ii) does not and will not result in the contemplated operations of
the Trust being treated as non-exempt prohibited transactions.
The Certificates may not be acquired by or for the account of an
individual or entity that is not a U.S. person as defined in Section 7701(a)(30)
of the Code, any transfer of a Certificate to a person that is not a U.S. Person
shall be void, and each transferee must represent and warrant, in writing and
under penalties of perjury, that it (or, if it is acting as a nominee, the
beneficial owner) is a U.S. Person prior to acquiring any Certificates.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and (if the Certificate Registrar is different than the
Owner Trustee, then the Certificate Registrar shall) deliver (or shall cause
Chase as its authenticating agent to authenticate and deliver), in the name of
the designated transferee or transferees, one or more new Certificates in
authorized denominations of a like class and aggregate face amount dated the
date of authentication by the Owner Trustee or any authenticating agent. At the
option of a Holder, Certificates may be exchanged for other Certificates of the
same class in authorized denominations of a like aggregate amount upon surrender
of the Certificates to be exchanged at the office or agency maintained pursuant
to Section 3.8.
Whenever any Certificate is surrendered for exchange, the Owner Trustee
shall execute, authenticate and (if the Certificate Registrar is different than
the Owner Trustee, then the Certificate Registrar shall) deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certifi-
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cate Registrar duly executed by the Holder, which signature on such assignment
must be guaranteed by a member of the New York Stock Exchange or a commercial
bank or trust company.
Each Certificate surrendered for registration of transfer or exchange
shall be canceled and subsequently disposed of by the Owner Trustee or
Certificate Registrar in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, of
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
the Owner Trustee on behalf of Issuer shall execute and the Owner Trustee, or
Chase, as the Owner Trustee's authenticating agent, shall authenticate and (if
the Certificate Registrar is different from the Owner Trustee, then the
Certificate Registrar shall) deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
class, tenor and denomination. If, after delivery of such replacement
Certificate, a bona fide purchaser of the original Certificate in lieu of which
such replacement Certificate was issued presents for payment such original
Certificate, the Owner Trustee or the Certificate Registrar shall be entitled to
recover such replacement Certificate from such Person to whom such replacement
Certificate was delivered or any assignee of such Person, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Owner Trustee or the Certificate Registrar in connection therewith. In
connection with the issuance of any new Certificate under this Section 3.5, the
Owner Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this Section
shall constitute conclusive evidence of an ownership interest in Issuer, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time. The provisions of this Section 3.5 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with respect
to the replacement of mutilated, destroyed, lost or stolen Certificates.
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SECTION 3.6 Persons Deemed Certificateholders. Prior to due
presentation of a Certificate for registration of transfer, the Owner Trustee or
the Certificate Registrar may treat the Person in whose name any Certificate
shall be registered in the Certificate Register as the owner of such Certificate
for the purpose of receiving distributions pursuant to Section 5.2 and for all
other purposes whatsoever, and neither the Owner Trustee nor the Certificate
Registrar shall be bound by any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar shall furnish or cause to be furnished to the Servicer
and the Depositors (and to the Owner Trustee, if the Owner Trustee is not the
Certificate Registrar) within 15 days after receipt by the Certificate Registrar
of a request therefor from the Servicer or the Depositors (or the Owner Trustee)
in writing, a list, in such form as the Servicer or the Depositors (or the Owner
Trustee) may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Certificateholders representing not less than
25% of the Certificate Interest then outstanding apply in writing to the
Certificate Registrar, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and such application is accompanied by
a copy of the communication that such applicants propose to transmit, then the
Certificate Registrar shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed to hold none of the Depositors, the
Certificate Registrar, the Servicer or the Owner Trustee accountable by reason
of the disclosure of its name and address, regardless of the source from which
such information was derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain in The City of New York, an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or exchange.
The Owner Trustee initially designates the offices of The Chase Manhattan Bank
located at 450 West 33rd Street, New York, New York 10001-2697 as its office for
such purposes. The Owner Trustee shall give prompt written notice to each
Depositor, the Servicer and to the Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
SECTION 3.9 Appointment of Paying Agent. The Owner Trustee may appoint
a Paying Agent with respect to the Certificates. The Owner Trustee hereby
appoints Chase as the initial Paying Agent. The Paying Agent shall have the
revocable power to make distributions to Certificateholders pursuant to the
Sale and Servicing Agreement and shall report the amounts of such distributions
to the Owner Trustee. The Owner Trustee may revoke
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such power and remove the Paying Agent if the Owner Trustee determines in its
sole discretion that the Paying Agent shall have failed to perform its
obligations under this Agreement in any material respect or for other good
cause. The Paying Agent shall be permitted to resign upon 30 days' written
notice to the Owner Trustee and the Servicer. In the event that Chase shall no
longer be the Paying Agent, the Owner Trustee shall appoint a successor to act
as Paying Agent (which shall be a bank or trust company and may be the Owner
Trustee), with the consent of each Depositor (which consent shall not be
unreasonably withheld). The Owner Trustee shall cause such successor Paying
Agent or any additional Paying Agent appointed by the Owner Trustee (unless it
is the Owner Trustee) to execute and deliver to the Owner Trustee an instrument
in which such successor Paying Agent or additional Paying Agent shall agree with
the Owner Trustee that as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. The
Paying Agent shall return all unclaimed funds to the Owner Trustee and upon the
removal of a Paying Agent, such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Sections 7.1, 7.3, 7.4, 7.6,
8.1 and 8.2 shall apply to the Owner Trustee also in its role as Paying Agent,
for so long as the Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.10 [Reserved].
SECTION 3.11 [Reserved].
SECTION 3.12 [Reserved]. The Certificates will be issued in definitive,
registered form. The Certificates shall be printed, lithographed or engraved or
may be produced in any other matter as is reasonably acceptable to the Owner
Trustee, as evidenced by its execution thereof.
SECTION 3.13 Authenticating Agent.
(a) The Owner Trustee may appoint one or more authenticating agents
with respect to the Certificates which shall be authorized to act on behalf of
the Owner Trustee in authenticating the Certificates in connection with the
issuance, delivery, registration of transfer, exchange or repayment of the
Certificates. The Owner Trustee hereby appoints Chase as Authenticating Agent
for the authentication of Certificates upon any registration of transfer or
exchange of such Certificates. Whenever reference is made in this Agreement to
the authentication of Certificates by the Owner Trustee or the Owner Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Owner Trustee by an authenticating agent and a
certificate of authentication executed
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on behalf of the Owner Trustee by an authenticating agent. Each authenticating
agent (other than Chase) shall be subject to acceptance by each Depositor.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Owner
Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Owner Trustee and each Depositor. The Owner Trustee
may at any time terminate the agency of an authenticating agent by giving notice
of termination to such authenticating agent and to each Depositor. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time an authenticating agent shall cease to be acceptable to the Owner
Trustee or either of the Depositors, the Owner Trustee promptly may appoint a
successor authenticating agent with the consent of each Depositor. Any successor
authenticating agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an authenticating agent.
(d) The Servicer shall pay the authenticating agent from time to time
reasonable compensation for its services under this Section 3.13.
(e) The provisions of Sections 7.1, 7.3, 7.4, 7.6, 8.1 and 8.2 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 3.13, the
Certificates may have endorsed thereon, in lieu of the Owner Trustee's
certificate of authentication, an alternate certificate of authentication in
substantially the following form:
This is one of the Certificates referred to in the within mentioned
Agreement.
_________________________,
as Owner Trustee
By: _________________________
Authorized Officer
or
___________________________
as Authenticating Agent
for the Owner Trustee,
___________________________
Authorized Officer
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SECTION 3.14 Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Owner Trustee and, when required, to the Depositors or the
Servicer. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Agreement and
conclusive in favor of the Owner Trustee, the Depositors and the Servicer, if
made in the manner provided in this Section 3.14.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Owner Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Owner Trustee, the Depositors or the Servicer in reliance thereon,
regardless of whether notation of such action is made upon such Certificate.
(d) The Owner Trustee may require such additional proof of any matter
referred to in this Section 3.14 as it shall deem necessary.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified the Owner Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by the
Issuer (except claims or lawsuits brought in connection with the
collection of the Receivables) and the compromise of any material
action, claim or lawsuit brought by or against
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the Issuer (except with respect to the aforementioned claims
or lawsuits for collection of the Receivables);
(b) the election by the Issuer to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder
is required;
(d) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required
and such amendment materially adversely affects the interest of the
Certificateholders;
(e) the amendment, change or modification of the Sale and
Servicing Agreement, except to any amendment where the consent of any
Certificateholder is not required under the terms of the Sale and
Servicing Agreement; or
(f) the appointment pursuant to the Indenture of a successor
Indenture Trustee or the consent to the assignment by the Note
Registrar, the Paying Agent, the Indenture Trustee or the Certificate
Registrar of its obligations under the Indenture or this Agreement, as
applicable.
The Owner Trustee shall notify the Certificateholders in writing of any
appointment of a successor Paying Agent, Authenticating Agent or Certificate
Registrar within five Business Days thereof.
SECTION 4.2 Action by Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the direction
of Certificateholders, to (a) remove the Servicer under the Sale and Servicing
Agreement pursuant to Article VIII thereof, (b) remove either Administrator
under an Administration Agreement pursuant to Section 8 thereof or (c) except as
expressly provided in the Basic Documents, sell the Receivables or any interest
therein after the termination of the Indenture. The Owner Trustee shall take the
actions referred to in the preceding sentence only upon written instructions
signed by the Certificateholders.
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Issuer without the unanimous prior approval of all
Certificateholders unless the Owner Trustee reasonably believes that the Issuer
is insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction (i) would be contrary to any
obligation of the Issuer or the Owner Trustee under this Agreement or any of the
other Basic Documents or (ii)
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would be contrary to Section 2.3, nor shall the Owner Trustee be obligated to
follow any such direction, if given.
SECTION 4.5 Majority Control. Except as expressly provided herein, any
action that may be taken by the Certificateholders under this Agreement may be
taken by the Certificateholders representing not less than a majority of the
Certificate Interest. Except as expressly provided herein, any written notice of
the Certificateholders delivered pursuant to this Agreement shall be effective
if signed by the Certificateholders representing not less than a majority of the
Certificate Interest then outstanding at the time of the delivery of such
notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 [Reserved].
SECTION 5.2 Reports.
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On each Distribution Date, the Owner Trustee shall send, or cause
to be sent, to each Certificateholder the statement provided to the Owner
Trustee by the Servicer pursuant to Section 5.8 of the Sale and Servicing
Agreement on such Distribution Date.
SECTION 5.3 Method of Payment. Subject to Section 9.1(c), distributions
required to be made to Certificateholders pursuant to the Sale and Servicing
Agreement on any Distribution Date shall be made to each Certificateholder of
record on the preceding Record Date either (a) by wire transfer, in immediately
available funds, to the account of such Holder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have provided
to the Certificate Registrar appropriate written instructions at least five
Business Days prior to such Distribution Date.
SECTION 5.4 [Reserved].
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SECTION 5.5 Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. The Owner Trustee
shall (a) maintain (or cause to be maintained) the books of the Issuer on a
calendar year basis on the accrual method of accounting, (b) deliver (or cause
to be delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each Certificateholder to prepare its Federal and state
income tax returns and (c) prepare, or cause to be prepared, and file, or cause
to be filed, such tax returns relating to the Issuer (including a partnership
information return, Form 1065), and make such elections as may from time to time
be required or appropriate under any applicable state or Federal statute or rule
or regulation thereunder so as to maintain the Trust's characterization as a
partnership for Federal income tax purposes. Chase shall sign all tax
information returns filed pursuant to this Section 5.5 and any other returns as
may be required by law. The Owner Trustee shall elect under Section 1278 of the
Code to include in income currently any market discount that accrues with
respect to the Receivables. The Owner Trustee shall not make the election
provided under Section 754 of the Code.
SECTION 5.6 Signature on Returns; Tax Matters Partner. Notwithstanding
the provisions of Section 5.5, Chase shall sign on behalf of the Issuer the tax
returns of the Issuer, unless applicable law requires the Owner Trustee to sign
such documents, in which case such documents shall be signed by the Owner
Trustee at the written direction of Chase.
Chase shall be the "tax matters partner" of the Issuer pursuant to the
Code.
SECTION 5.7 Capital Accounts. The Issuer shall maintain accounts
("Capital Accounts") with respect to each Certificateholder and each Depositor
(each an "Owner"). For this purpose, Capital Accounts shall be maintained in
accordance with the following provisions:
(a) Each Owner's Capital Account shall be increased by the
Capital Contributions (as defined below) of such Owner, such Owner's
distributive share of gross income (if any) and any items in the nature
of income or gain that are allocated to such Owner pursuant to Section
2.12(b) or 2.13.
(b) Each Owner's Capital Account shall be reduced by any
amount distributed to such Owner (including, in the case of each
Depositor, any amount released or otherwise distributed to each
Depositor from the Reserve Account under Section 5.6 of the Sale and
Servicing Agreement) and any items in the nature of deductions or
losses that are allocated to such Owner pursuant to Section 2.12 or
2.13.
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(c) In the event all or a portion of a Certificate is
transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to
the extent it related to such Certificate or a portion thereof.
"Capital Contribution" means the amount of any cash contributed to the
Issuer by an Owner (including any amounts deemed to be contributed in connection
with the original issuance of the Certificates), including, in the case of each
Depositor, the amount of any Receivables deemed to have been contributed by such
Depositor (with such amount for Receivables intended to reflect the amount of
the Receivables and monies due thereon or with respect thereto, including
accrued but unpaid interest and finance charges, conveyed to the Issuer by the
Depositors on the Closing Date under Article II of the Sale and Servicing
Agreement). The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
section 1.704-l(b) of the Treasury Regulations and shall be interpreted in a
manner consistent therewith.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Issuer is named
as a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Issuer is named as a party and
any amendment thereto, in each case, in such form as the Depositors shall
approve as evidenced conclusively by the Owner Trustee's execution thereof, and,
on behalf of the Issuer at the written direction of the Depositors, to direct
the Indenture Trustee to authenticate and deliver Class A-1 Notes in the
aggregate principal amount of $41,800,000, Class A-2 Notes in the aggregate
principal amount of $55,600,000, Class A-3 Notes in the aggregate principal
amount of $50,600,000, Class A-4 Notes in the aggregate principal amount of
$37,300,000, Class A-5 Notes in the aggregate principal amount of $29,300,000,
Class A-6 Notes in the aggregate principal amount of $23,700,000, Class B
Notes in the aggregate principal amount of $10,650,000 and Class C Notes in
the aggregate principal amount of $17,312,029.25. In addition to the
foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Issuer pursuant to the Basic Documents.
The Owner Trustee is further authorized from time to time to take such action
as an Administrator or the Depositors recommend or direct in writing with
respect to the Basic Documents.
SECTION 6.2 General Duties. It shall be the duty of the
Owner Trustee to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the
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other Basic Documents and to administer the Issuer in the interest of
Certificateholders, subject to the Basic Documents and in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder and
under the Basic Documents to the extent the Administrators have agreed in the
Administration Agreements to perform any act or to discharge any duty of the
Owner Trustee or the Issuer hereunder or under any other Basic Document, and the
Owner Trustee shall not be liable for the default or failure of an Administrator
to carry out its obligations under the related Administration Agreement.
SECTION 6.3 Action upon Instruction. (a) Subject to Article IV, the
Certificateholders may, by written instruction, direct the Owner Trustee in the
management of the Issuer. Such direction may be exercised at any time by written
instruction of the Certificateholders pursuant to Section 4.5.
(b) Notwithstanding the foregoing, the Owner Trustee shall not be
required to take any action hereunder or under any other Basic Document if the
Owner Trustee shall reasonably determine, or shall have been advised by counsel
in writing, that such action is likely to result in personal liability to the
Owner Trustee (in such capacity or individually), is contrary to the terms of
this Agreement or any other Basic Document or is contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
other Basic Document or is unsure as to the application of any provision of this
Agreement or any Basic Document, or if any such provision is ambiguous as to its
application, or is, or appears to be, in conflict with any other applicable
provision, or in the event that this Agreement permits any determination by the
Owner Trustee or is silent or is incomplete as to the course of action that the
Owner Trustee is required to take with respect to a particular set of facts, the
Owner Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting instruction as to the course
of action to be adopted, and to the extent the Owner Trustee acts in good faith
in accordance with any written instruction of the Certificateholders received,
the Owner Trustee shall not be liable on account of such action to any Person.
If the Owner Trustee shall not have received appropriate instruction within ten
days of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the other Basic Documents, as it shall deem
to be in the best interests of the Certificateholders, and shall have no
liability to any Person for such action or inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall undertake to perform such duties and only
such duties as are specifically set forth in
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this Agreement and the other Basic Documents, and no implied covenants or
obligations shall be read into this Agreement or the other Basic Documents. The
Owner Trustee shall not have any duty or obligation to manage, make any payment
with respect to, register, record, sell, dispose of, or otherwise deal with the
Owner Trust Estate, or to otherwise take or refrain from taking any action
under, or in connection with, any document contemplated hereby to which the
Owner Trustee is a party, except as expressly provided by the terms of this
Agreement or in any document or written instruction received by the Owner
Trustee pursuant to Section 6.3; and no implied duties or obligations shall be
read into this Agreement or any Basic Document against the Owner Trustee. The
Owner Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to prepare or file any Commission filing for the Issuer or to
record this Agreement or any other Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any Liens on any part of the Owner Trust
Estate that result from actions by, or claims against, the Owner Trustee, in its
individual capacity, that are not related to the ownership or the administration
of the Owner Trust Estate.
SECTION 6.5 No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Basic Documents, and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not (a) take any
action that is inconsistent with the purposes of the Issuer set forth in Section
2.3 or (b) take any action or amend this Agreement in any manner that, to the
best knowledge of the Owner Trustee, would result in the Issuer's becoming
taxable as a corporation for United States federal income tax purposes. The
Owner Trustee and the Depositors agree that no election to treat the Issuer
other than as a partnership for United States federal income tax purposes or any
relevant state tax purposes shall be made by or on behalf of the Issuer. The
Certificateholders shall not direct the Owner Trustee to take action that would
violate the provisions of this Section.
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SECTION 6.7 Doing Business in Other Jurisdictions. (a) Notwithstanding
anything contained herein to the contrary, the Owner Trustee shall not be
required to take any action in any jurisdiction other than in the State of
Delaware, other than as set forth in the last sentence of this Section 6.7, if
the taking of such action will (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware; (ii)
result in any fee, tax or other governmental charge under the laws of any
jurisdiction or any political subdivisions thereof in existence on the date
hereof other than the State of Delaware becoming payable by the Owner Trustee;
or (iii) subject the Owner Trustee to personal jurisdiction in any jurisdiction
other than the State of Delaware for causes of action arising from acts
unrelated to the consummation of the transactions by the Owner Trustee, as the
case may be, contemplated hereby. The Owner Trustee shall be entitled to obtain
advice of counsel (which advice shall be an expense of the Depositors) to
determine whether any action required to be taken pursuant to this Agreement
results in the consequences described in clauses (i), (ii) and (iii) of the
preceding sentence. In the event that said counsel advises the Owner Trustee
that such action will result in such consequences, the Owner Trustee will
appoint an additional trustee pursuant to Section 10.5 to proceed with such
action.
ARTICLE VII
CONCERNING OWNER TRUSTEE
SECTION 7.1 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the other Basic Documents and
this Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Basic Document under any circumstances, except (i) for
its own willful misconduct, bad faith or gross negligence or (ii) in the case of
the breach of any representation or warranty contained in Section 7.3 expressly
made ----------- by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding sentence):
(a) The Owner Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Owner
Trustee unless it is proved that the Owner Trustee was grossly
negligent in ascertaining the pertinent facts;
(b) The Owner Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in
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accordance with the instructions of the Certificateholders
given pursuant to Section 6.3;
(c) No provision of this Agreement or any other Basic Document
shall require the Owner Trustee to expend or risk funds or otherwise
incur any financial liability in its own performance of any of its
rights or powers hereunder or under any other Basic Document if the
Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not assured or provided to it;
(d) Under no circumstances shall the Owner Trustee be
liable for indebtedness evidenced by or arising under any of
the Basic Documents, including the principal of and interest
on the Notes;
(e) The Owner Trustee shall not be responsible for and makes
no representation as to the validity or adequacy of this Agreement or
for the due execution hereof by each Depositor or for the form,
character, genuineness, sufficiency, value or validity of any of the
Owner Trust Estate or for or in respect of the validity or sufficiency
of the Basic Documents, other than the certificate of authentication on
the Certificates, shall not be accountable for the use or application
by the Depositors of the proceeds from the Certificates, and the Owner
Trustee shall in no event assume or incur any liability, duty or
obligation to any Noteholder or to any Certificateholder, other than as
expressly provided for herein and in the Basic Documents. The Owner
Trustee shall at no time have any responsibility or liability for or
with respect to the legality, validity and enforceability of any
Receivable, or the perfection and priority of any security interest
created by any Receivable in any Financed Boat or the maintenance of
any such perfection and priority; or the ability of the Owner Trust
Estate to generate the payments to be distributed to Certificateholders
under this Agreement or the Noteholders under the Indenture, including:
the existence, condition and ownership of any Financed Boat; the
existence and enforceability of any insurance thereon; the existence
and contents of any Receivable on any computer or other record thereof;
the validity of the assignment of any Receivable to the Issuer or of
any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by each
Depositor or the Servicer with any warranty or representation made
under any Basic Document or in any related document or the accuracy of
any such warranty or representation or any action of the Indenture
Trustee, an Administrator or the Servicer or any subservicer taken in
the name of the Owner Trustee;
(f) The Owner Trustee shall not be liable for the
default or misconduct of the Indenture Trustee, the Administrators or
the Servicer under any of the Basic
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Documents or otherwise, and the Owner Trustee shall have no obligation
or liability to perform the obligations of the Issuer under this
Agreement or the Basic Documents that are required to be performed by
an Administrator under an Administration Agreement, the Indenture
Trustee under the Indenture or the Servicer under the Sale and
Servicing Agreement;
(g) The Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any other Basic Document,
at the request, order or direction of any of the Certificateholders,
unless such Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs, expenses
and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary
act enumerated in this Agreement or in any other Basic Document shall
not be construed as a duty, and the Owner Trustee shall not be
answerable for other than its negligence, bad faith or willful
misconduct in the performance of any such act; and
(h) The Owner Trustee, upon receipt of any resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Owner Trustee that shall be specifically
required to be furnished pursuant to any provision of this Agreement or
the other Basic Documents, shall examine them to determine whether they
conform to the requirements of this Agreement or such other Basic
Document; provided, however, that the Owner Trustee shall not be
responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other
instrument furnished to the Owner Trustee pursuant to this Agreement or
the other Basic Documents.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Depositors, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized and
validly existing in good standing under the laws of the State
of Delaware and having an office within the State of Delaware.
It has all requisite corporate power, authority and legal
right to execute, deliver and perform its obligations under
this Agreement.
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(b) It has taken all corporate action necessary to
authorize the execution and delivery by it of this Agreement,
and this Agreement will be executed and delivered by one of
its officers who is duly authorized to execute and deliver
this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of
this Agreement, nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the terms
or provisions hereof will contravene any federal or Delaware
law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment, writ,
decree or order applicable to it, or constitute any default
under its charter documents or by-laws or, with or without
notice or lapse of time, any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any
of its properties may be bound.
(d) The execution, delivery and performance by the
Owner Trustee of this Agreement does not require the
authorization, consent, or approval of, the giving of notice
to, the filing or registration with, or the taking of any
other action in respect of, any governmental authority or
agency of the State of Delaware or the United States of
America regulating the corporate trust activities of the Owner
Trustee (other than the filing of the Certificate of Trust
with the Delaware Secretary of State).
(e) This Agreement has been duly authorized, executed
and delivered by the Owner Trustee and (assuming due
authorization, execution and delivery of this Agreement by the
Depositors) shall constitute the legal, valid, and binding
agreement of the Owner Trustee, enforceable in accordance with
its terms against the Owner Trustee, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization and other laws affecting the rights of
creditors generally, and by general principles of equity
regardless of whether enforcement is pursuant to a proceeding
in equity or at law.
SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein,
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the Owner Trustee may for all purposes hereof rely on a certificate, signed by
the president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with due care and (ii) may consult with counsel, accountants and other
skilled persons knowledgeable in the relevant area to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
written opinion or advice of any such counsel, accountants or other such persons
and not contrary to this Agreement or any Basic Document.
SECTION 7.5 Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created, Wilmington Trust
Company acts solely as the Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any Basic Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of the Certificates or the Notes and may deal with the Depositors, the Indenture
Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not the Owner Trustee.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1 Owner Trustee's Fees and Expenses. In accordance with
Section 4.7 of the Sale and Servicing Agreement, the Owner Trustee shall receive
as compensation for its services hereunder such fees as have been separately
agreed upon before the date hereof between the Servicer and the Owner Trustee,
and the Owner Trustee shall be entitled to be reimbursed by the Servicer and the
Sellers in accordance with Sections 4.7 and 6.2, respectively, of the Sale and
Servicing Agreement for its reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
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representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder except any such expenses as may arise from its gross negligence,
wilful misfeasance, or bad faith or that is the responsibility of
Certificateholders under this Agreement.
SECTION 8.2 Indemnification. The Depositors, jointly and severally,
shall be liable as primary obligors for, and shall indemnify the Owner Trustee
(in such capacity or individually) and its successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of this Agreement, the other Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Depositors shall not be
liable for or required to indemnify the Owner Trustee from and against Expenses
arising or resulting from any of the matters described in the third sentence of
Section 7.1. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Indemnified Party in respect of which indemnity may be sought pursuant to
this Section 8.2, such Indemnified Party shall promptly notify the Depositors in
writing, and the Depositors upon request of the Indemnified Party shall retain
counsel reasonably satisfactory to the Indemnified Party (or, with the consent
of the Depositors, counsel selected by the Indemnified Party acceptable to the
Depositors) to represent the Indemnified Party and any others the Depositors may
designate in such proceeding and shall pay the reasonable fees and expenses of
such counsel related to such proceeding. The Depositors shall not be liable for
any settlement of any claim or proceeding effected without its written consent,
but if settled with such consent or if there be a final judgment for the
plaintiff, the Depositors agree to indemnify any Indemnified Party from and
against any loss or liability by reason of such settlement or judgment. The
Depositors shall not, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability
on claims that are the subject matter of such proceeding.
SECTION 8.3 Payments to Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not
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to be a part of the Owner Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1 Termination of Trust Agreement. (a) This Agreement (other
than Article VIII) and the Issuer shall terminate and be of no further force or
effect, on the Distribution Date next succeeding the month which is six months
after the final distribution by the Owner Trustee of all moneys or other
property or proceeds of the Owner Trust Estate in accordance with the terms of
the Indenture and the Sale and Servicing Agreement, including the payment to the
Certificateholders of all amounts required to be paid to them pursuant to the
Sale and Servicing Agreement; provided, however, that in no event shall the
Trust created by the Sale and Servicing Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador to the Court of St. James's, living on the date of
this Agreement. The bankruptcy, liquidation, dissolution, death or incapacity of
any Certificateholder or Certificate Owner shall not (x) operate to terminate
this Agreement or the Issuer, nor (y) entitle such Certificateholder's or
Certificate Owner's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Issuer or the Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither any Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Issuer, specifying the
Distribution Date upon which the Certificateholders shall surrender their
Certificates to the Owner Trustee or the Paying Agent for payment of the final
distribution and cancellation, shall be given by the Owner Trustee by letter to
the Certificateholders mailed within five Business Days of receipt of notice of
such termination from the Servicer given pursuant to Section 9.1(c) of the Sale
and Servicing Agreement, stating (i) the Distribution Date upon or with respect
to which final payment of the Certificates shall be made upon or with respect to
which final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Owner Trustee or the Paying
Agent therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Owner Trustee or the Paying Agent therein
specified. The Owner Trustee shall give such notice to the Certificate Registrar
(if other than the Owner Trustee) and the Paying Agent at the time such notice
is given to
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the Certificateholders. Upon presentation and surrender of the Certificates to
the Owner Trustee, the Certificateholders shall receive the amounts
distributable on such Distribution Date pursuant to the Sale and Servicing
Agreement.
If all of the Certificateholders shall not surrender their Certificates
for cancellation within six months after the date specified in the above
mentioned written notice, the Owner Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Owner Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Owner Trust Estate after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Owner Trustee to the Depositors.
(d) Upon the winding up of the Issuer and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation authorized to exercise corporate
trust powers; having a combined capital and surplus of at least $100,000,000
subject to supervision or examination by Federal or state authorities; and an
approved assignee of a Preferred Mortgage under the Ship Mortgage Statutes. If
such corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section
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10.2. In addition, at all times the Owner Trustee or a co-trustee shall be a
person that satisfies the requirements of Section 3807(a) of the Business Trust
Statute (the "Delaware Trustee").
SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Administrators and the Depositors. Upon
receiving such notice of resignation, the Depositors shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Owner Trustee may petition any court of
competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Depositors, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositors may remove the Owner Trustee. If the Depositors
shall remove the Owner Trustee under the authority of the immediately preceding
sentence, the Depositors shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed and one copy of which shall
be delivered to the successor Owner Trustee, and payment of all fees owed to the
outgoing Owner Trustee shall be made to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Depositors shall provide notice of such
resignation or removal of the Owner Trustee to the Administrators and each of
the Rating Agencies.
SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to
the Depositors and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as the Owner Trustee.
The
29
<PAGE>
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Depositors and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, (i) the Chase Administrator shall mail notice of the successor of
such Owner Trustee to all Certificateholders, the Trustee, the Noteholders and
the Rating Agencies and (ii) such successor Owner Trustee shall file an
amendment to the Certificate of Trust with the Secretary of State reflecting the
name and principal place of business of such successor Owner Trustee in the
State of Delaware. If the Chase Administrator shall fail to mail such notice
within 10 days after acceptance of appointment by the successor Owner Trustee,
the successor Owner Trustee shall cause such notice to be mailed at the expense
of the Chase Administrator.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided further that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Boat may at the time be located, the
Chase Administrator and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee to act as co-trustee, jointly with the Owner
Trustee, or separate trustee or separate trustees, of all or any part of the
Owner Trust Estate, and to vest in such Person, in such capacity, such title to
the Issuer, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Chase
Administrator and the Owner Trustee may consider necessary or desirable. If the
30
<PAGE>
Chase Administrator shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, the Owner Trustee alone shall
have the power to make such appointment. If the Delaware Trustee shall become
incapable of acting, resign or be removed, unless the Owner Trustee is qualified
to act as the Delaware Trustee, a successor co-trustee shall promptly be
appointed in the manner specified in this Section 10.5 to act as the Delaware
Trustee. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Issuer or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Chase Administrator and the Owner Trustee acting
jointly may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Depositors.
31
<PAGE>
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Supplements and Amendments. This Agreement may be amended
by the Depositors and the Owner Trustee, with prior written notice to the Rating
Agencies, without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity or defect, to correct or supplement
any provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided that such action shall not, as evidenced by an
Opinion of Counsel, materially adversely affect the interests of any Noteholder
or Certificateholder; provided, further, that the Depositors shall deliver
written notice of such amendments to each Rating Agency prior to the execution
of any such amendment.
This Agreement may also be amended from time to time by the Depositors
and the Owner Trustee, with prior written notice to the Rating Agencies, with
the consent of the Noteholders representing not less than a majority of the
Outstanding Amount of the Notes and, to the extent affected thereby, the consent
of the Certificateholders representing not less than a majority of the
Certificate Interest for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or modifying
in any manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Receivables or distributions that shall be required to be made for the benefit
of any Noteholder or any Certificateholder, or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Certificate Interest
required to consent to any such amendment without the consent of the Noteholders
or the Certificateholders representing 100% of the Outstanding Amount of the
Notes or the Certificateholders representing 100% of the Certificate Interest,
as the case may be.
32
<PAGE>
Promptly after the execution of any amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and each of the Rating
Agencies.
It shall not be necessary for the consent of Certificateholders or the
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of the Certificateholders provided for in this Agreement or in
any other Basic Document) and of evidencing the authorization of the execution
thereof by the Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of the
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of the Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided ownership interest therein
only in accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholders to and in
their ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for Sections 2.7
and 2.10, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Depositors, the Certificateholders and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally
33
<PAGE>
delivered, delivered by overnight courier or mailed certified mail, return
receipt requested and shall be deemed to have been duly given upon receipt, if
to the Owner Trustee, addressed to Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration; if to the Depositors, addressed to, (i) Chase
Manhattan Bank USA, National Association, 802 Delaware Avenue, Wilmington,
Delaware 19801, Attention: Controller and (ii) The Chase Manhattan Bank, c/o
Chase Financial Corporation, 260 West Huron, Cleveland, Ohio 44113, Attention:
Chief Financial Officer (cc: General Counsel), or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, regardless of whether the Certificateholder receives such notice.
SECTION 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositors, the Owner Trustee and its successors and each Certificateholder and
its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 11.8 No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
equity interests in the Issuer only and do not represent interests in or
obligations of the Depositors, the Servicer, the Owner Trustee, the Indenture
Trustee or any Affiliate thereof, and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated in
this Agreement, the Certificates or the other Basic Documents.
SECTION 11.9 [Reserved].
34
<PAGE>
SECTION 11.10 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized as of
the day and year first above written.
WILMINGTON TRUST COMPANY,
as Owner Trustee
By:
---------------------
Name:
Title:
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION,
as Depositor
By:
---------------------
Name: Keith Schuck
Title: Vice President
THE CHASE MANHATTAN BANK,
as Depositor
By: ---------------------
Name: Robert Krug
Title: Vice President
<PAGE>
EXHIBIT A
[FORM OF CERTIFICATE]
NUMBER
R CERTIFICATE INTEREST: ____%
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1993, AS AMENDED (THE "ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION HEREOF
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE REGISTRATION PROVISIONS OF THE ACT AND ANY APPLICABLE PROVISIONS OF ANY
STATE BLUE SKY OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH PROVISIONS. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN
CONDITIONS SET FORTH IN THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF (i) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) WHICH IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN (AS DEFINED IN SECTION 4975(e)(1) OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OTHER THAN A PLAN
DESCRIBED IN SECTION 4975(g)(2) OR (3) OF THE CODE), OR (iii) ANY ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF A PLAN'S INVESTMENT IN THE
ENTITY (EXCLUDING ANY INVESTMENT COMPANY THAT IS REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED). BY ACCEPTING AND HOLDING THIS CERTIFICATE, THE
HOLDER HEREOF AND THE CERTIFICATE OWNER SHALL EACH BE DEEMED TO HAVE REPRESENTED
AND WARRANTED THAT IT IS NOT SUCH A PLAN AND THAT NO ASSETS OF SUCH A PLAN WERE
USED TO ACQUIRE THIS CERTIFICATE. THE FOREGOING RESTRICTIONS SHALL NOT APPLY TO
ACQUISITIONS OR HOLDINGS OF CERTIFICATES WITH ASSETS OF THE GENERAL ACCOUNT OF
AN INSURANCE COMPANY, TO THE EXTENT THAT THE ACQUISITION OR HOLDING,
RESPECTIVELY, OF SUCH CERTIFICATES (i) IS AND WILL BE PERMISSIBLE UNDER SECTION
401(c) OF ERISA AND FINAL REGULATIONS THEREUNDER OR ANOTHER EXEMPTION UNDER
ERISA AND (ii) DOES NOT AND WILL NOT RESULT IN THE CONTEMPLATED OPERATIONS OF
THE TRUST BEING TREATED AS NONEXEMPT PROHIBITED TRANSACTIONS.
THE CERTIFICATES MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF AN
INDIVIDUAL OR ENTITY THAT IS NOT A U.S. PERSON AS DEFINED IN SECTION 7701(A)(30)
OF THE CODE. BY ACCEPTING AND HOLDING A CERTIFICATE, THE HOLDER SHALL BE DEEMED
TO HAVE REPRESENTED AND WARRANTED THAT IT (OR, IF IT IS ACTING AS A NOMINEE, THE
BENEFICIAL OWNER) IS A U.S. PERSON.
<PAGE>
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Issuer, as defined below, the property of which includes a pool of retail
installment sales contracts or purchase money notes and security agreements
secured by new or used boats and sold to the Issuer by Chase Manhattan Bank USA,
National Association, a national banking association, and The Chase Manhattan
Bank, a New York banking corporation.
(This Certificate does not represent an interest in or obligation of Chase
Manhattan Bank USA, National Association, The Chase Manhattan Bank or any of
their Affiliates, except to the extent described below.)
THIS CERTIFIES THAT __________ is the registered owner of
___________________________ nonassessable, fully-paid, beneficial ownership
interest in certain distributions of Chase Manhattan Marine Owner Trust 1997-A
(the "Issuer") formed by Chase Manhattan Bank USA, National Association, a
national banking association, and The Chase Manhattan Bank, a New York banking
corporation (each, a "Depositor" and collectively, the "Depositors").
A-2
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within mentioned
Trust Agreement.
- ------------------------ -----------------------------
or
as Owner Trustee as Owner Trustee
By: By:
--------------------- --------------------------
Authenticating Agent
A-3
<PAGE>
Issuer was created pursuant to a Certificate of Trust, filed with the
Delaware Secretary of State on July 17, 1997 and an original Trust Agreement,
dated as of July 18, 1997 and continued pursuant to an Amended and Restated
Trust Agreement dated as of October 1, 1997 (as amended and restated the "Trust
Agreement"), among the Depositors and Wilmington Trust Company, as owner trustee
(the "Owner Trustee"), a summary of certain of the pertinent provisions of which
is set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in Section 1.1 of the Sale
and Servicing Agreement dated as of October 1, 1997, among the Issuer and Chase
Manhattan Bank USA, National Association and The Chase Manhattan Bank, as
Sellers and The CIT Group/Sales Financing, Inc., as Servicer, as the same may be
amended or supplemented from time to time (the "Sale and Servicing Agreement").
This Certificate is one of the duly authorized Certificates of the
Issuer designated as "Asset Backed Certificates" (herein called the
"Certificates"). Issued under the Indenture dated as of October 1, 1997, between
the Issuer and Norwest Bank Minnesota, National Association, as indenture
trustee (the "Indenture"), are eight classes of Notes designated as "Class A-1
[______]% Asset Backed Notes" (the "Class A-1 Notes"), "Class A-2 [______]%
Asset Backed Notes" (the "Class A-2 Notes"), "Class A-3 [______]% Asset Backed
Notes" (the "Class A-3 Notes"), "Class A-4 [______]% Asset Backed Notes" (the
"Class A-4 Notes"), "Class A-5 [______]% Asset Backed Notes" (the "Class A-5
Notes"), "Class A-6 [______]% Asset Backed Notes" (the "Class A-6 Notes"),
"Class B [______]% Asset Backed Notes" (the "Class B Notes") and "Class C
[______]% Asset Backed Notes" (the "Class C Notes" and, together with the Class
A-1 Notes, the Class A-2 Notes, the Class A-3, the Class A-4 Notes and the Class
A-5 Notes, the Class A-6 Notes, the Class B Notes, the "Notes"). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the holder of this
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement, the
Indenture and the Trust Agreement, as applicable.
It is the intent of each Depositor and the Certificateholders that, for
United States federal income tax purposes, the Issuer will be treated as a
partnership and the Depositors and the Certificateholders will be treated as
partners in that partnership. The Certificateholders by acceptance of a
Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Certificates for such tax purposes as equity (i.e.,
partnership interests) in the Issuer.
Each Certificateholder, by its acceptance of a Certificate or
a beneficial interest in a Certificate, acknowledges and agrees
A-4
<PAGE>
that none of the Depositors or the Owner Trustee is authorized to elect to treat
the Issuer other than as a partnership for United States federal income tax
purposes or any relevant state tax purposes. Each Certificateholder, by its
acceptance of a Certificate or a beneficial interest in a Certificate, agrees
not to take any actions (or direct the Owner Trustee to take such acts or
actions) that would violate such restriction.
The Certificates do not represent an obligation of, or an interest in,
any of the Depositors, the Servicer, the Owner Trustee, the Indenture Trustee or
their respective Affiliates, and no recourse may be had against such parties or
their assets, except as may be expressly set forth or contemplated herein or in
the Trust Agreement, the Indenture or the other Basic Documents.
This Certificate is subject to the restrictions on transfer set forth
in Section 3.4 of the Trust Agreement.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee or the Authentication
Agent, by manual or facsimile signature, this Certificate shall not entitle the
holder hereof to any benefit under the Trust Agreement or the Sale and Servicing
Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, 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.
A-5
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of Issuer and not in
its individual capacity, has caused this Certificate to be duly executed.
CHASE MANHATTAN MARINE OWNER
TRUST 1997-A
By:
-------------------------------
not in its individual
capacity, but solely as
Owner Trustee
Dated: By:
-------------------------------
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the Certificate mentioned herein, and all rights thereunder, hereby irrevocably
constituting and appointing
___________________________________________ as Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
-----------------------------------*
Signature Guaranteed:
-----------------------------------*
- --------
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Certificate in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by a member firm of the New York Stock Exchange
or a commercial bank or trust company.
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST
<PAGE>
- --------------------------------------------------------------------------------
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
Class A-1 [____]% Asset Backed Notes
Class A-2 [____]% Asset Backed Notes
Class A-3 [____]% Asset Backed Notes
Class A-4 [____]% Asset Backed Notes
Class A-5 [____]% Asset Backed Notes
Class A-6 [____]% Asset Backed Notes
Class B [____]% Asset Backed Notes
Class C [____]% Asset Backed Notes
------------------------------------
CHASE ADMINISTRATION AGREEMENT
Dated as of October 1, 1997
------------------------------------
The Chase Manhattan Bank
Chase Administrator
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
1. Duties of Chase Administrator.......................... 2
2. Records................................................ 7
3. Compensation........................................... 7
4. Additional Information To Be Furnished to Issuer....... 7
5. Independence of Chase Administrator.................... 7
6. No Joint Venture....................................... 7
7. Other Activities of Chase Administrator................ 7
8. Term of Agreement; Resignation and Removal of Chase
Administrator.......................................... 8
9. Action upon Termination, Resignation or Removal........ 9
10. CITSF Administration Agreements........................ 10
11. Notices................................................ 10
12. Amendments............................................. 11
13. Successors and Assigns................................. 12
14. GOVERNING LAW.......................................... 12
15. Headings............................................... 12
16. Counterparts........................................... 12
17. Severability........................................... 12
18. Not Applicable to Chase in Other Capacities............ 13
19. Limitation of Liability of Owner Trustee, Indenture
Trustee and Chase Administrator........................ 13
20. Third-Party Beneficiary................................ 14
21. Nonpetition Covenants.................................. 14
22. Liability of Chase Administrator....................... 14
EXHIBIT A - Form of Power of Attorney
<PAGE>
CHASE ADMINISTRATION AGREEMENT, dated as of October 1, 1997, among
CHASE MANHATTAN MARINE OWNER TRUST 1997-A, a Delaware business trust (the
"Issuer"), THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrator (the "Chase Administrator"), THE CIT GROUP/SALES FINANCING, INC.
and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as Indenture Trustee (the
"Indenture Trustee").
W I T N E S S E T H :
WHEREAS the Issuer is issuing the Class A-1 [____]% Asset Backed Notes
(the "Class A-1 Notes"), the Class A-2 [____]% Asset Backed Notes (the "Class
A-2 Notes"), the Class A-3 [____]% Asset Backed Notes (the "Class A-3 Notes"),
the Class A-4 [____]% Asset Backed Notes (the "Class A-4 Notes"), the Class A-5
[____]% Asset Backed Notes (the "Class A-5 Notes"), the Class A-6 [____]% Asset
Backed Notes (the "Class A-6 Notes"), the Class B [____]% Asset Backed Notes
(the "Class B Notes") and the Class C [____]% Asset Backed Notes (the "Class C
Notes" and, together with the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the Class B Notes, the
"Notes") pursuant to the Indenture, dated as of October 1, 1997 (as amended,
modified or supplemented from time to time in accordance with the provisions
thereof, the "Indenture"), between the Issuer and the Indenture Trustee and the
Asset Backed Certificates (the "Certificates") pursuant to the Trust Agreement,
dated as of October 1, 1997 (as amended, modified or supplemented from time to
time in accordance with the provisions thereof, the "Trust Agreement"), among
Chase USA and Chase (as defined below), as Depositors, and Wilmington Trust
Company, as owner trustee (the "Owner Trustee").
WHEREAS the Issuer has entered into certain agreements in connection
with the issuance of the Notes and the Certificates, including (i) a Sale and
Servicing Agreement, dated as of October 1, 1997 (the "Sale and Servicing
Agreement") (capitalized terms used herein and not defined herein shall have the
meanings assigned such terms in the Sale and Servicing Agreement), among the
Issuer, Chase Manhattan Bank USA, N.A. ("Chase USA"), as a Seller, The Chase
Manhattan Bank ("Chase"), as a Seller and The CIT Group/Sales Financing, Inc.,
as Servicer, (ii) the Trust Agreement and (iii) the Indenture (the Sale and
Servicing Agreement, the Trust Agreement and the Indenture being hereinafter
referred to collectively as the "Related Agreements");
WHEREAS pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the Notes
and the collateral pledged therefor pursuant to the Indenture (the "Collateral")
and (b) the Certificates;
<PAGE>
WHEREAS the Issuer desires to have the Chase Administrator perform
certain of the duties of the Issuer and the Owner Trustee referred to herein,
and to provide such additional services consistent with the terms of this
Agreement and the Related Agreements as the Issuer may from time to time
request;
WHEREAS the Chase Administrator has the capacity to provide the
services required hereby and is willing to perform such services for the Issuer
and the Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. Duties of Chase Administrator. (a) Duties with Respect to the
Related Agreements. (i) Subsequent to the Closing Date, the Chase Administrator
shall take all appropriate action that it is the duty of the Issuer or the Owner
Trustee to take pursuant to the following provisions of the Indenture:
(A) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes, if any, and
delivery of the same to the Indenture Trustee (Section 2.2);
(B) the duty to cause the Note Register to be kept and to give
the Indenture Trustee notice of any appointment of a new Note Registrar
and the location, or change in location, of the Note Register and the
office or offices where Notes may be surrendered for registration of
transfer or exchange (Section 2.4);
(C) the notification of Noteholders of the final
principal payment on their Notes (Section 2.7(b));
(D) the preparation of Definitive Notes and arranging
the delivery thereof (Section 2.12);
(E) the maintenance of an office or agency in the City
of New York for registration of transfer or exchange of Notes
(Section 3.2);
(F) the duty to cause newly appointed Paying Agents, if any,
to deliver to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (Section 2.14);
(G) the direction to Paying Agents to pay to the
Indenture Trustee all sums held in trust by such Paying Agents
(Section 3.3);
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(H) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes, the Collateral and each
other instrument and agreement included in the Trust Estate (Section
3.4);
(I) the preparation of all supplements, amendments, if any,
instruments of further assurance and other instruments, in accordance
with Section 3.5 of the Indenture, necessary to protect the Trust
Estate (Section 3.5);
(J) the identification to the Indenture Trustee in an
Officers' Certificate of a Person with whom the Issuer has contracted
to perform its duties under the Indenture (Section 3.7(b));
(K) the notification of the Indenture Trustee and the Rating
Agencies of an Event of Servicing Termination pursuant to the Sale and
Servicing Agreement and, if such Event of Servicing Termination arises
from the failure of the Servicer to perform any of its duties under the
Sale and Servicing Agreement, the taking of all reasonable steps
available to remedy such failure (Section 3.7(d));
(L) the delivery of notice to the Indenture Trustee of each
Event of Default, Event of Servicing Termination and each default by
the Seller under the Sale and Servicing Agreement (Section 3.18);
(M) the taking of such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of the
Indenture or to compel or secure the performance and observance by the
Seller and the Servicer of their obligations under the Sale and
Servicing Agreement (Sections 3.19 and 5.16);
(N) provide the Indenture Trustee with the information
necessary to deliver to each Noteholder such information as may be
reasonably required to enable such Holder to prepare its United States
federal and state and local income or franchise tax returns (Section
6.6);
(O) the preparation and delivery of notice to
Noteholders of the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee (Section 6.8);
(P) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of the Indenture
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Trustee or any co-trustee or separate trustee (Sections 6.8
and 6.10);
(Q) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee
is not the Note Registrar (Section 7.1);
(R) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a periodic basis
with, and summaries thereof as may be required by rules and regulations
prescribed by, the Commission and any applicable state agencies and the
transmission of such summaries, as necessary, to the Noteholders
(Section 7.3);
(S) the preparation of Issuer Orders and Issuer Requests and
the obtaining of Opinions of Counsel with respect to the execution of
supplemental indentures and the mailing to the Noteholders of notices
with respect to such supplemental indentures (Sections 9.1 and 9.2);
(T) the execution of new Notes conforming to any
supplemental indenture (Section 9.5);
(U) provide the Indenture Trustee with the form of notice
necessary to deliver the notification of the Class C Noteholders of
redemption of the Class C Notes (Section 10.2);
(V) provide the Indenture Trustee with the form of notice
necessary to deliver the notification of Noteholders of redemption of
the Notes (Section 10.2);
(W) the preparation and delivery to the Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.6); and
(X) the recording of the Indenture, if applicable
(Section 11.15).
(b) Additional Duties. (i) In addition to the duties of the Chase
Administrator set forth above, the Chase Administrator shall perform such
calculations and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to the Related Agreements, and at the request of the Owner Trustee
shall take all appropriate action that it is the duty of the Issuer or the Owner
Trustee to take pursuant to the Related Agreements. Subject to Section 5 of this
Agreement, and in accordance with the directions of the Owner Trustee, the Chase
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Administrator shall administer, perform or supervise the performance of such
other activities in connection with the Trust Estate (including the Related
Agreements) as are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee and are reasonably within the
capability of the Chase Administrator.
(ii) [Reserved.]
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Chase Administrator shall be responsible for
performance of the duties of the Owner Trustee and the Issuer set forth in
Sections 2.11, 2.12, 2.13 and 5.5(a), (b) and (c) and 5.7 of the Trust Agreement
with respect to, among other things, accounting and reports to
Certificateholders and the maintenance of Capital Accounts; provided, however,
that the Owner Trustee shall retain responsibility for the distribution of the
Schedule K-1s necessary to enable each Certificateholder to prepare its federal
and state income tax returns.
(iv) The Chase Administrator may satisfy its obligations with respect
to clause (iii) above by retaining, at the expense of the Chase
Administrator, a firm of independent public accountants (the "Accountants")
acceptable to the Owner Trustee which shall perform the obligations of the Chase
Administrator thereunder.
(v) [Reserved.]
(vi) The Chase Administrator shall perform the duties of the Chase
Administrator specified in Section 10.3 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner Trustee,
the duties of the Chase Administrator specified in Section 10.5 of the Trust
Agreement required to be performed in connection with the
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appointment and payment of co-Trustees, and any other duties expressly required
to be performed by the Chase Administrator under the Trust Agreement.
(vii) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Chase Administrator may enter into
transactions with or otherwise deal with any of its affiliates; provided,
however, that the terms of any such transactions or dealings shall be in
accordance with any directions received from the Issuer and shall be, in the
Chase Administrator's opinion, no less favorable to the Issuer than would be
available from unaffiliated parties.
(viii) It is the intention of the parties hereto that the Chase
Administrator shall, and the Chase Administrator hereby agrees to, execute on
behalf of the Issuer or the Owner Trustee all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Issuer or
the Owner Trustee to prepare, file or deliver pursuant to the Basic Documents.
In furtherance thereof, the Owner Trustee shall, on behalf of itself and of the
Issuer, execute and deliver to the Chase Administrator, and to each successor
Chase Administrator appointed pursuant to the terms hereof, one or more powers
of attorney substantially in the form of Exhibit A hereto, appointing the Chase
Administrator the attorney-in-fact of the Owner Trustee and the Issuer for the
purpose of executing on behalf of the Owner Trustee and the Issuer all such
documents, reports, filings, instruments, certificates and opinions.
(c) Non-Ministerial Matters. (i) With respect to matters that in the
reasonable judgment of the Chase Administrator are non-ministerial, the Chase
Administrator shall not take any action unless within a reasonable time before
the taking of such action, the Chase Administrator shall have notified the Owner
Trustee of the proposed action and the Owner Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include, without limitation:
(A) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Receivables);
(B) the amendment, change or modification of the Related
Agreements;
(C) the appointment of successor Indenture Trustees pursuant
to the Indenture, successor Paying Agents pursuant to the Amended and
Restated Trust Agreement or successor Chase Administrators or the
consent to the appointment of successor Note Registrars; and
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(D) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement, the
Chase Administrator shall not be obligated to, and shall not, (x) make any
payments to the Noteholders or the Certificateholders under the Related
Agreements, (y) sell the Trust Estate pursuant to Section 5.4 of the Indenture
or (z) take any action that the Issuer directs the Chase Administrator not to
take on its behalf.
2. Records. The Chase Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer, the Owner
Trustee, the Indenture Trustee and each Seller at any time during normal
business hours.
3. Compensation. As compensation for the performance of the Chase
Administrator's obligations under this Agreement, the Chase Administrator shall
be paid by the Servicer as set forth in Schedule D to the Sale and Servicing
Agreement.
4. Additional Information To Be Furnished to Issuer. The Chase
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request,
including notification of Noteholders pursuant to Section 1(C) hereof.
5. Independence of Chase Administrator. For all purposes of this
Agreement, the Chase Administrator shall be an independent contractor and shall
not be subject to the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer or the Owner
Trustee, as the case may be, the Chase Administrator shall have no authority to
act for or represent the Issuer or the Owner Trustee in any way and shall not
otherwise be deemed an agent of the Issuer or the Owner Trustee.
6. No Joint Venture. Nothing contained in this Agreement shall (i)
constitute the Chase Administrator and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity or (ii) be construed to impose
any liability as such on any of them.
7. Other Activities of Chase Administrator. (a) Nothing herein shall
prevent the Chase Administrator or its affiliates from engaging in other
businesses or, in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or entity
may engage in
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business activities similar to those of the Issuer, the Owner Trustee or the
Indenture Trustee.
(b) The Chase Administrator and its affiliates may generally engage in
any kind of business with any person party to a Related Agreement, any of its
affiliates and any person who may do business with or own securities of any such
person or any of its affiliates, without any duty to account therefor to the
Issuer, the Owner Trustee or the Indenture Trustee.
8. Term of Agreement; Resignation and Removal of Chase Administrator.
(a) This Agreement shall continue in force until the dissolution of the Issuer,
upon which event this Agreement shall automatically terminate.
(b) Subject to Sections 8(e) and (f), the Chase Administrator may
resign its duties hereunder by providing the Issuer, the Servicer and the Owner
Trustee with at least 60 days' prior written notice.
(c) Subject to Sections 8(e) and (f), the Issuer may remove the Chase
Administrator without cause by providing the Chase Administrator with at least
60 days' prior written notice.
(d) Subject to Sections 8(e) and (f), at the sole option of the Issuer,
the Chase Administrator may be removed immediately upon written notice of
termination from the Issuer to the Chase Administrator if any of the following
events shall occur:
(i) the Chase Administrator shall default in the performance
of any of its duties under this Agreement and, after notice of such
default, shall not cure such default within ten days (or, if such
default cannot be cured in such time, shall not give within ten days
such assurance of cure as shall be reasonably satisfactory to the
Issuer);
(ii) a court having jurisdiction in the premises shall enter
a decree or order for relief, and such decree or order shall not have
been vacated within 60 days, in respect of the Chase Administrator in
any involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect or appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for the Chase Administrator or any substantial part of its
property or order the winding-up or liquidation of its affairs; or
(iii) the Chase Administrator shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief
in an involuntary case under any such law, or shall consent to the
appointment of a receiver,
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liquidator, assignee, trustee, custodian, sequestrator or similar
official for the Chase Administrator or any substantial part of its
property, shall consent to the taking of possession by any such
official of any substantial part of its property, shall make any
general assignment for the benefit of creditors or shall fail generally
to pay its debts as they become due.
The Chase Administrator agrees that if any of the events specified in
clause (ii) or (iii) of this Section shall occur, it shall give written notice
thereof to the Issuer, the Servicer, the Owner Trustee and the Indenture Trustee
within seven days after the happening of such event.
(e) No resignation or removal of the Chase Administrator pursuant to
this Section shall be effective until (i) a successor Chase Administrator shall
have been appointed by the Issuer and (ii) such successor Chase Administrator
shall have agreed in writing to be bound by the terms of this Agreement in the
same manner as the Chase Administrator is bound hereunder.
(f) The appointment of any successor Chase Administrator shall be
effective only after receipt of written confirmation from each Rating Agency
that the proposed appointment will not result in the qualification, downgrading
or withdrawal of any rating assigned to the Notes by such Rating Agency.
(g) A successor Chase Administrator shall execute, acknowledge and
deliver a written acceptance of its appointment hereunder to the resigning Chase
Administrator and to the Issuer. Thereupon the resignation or removal of the
resigning Chase Administrator shall become effective, and the successor Chase
Administrator shall have all the rights, powers and duties of the Chase
Administrator under this Agreement. The successor Chase Administrator shall mail
a notice of its succession to the Noteholders and the Certificateholders. The
resigning Chase Administrator shall promptly transfer or cause to be transferred
all property and any related agreements, documents and statements held by it as
Chase Administrator to the successor Chase Administrator and the resigning Chase
Administrator shall execute and deliver such instruments and do other things as
may reasonably be required for fully and certainly vesting in the successor
Chase Administrator all rights, powers, duties and obligations hereunder.
(h) In no event shall a resigning Chase Administrator be
liable for the acts or omissions of any successor Chase Administrator hereunder.
(i) In the exercise or administration of its duties hereunder and under
the Related Documents, the Chase Administrator may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Chase Administrator shall
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not be liable for the conduct or misconduct of such agents or attorneys if such
agents or attorneys shall have been selected by the Chase Administrator with due
care.
9. Action upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a) or the
resignation or removal of the Chase Administrator pursuant to Section 8(b) or
(c), respectively, the Chase Administrator shall be entitled to be paid all fees
and reimbursable expenses accruing to it to the date of such termination,
resignation or removal. The Chase Administrator shall forthwith upon termination
pursuant to Section 8(a) deliver to the Issuer all property and documents of or
relating to the Collateral then in the custody of the Chase Administrator. In
the event of the resignation or removal of the Chase Administrator pursuant to
Section 8(b) or (c), respectively, the Chase Administrator shall cooperate with
the Issuer and take all reasonable steps requested to assist the Issuer in
making an orderly transfer of the duties of the Chase Administrator.
10. CITSF Administration Agreements. The Chase Administrator hereby
agrees to succeed to the responsibilities, duties and liabilities of the CITSF
Administrator under the CITSF Administration Agreement in accordance with
Section 7 (e) thereof upon the termination of the CITSF Administrator pursuant
to Section 7(a)(ii) of the CITSF Administration Agreement.
11. Notices. Any notice, report or other communication given
hereunder shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
with copies to:
(i) Chase Manhattan Bank USA, National Association
802 Delaware Avenue
Wilmington, Delaware 19801
Attention: Controller
(ii) The Chase Manhattan Bank
c/o Chase Financial Corporation
260 West Huron
Cleveland, Ohio 44113
Attention: Chief Financial Officer
(cc: General Counsel)
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(iii) The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
(b) if to the Chase Administrator, to
The Chase Manhattan Bank
c/o Chase Financial Corporation
260 West Huron
Cleveland, Ohio 44113
Attention: Chief Financial Officer
(cc: General Counsel)
(c) if to the Indenture Trustee, to
Norwest Bank Minnesota,
National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Asset-Backed Securities
(d) if to the Sellers, to
(i) Chase Manhattan Bank USA, National Association
802 Delaware Avenue
Wilmington, Delaware 19801
Attention: Controller
(ii) The Chase Manhattan Bank
c/o Chase Financial Corporation
260 West Huron
Cleveland, Ohio 44113
Attention: Chief Financial Officer
(cc: General Counsel)
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above, except that notices to the
Indenture Trustee are effective only upon receipt.
12. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Chase
Administrator and the Indenture Trustee, with the written consent of the Owner
Trustee and without the consent of the Noteholders and the Certificateholders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or Certificateholders; provided that such
amendment will not, as evidenced by an Opinion of Counsel,
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<PAGE>
materially adversely affect the interest of any Noteholder or Certificateholder.
This Agreement may also be amended by the Issuer, the Chase Administrator and
the Indenture Trustee with the written consent of the Owner Trustee and the
holders of Notes representing a majority in the Outstanding Amount of the Notes
and the holders of the Certificates representing a majority of the Certificate
Interest of the Certificates for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of Noteholders or the Certificateholders;
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that are required to be made for the
benefit of the Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the holders of Notes and Certificates which are required to
consent to any such amendment, without the consent of the holders of all the
outstanding Notes and Certificates. Notwithstanding the foregoing, the Chase
Administrator may not amend this Agreement without (i) the permission of each
Seller, which permission shall not be unreasonably withheld and (ii) providing
the Rating Agencies with prior written notice of such amendment.
13. Successors and Assigns. This Agreement may not be assigned by the
Chase Administrator unless such assignment is previously consented to in writing
by the Issuer and the Owner Trustee and subject to receipt by the Owner Trustee
of written confirmation from each Rating Agency that such assignment will not
result in the qualification, downgrading or withdrawal of any rating assigned to
the Notes by such Rating Agency in respect thereof. An assignment with such
consent and satisfaction, if accepted by the assignee, shall bind the assignee
hereunder in the same manner as the Chase Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by the Chase
Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of assets) to the Chase Administrator, provided that such successor
organization executes and delivers to the Issuer, the Owner Trustee and the
Indenture Trustee an agreement in which such corporation or other organization
agrees to be bound hereunder by the terms of the assignment in the same manner
as the Chase Administrator is bound hereunder. Subject to the foregoing, this
Agreement shall bind any successors or assigns of the parties hereto.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
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15. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
16. Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall together constitute but one and the same
agreement.
17. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
18. Not Applicable to Chase in Other Capacities. Nothing in this
Agreement shall affect any obligation Chase may have in any other capacity.
19. Limitation of Liability of Owner Trustee, Indenture Trustee and
Chase Administrator. (a) Notwithstanding anything contained herein to the
contrary, this instrument has been signed by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by Norwest Bank Minnesota, National Association, not
in its individual capacity but solely as Indenture Trustee, and in no event
shall Norwest Bank Minnesota, National Association have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
(c) No recourse under any obligation, covenant or agreement of the
Issuer contained in this Agreement shall be had against any agent of the Issuer
(including the Chase Administrator) as such by the enforcement of any assessment
or by any legal or equitable proceeding, by virtue of any statute or otherwise;
it being expressly agreed and understood that this Agreement is solely an
obligation of the Issuer as a Delaware business trust, and that no
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personal liability whatever shall attach to or be incurred by any agent of the
Issuer (including the Chase Administrator), as such, under or by reason of any
of the obligations, covenants or agreements of the Issuer contained in this
Agreement, or implied therefrom, and that any and all personal liability for
breaches by the Issuer of any such obligations, covenants or agreements, either
at common law or at equity, or by statute or constitution, of every such agent
is hereby expressly waived as a condition of and in consideration for the
execution of this Agreement.
20. Third-Party Beneficiary. Each of the Sellers (to the extent
provided in Section 11) and the Owner Trustee is a third-party beneficiary to
this Agreement and is entitled to the rights and benefits hereunder and may
enforce the provisions hereof as if it were a party hereto.
21. Nonpetition Covenants. Notwithstanding any prior termination of
this Agreement, the Chase Administrator and the Indenture Trustee shall not,
prior to the date which is one year and one day after the termination of this
Agreement with respect to the Issuer, acquiesce, petition or otherwise invoke or
cause the Issuer to invoke the process of any court of government authority for
the purpose of commencing or sustaining a case against the Issuer under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
22. Liability of Chase Administrator. Notwithstanding any provision of
this Agreement, the Chase Administrator shall not have any obligations under
this Agreement other than those specifically set forth herein, and no implied
obligations of the Chase Administrator shall be read into this Agreement.
Neither the Chase Administrator nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken in good
faith by it or them under or in connection with this Agreement, except for its
or their own gross negligence or willful misconduct and in no event shall the
Chase Administrator be liable under or in connection with this Agreement for
indirect, special, or consequential losses or damages of any kind, including
lost profits, even if advised of the possibility thereof and regardless of the
form of action by which such losses or damages may be claimed. Without limiting
the foregoing, the Chase Administrator may (a) consult with legal counsel
(including counsel for the Issuer), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts and (b) shall incur no liability under or in respect of
this Agreement by acting upon any notice (including notice by telephone),
consent, certificate or other
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instrument or writing (which may be by facsimile) believed by it to be genuine
and signed or sent by the proper party or parties.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
CHASE MANHATTAN MARINE OWNER TRUST
1997-A
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee,
By:
____________________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual
capacity but solely as
Indenture Trustee,
By:
____________________________________
Name: Marianna Stershic
Title: Assistant Vice President
THE CHASE MANHATTAN BANK,
as Chase Administrator,
By:
____________________________________
Name: Robert Krug
Title: Vice President
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer,
By:
____________________________________
Name:
Title:
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EXHIBIT A
[Form of Power of Attorney]
POWER OF ATTORNEY
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity but solely as owner
trustee ("Owner Trustee") for Chase Manhattan Marine Owner Trust 1997-A
("Trust"), does hereby make, constitute and appoint THE CHASE MANHATTAN BANK, as
Chase Administrator under the Administration Agreement (as defined below), and
its agents and attorneys, as Attorneys-in-Fact to execute on behalf of the Owner
Trustee or the Trust all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Owner Trustee or the
Trust to prepare, file or deliver pursuant to the Related Documents (as defined
in the Administration Agreement), including, without limitation, to appear for
and represent the Owner Trustee and the Trust in connection with the
preparation, filing and audit of federal, state and local tax returns pertaining
to the Trust, and with full power to perform any and all acts associated with
such returns and audits that the Owner Trustee could perform, including without
limitation, the right to distribute and receive confidential information, defend
and assert positions in response to audits, initiate and defend litigation, and
to execute waivers of restriction on assessments of deficiencies, consents to
the extension of any statutory or regulatory time limit, and settlements. For
the purpose of this Power of Attorney, the term "Administration Agreement" means
the Chase Administration Agreement, dated as of October 1, 1997, among the
Trust, The Chase Manhattan Bank, as Chase Administrator, The CIT Group/Sales
Financing, Inc. and Norwest Bank Minnesota, National Association, as Indenture
Trustee, as such may be amended from time to time.
All powers of attorney for this purpose heretofore filed or executed
by the Owner Trustee are hereby revoked.
EXECUTED this ____ day of _______, 199_.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By:
____________________________________
Name:
Title:
17
<PAGE>
- --------------------------------------------------------------------------------
CHASE MANHATTAN MARINE OWNER TRUST 1997-A
Class A-1 [____]% Asset Backed Notes
Class A-2 [____]% Asset Backed Notes
Class A-3 [____]% Asset Backed Notes
Class A-4 [____]% Asset Backed Notes
Class A-5 [____]% Asset Backed Notes
Class A-6 [____]% Asset Backed Notes
Class B [____]% Asset Backed Notes
Class C [____]% Asset Backed Notes
------------------------------------
CITSF ADMINISTRATION AGREEMENT
Dated as of October 1, 1997
------------------------------------
The CIT GROUP/SALES FINANCING, INC., as
CITSF Administrator
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Duties of CITSF Administrator..................................... 2
2. Compensation...................................................... 3
3. Additional Information To Be Furnished to Issuer.................. 3
4. Independence of CITSF Administrator............................... 3
5. No Joint Venture.................................................. 4
6. Other Activities of CITSF Administrator........................... 4
7. Term of Agreement................................................. 4
8. Action upon Termination........................................... 5
9. Notices........................................................... 6
10. Amendments........................................................ 7
11. Successors and Assigns............................................ 7
12. GOVERNING LAW..................................................... 8
13. Headings.......................................................... 8
14. Counterparts...................................................... 8
15. Severability...................................................... 8
16. Not Applicable to CITSF in Other Capacities....................... 8
17. Limitation of Liability of Owner Trustee, Indenture
Trustee and CITSF Administrator................................... 8
18. Third-Party Beneficiary........................................... 9
19. Nonpetition Covenants............................................. 9
20. Liability of CITSF Administrator.................................. 9
21. Indemnity......................................................... 10
EXHIBIT A - Form of Power of Attorney
i
<PAGE>
CITSF ADMINISTRATION AGREEMENT, dated as of October 1, 1997, among
CHASE MANHATTAN MARINE OWNER TRUST 1997-A, a Delaware business trust (the
"Issuer"), THE CIT GROUP/SALES FINANCING, INC., a Delaware corporation, as
administrator (the "CITSF Administrator"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity but
solely as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS the Issuer is issuing the Class A-1 [____]% Asset Backed Notes
(the "Class A-1 Notes"), the Class A-2 [____]% Asset Backed Notes (the "Class
A-2 Notes"), the Class A-3 [____]% Asset Backed Notes (the "Class A-3 Notes"),
the Class A-4 [____]% Asset Backed Notes (the "Class A-4 Notes"), the Class A-5
[____]% Asset Backed Notes (the "Class A-5 Notes"), the Class A-6 [____]% Asset
Backed Notes (the "Class A-6 Notes"), the Class B [____]% Asset Backed Notes
(the "Class B Notes") and the Class C [____]% Asset Backed Notes (the "Class C
Notes" and, together with the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes and the
Class B Notes, the "Notes") pursuant to the Indenture dated as of October 1,
1997 (as amended, modified or supplemented from time to time in accordance with
the provisions thereof, the "Indenture"), between the Issuer and the Indenture
Trustee and the Asset Backed Certificates (the "Certificates") pursuant to the
Trust Agreement dated as of October 1, 1997 (as amended, modified or
supplemented from time to time in accordance with the provisions thereof, the
"Trust Agreement") among Chase USA and Chase (as defined below), as Depositors,
and Wilmington Trust Company, as owner trustee (the "Owner Trustee").
WHEREAS the Issuer has entered into certain agreements in connection
with the issuance of the Notes and the Certificates, including (i) a Sale and
Servicing Agreement dated as of October 1, 1997 (the "Sale and Servicing
Agreement") (capitalized terms used herein and not defined herein shall have the
meanings assigned such terms in the Sale and Servicing Agreement), among the
Issuer, Chase Manhattan Bank USA, N.A. ("Chase USA"), as a Seller, The Chase
Manhattan Bank ("Chase"), as a Seller, and The CIT Group/Sales Financing, Inc.,
as Servicer, (ii) the Trust Agreement and (iii) the Indenture (the Sale and
Servicing Agreement, the Trust Agreement and the Indenture being hereinafter
referred to collectively as the "Related Agreements");
WHEREAS pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the Notes
and the collateral pledged therefor pursuant to the Indenture (the "Collateral")
and (b) the Certificates;
<PAGE>
WHEREAS the Issuer desires to have the CITSF Administrator perform
certain of the duties of the Issuer and the Owner Trustee referred to herein,
and to provide such additional services consistent with the terms of this
Agreement and the Related Agreements as the Issuer may from time to time
request;
WHEREAS the CITSF Administrator has the capacity to provide the
services required hereby and is willing to perform such services for the Issuer
and the Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. Duties of CITSF Administrator. (a) Duties with Respect to the
Related Agreements. (i) Subsequent to the Closing Date and subject to the
cooperation of the Owner Trustee and the Indenture Trustee, to the extent such
cooperation is necessary to take any such action, the CITSF Administrator shall
take all appropriate action that it is the duty of the Issuer or the Owner
Trustee to take pursuant to the following provisions of the Indenture:
(A) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of collateral (Section 2.9);
(B) the preparation of all continuation statements, if any, in
accordance with Section 3.5 of the Indenture, necessary to protect the
Trust Estate (Section 3.5);
(C) the annual delivery of Opinions of Counsel, in accordance
with Section 3.6(b) of the Indenture, as to the Trust Estate, and the
annual delivery of the Officers' Certificate and certain other
statements, in accordance with Section 3.9 of the Indenture, as to
compliance with the Indenture (Sections 3.6 and 3.9);
(D) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligation under the
Indenture (Section 3.11(b));
(E) the preparation of an Officers' Certificate and the
obtaining of the Opinion of Counsel and the Independent Certificate
relating thereto (Section 4.1);
(F) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Trust Estate in any manner
permitted by law if an Event of Default shall have occurred and be
continuing, to the extent the CITSF Administrator is the practicable
party to take such action and
2
<PAGE>
is indemnified for any losses and expenses in connection therewith
(Section 5.4);
(G) the obtaining of an Officers' Certificate, Opinion of
Counsel and Independent Certificates, if necessary, for the release of
the Trust Estate as defined in the Indenture (Sections 8.4 and 8.5);
(H) the preparation of all Officers' Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests by
the Issuer to the Indenture Trustee to take any action under the
Indenture (Section 11.1(a));
(I) the preparation and delivery of Officers' Certificates and
the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section 11.1(b));
(b) In furtherance of CITSF's obligations set forth in clause (B)
above, the Owner Trustee shall, on behalf of the Issuer, execute and deliver to
the CITSF Administrator, and to each successor CITSF Administrator appointed
pursuant to the terms hereof, one or more powers of attorney substantially in
the form of Exhibit A hereto, appointing the CITSF Administrator the
attorney-in-fact of the Issuer for the purpose of executing on behalf of the
Issuer all such continuation statements.
2. Compensation. Compensation for the performance of the CITSF
Administrator's obligations under this Agreement shall be included in the
Servicing Fee.
3. Additional Information To Be Furnished to Issuer. The CITSF
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
4. Independence of CITSF Administrator. For all purposes of this
Agreement, the CITSF Administrator shall be an independent contractor and shall
not be subject to the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer or the Owner
Trustee, as the case may be, the CITSF Administrator shall have no authority to
act for or represent the Issuer or the Owner Trustee in any way and shall not
otherwise be deemed an agent of the Issuer or the Owner Trustee.
5. No Joint Venture. Nothing contained in this Agreement shall (i)
constitute the CITSF Administrator and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other
3
<PAGE>
separate entity or (ii) be construed to impose any liability as such on any of
them.
6. Other Activities of CITSF Administrator. (a) Nothing herein shall
prevent the CITSF Administrator or its affiliates from engaging in other
businesses or, in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
(b) The CITSF Administrator and its affiliates may generally engage in
any kind of business with any person party to a Related Agreement, any of its
affiliates and any person who may do business with or own securities of any such
person or any of its affiliates, without any duty to account therefor to the
Issuer, the Owner Trustee or the Indenture Trustee.
7. Term of Agreement. (a) This Agreement shall continue in force until
the earlier of (i) the dissolution of the Issuer or (ii) the termination of the
Servicer under the Sale and Servicing Agreement, upon which event this Agreement
shall automatically terminate.
(b) Subject to Sections 7(c) and (d), the Issuer may remove the CITSF
Administrator without cause by providing the CITSF Administrator with at least
60 days' prior written notice.
(c) Subject to Section 7(e), no removal of the CITSF Administrator
pursuant to Section 7(b) shall be effective until (i) a successor CITSF
Administrator shall have been appointed by the Issuer and (ii) such successor
CITSF Administrator shall have agreed in writing to be bound by the terms of
this Agreement in the same manner as the CITSF Administrator is bound hereunder.
(d) The appointment of any successor CITSF Administrator shall be
effective only after receipt of written confirmation from each Rating Agency
that the proposed appointment will not result in the qualification, downgrading
or withdrawal of any rating assigned to the Notes by such Rating Agency.
(e) Upon the termination of the CITSF Administrator pursuant to Section
7(a)(ii), Chase shall be the successor in all respects to the CITSF
Administrator in its capacity as Administrator under this Agreement, and shall
be subject to all the responsibilities, duties and liabilities arising
thereafter relating thereto placed on the CITSF Administrator by the terms and
provisions of this Agreement. As compensation therefor, Chase shall be entitled
to reasonable compensation from the Servicer.
(f) A successor CITSF Administrator shall execute, acknowledge and
deliver a written acceptance of its appointment
4
<PAGE>
hereunder to the predecessor CITSF Administrator and to the Issuer. Thereupon
the termination of the predecessor CITSF Administrator shall become effective,
and the successor CITSF Administrator shall have all the rights, powers and
duties of the CITSF Administrator under this Agreement. The successor CITSF
Administrator shall mail a notice of its succession to the Noteholders and the
Certificateholders. The predecessor CITSF Administrator shall promptly transfer
or cause to be transferred all property and any related agreements, documents
and statements held by it as CITSF Administrator to the successor CITSF
Administrator and the predecessor CITSF Administrator shall execute and deliver
such instruments and do other things as may reasonably be required for fully and
certainly vesting in the successor CITSF Administrator all rights, powers,
duties and obligations hereunder.
(g) In no event shall a predecessor CITSF Administrator be liable for
the acts or omissions of any successor CITSF Administrator hereunder.
(h) In the exercise or administration of its duties hereunder and under
the Related Documents, the CITSF Administrator may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the CITSF Administrator shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been selected by
the CITSF Administrator with due care.
8. Action upon Termination. Promptly upon the effective date of
termination of this Agreement pursuant to Section 7(a) or the removal of the
CITSF Administrator pursuant to Section 7(b), the CITSF Administrator shall be
entitled to be paid all fees and reimbursable expenses accruing to it to the
date of such termination, if any. The CITSF Administrator shall forthwith upon
termination pursuant to Section 7(a)(i) deliver to the Issuer all property and
documents of or relating to the Collateral then in the custody of the CITSF
Administrator. In the event of the termination or removal of the CITSF
Administrator pursuant to Section 7(a)(ii) or (b), respectively, the CITSF
Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties of
the CITSF Administrator.
5
<PAGE>
9. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
with copies to:
(i) Chase Manhattan Bank USA, National Association
802 Delaware Avenue
Wilmington, Delaware 19801
Attention: Controller
(ii) The Chase Manhattan Bank
c/o Chase Financial Corporation
260 West Huron
Cleveland, Ohio 44113
Attention: Chief Financial Officer
(cc: General Counsel)
(iii) The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
(b) if to the CITSF Administrator, to
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
(c) if to the Indenture Trustee, to
Norwest Bank Minnesota,
National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Asset-Backed Securities
(d) if to the Sellers, to
(i) Chase Manhattan Bank USA, National Association
802 Delaware Avenue
Wilmington, Delaware 19801
Attention: Controller
6
<PAGE>
(ii) The Chase Manhattan Bank
c/o Chase Financial Corporation
260 West Huron
Cleveland, Ohio 44113
Attention: Chief Financial Officer
(cc: General Counsel)
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above, except that notices to the
Indenture Trustee are effective only upon receipt.
10. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the CITSF
Administrator and the Indenture Trustee, with the written consent of the Owner
Trustee and without the consent of the Noteholders and the Certificateholders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or Certificateholders; provided that such
amendment will not, as evidenced by an Opinion of Counsel, materially adversely
affect the interest of any Noteholder. This Agreement may also be amended by the
Issuer, the CITSF Administrator and the Indenture Trustee with the written
consent of the Owner Trustee and the holders of Notes evidencing a majority in
the Outstanding Amount of the Notes and the Certificate Interest of the
Certificates for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of Noteholders and the Certificateholders; provided,
however, that no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that are required to be made for the benefit of the
Noteholders or Certificateholders or (ii) reduce the aforesaid percentage of the
holders of Notes and Certificates which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes and
Certificates. Notwithstanding the foregoing, the CITSF Administrator may not
amend this Agreement without (i) the permission of each Seller, which permission
shall not be unreasonably withheld and (ii) providing the Rating Agencies with
prior written notice of such amendment.
11. Successors and Assigns. This Agreement may not be assigned by the
CITSF Administrator unless such assignment is previously consented to in writing
by the Issuer, the Sellers and the Owner Trustee and subject to receipt by the
Owner Trustee of written confirmation from each Rating Agency that such
assignment will not result in the qualification, downgrading or withdrawal of
any rating assigned to the Notes by such Rating Agency in respect
7
<PAGE>
thereof. An assignment with such consent and satisfaction, if accepted by the
assignee, shall bind the assignee hereunder in the same manner as the CITSF
Administrator is bound hereunder. Notwithstanding the foregoing, this Agreement
may be assigned by the CITSF Administrator without the consent of the Issuer or
the Owner Trustee to a corporation or other organization that is a successor (by
merger, consolidation or purchase of assets) to the CITSF Administrator,
provided that such successor organization executes and delivers to the Issuer,
the Owner Trustee and the Indenture Trustee an agreement in which such
corporation or other organization agrees to be bound hereunder by the terms of
said assignment in the same manner as the CITSF Administrator is bound
hereunder. Subject to the foregoing, this Agreement shall bind any successors or
assigns of the parties hereto.
12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS
PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
13. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, each
of which when so executed shall together constitute but one and the same
agreement.
15. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
16. Not Applicable to CITSF in Other Capacities. Nothing in this
Agreement shall affect any obligation CITSF may have in any other capacity.
17. Limitation of Liability of Owner Trustee, Indenture Trustee and
CITSF Administrator. (a) Notwithstanding anything contained herein to the
contrary, this instrument has been signed by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of any duties or obligations
8
<PAGE>
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by Norwest Bank Minnesota, National Association, not
in its individual capacity but solely as Indenture Trustee, and in no event
shall Norwest Bank Minnesota, National Association have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
(c) No recourse under any obligation, covenant or agreement of the
Issuer contained in this Agreement shall be had against the CITSF Administrator
as such by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise; it being expressly agreed and
understood that this Agreement is solely an obligation of the Issuer as a
Delaware business trust, and that no personal liability whatever shall attach to
or be incurred by the CITSF Administrator, as such, under or by reason of any of
the obligations, covenants or agreements of the Issuer contained in this
Agreement, or implied therefrom, and that any and all personal liability for
breaches by the Issuer of any such obligations, covenants or agreements, either
at common law or at equity, or by statute or constitution, of the CITSF
Administrator is hereby expressly waived as a condition of and in consideration
for the execution of this Agreement.
18. Third-Party Beneficiary. Each of the Sellers (to the extent
provided in Sections 7, 10 and 11) and the Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
19. Nonpetition Covenants. Notwithstanding any prior termination of
this Agreement, the CITSF Administrator and the Indenture Trustee shall not,
prior to the date which is one year and one day after the termination of this
Agreement with respect to the Issuer, acquiesce, petition or otherwise invoke or
cause the Issuer to invoke the process of any court of government authority for
the purpose of commencing or sustaining a case against the Issuer under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
20. Liability of CITSF Administrator. Notwithstanding any provision of
this Agreement, the CITSF Administrator shall not have any obligations under
this Agreement other than those specifically
9
<PAGE>
set forth herein, and no implied obligations of the CITSF Administrator shall be
read into this Agreement. Neither the CITSF Administrator nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken in good faith by it or them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct
and in no event shall the CITSF Administrator be liable under or in connection
with this Agreement for indirect, special, or consequential losses or damages of
any kind, including lost profits, even if advised of the possibility thereof and
regardless of the form of action by which such losses or damages may be claimed.
Without limiting the foregoing, the CITSF Administrator may (a) consult with
legal counsel (including counsel for the Issuer), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts and (b) shall incur no liability under or in
respect of this Agreement by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by
facsimile) believed by it to be genuine and signed or sent by the proper party
or parties.
21. Indemnity. The CITSF Administrator shall indemnify, defend, and
hold harmless the Owner Trustee, the Indenture Trustee, the Issuer, the Sellers,
the Certificateholders and the Noteholders from and against all costs, expenses,
losses, claims, damages, and liabilities to the extent that such cost, expense,
loss, claim, damage, or liability arose out of, or was imposed upon such
Persons, through the willful misfeasance, gross negligence, or bad faith of the
CITSF Administrator in the performance of its duties under this Agreement or by
reason of reckless disregard of its obligations and duties under this Agreement.
Indemnification under this Section 21 shall include reasonable
fees and expenses of counsel in any litigation appointed by the CITSF
Administrator and reasonably satisfactory to the indemnitee; provided that the
CITSF Administrator shall only be required to pay the fees and expenses of one
counsel in any single litigation (or related proceedings) for all indemnities;
provided, however, if in the written opinion of counsel reasonably satisfactory
to the CITSF Administrator, the interests of an indemnitee and the CITSF
Administrator conflict such that the CITSF Administrator and such indemnitee may
not both be represented by such counsel, upon ten days prior written notice to
the CITSF Administrator, such indemnitee may hire one other counsel and the
indemnification under this Section 21 shall also include the reasonable fees and
expenses of such other counsel. If the CITSF Administrator shall have made any
indemnity payments, pursuant to this Section 21 and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts to the CITSF Administrator without interest. The indemnities under
this Section 21 shall survive the resignation or
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<PAGE>
removal of an indemnitee, or the termination of the Trust Agreement and this
Agreement.
The Issuer shall indemnify, defend, and hold harmless from and
against, and pay to the CITSF Administrator all reasonable costs, expenses,
losses, claims, damages, and liabilities arising out of or incurred in
connection with the acceptance or performance of the duties herein contained in
accordance with the terms and conditions herein and in the Related Documents,
except to the extent that such costs, expense, loss, claim, damage or liability:
(i) shall be due to the willful misfeasance, gross negligence or bad faith of
the CITSF Administrator; (ii) relates to any tax other than the taxes with
respect to which the CITSF Administrator shall be otherwise indemnified pursuant
to this Agreement; (iii) breach of any of its covenants set forth in the Related
Documents; or (iv) shall be one as to which the CITSF Administrator is required
to indemnify the Issuer. Any amounts due the CITSF Administrator pursuant to
this Section 21 shall be payable only to the CITSF Administrator from the
Reserve Account pursuant to Section 5.6(d) and Section 9.1(b) of the Sale and
Servicing Agreement.
11
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
CHASE MANHATTAN MARINE OWNER TRUST
1997-A
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee,
By:
-----------------------------------
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual
capacity but solely as
Indenture Trustee,
By:
-----------------------------------
Name: Marianna Stershic
Title: Assistant Vice President
THE CIT GROUP/SALES FINANCING, INC.
as CITSF Administrator,
By:
-----------------------------------
Name:
Title:
12
<PAGE>
EXHIBIT A
[Form of Power of Attorney]
POWER OF ATTORNEY
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that Wilmington Trust Company, a
Delaware banking corporation, not in its individual capacity but solely as owner
trustee ("Owner Trustee") for Chase Manhattan Marine Owner Trust 1997-A
("Trust"), does hereby make, constitute and appoint THE CIT GROUP/SALES
FINANCING, INC., as CITSF Administrator under the Administration Agreement (as
defined below), and its agents and attorneys, as Attorneys-in-Fact to execute on
behalf of the Owner Trustee or the Trust all such continuation statements as it
shall be the duty of the Trust to prepare, file or deliver to protect the Trust
Estate (as defined in the Administration Agreement) pursuant to the Indenture
(as defined in the Administration Agreement). For the purpose of this Power of
Attorney, the term "Administration Agreement" means the CITSF Administration
Agreement, dated as of October 1, 1997, among the Trust, The CIT Group/Sales
Financing, Inc., as CITSF Administrator, and Norwest Bank Minnesota, National
Association, as Indenture Trustee, as such may be amended from time to time.
All powers of attorney for this purpose heretofore filed or executed by
the Owner Trustee are hereby revoked.
EXECUTED this ____ day of _______, 199_.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:
---------------------------------------
Name:
Title:
<PAGE>
October 9, 1997
Chase Manhattan Bank USA, National Association
802 Delaware Avenue
Wilmington, Delaware 19801
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10001
Ladies and Gentlemen:
We have acted as counsel to Chase Manhattan Bank USA, National
Association, a national banking association, and The Chase Manhattan Bank, a New
York banking corporation (collectively, the "Registrants"), in connection with
their filing with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended, of a Registration Statement on
Form S-3 (the "Registration Statement"), registering (i) $41,800,000 aggregate
principal amount of Class A-1 Asset Backed Notes (the " Class A-1 Notes") to be
issued by Chase Manhattan Marine Owner Trust 1997-A (the "Trust"), a Delaware
business trust initially formed pursuant to a Trust Agreement dated as of July
17, 1997 among the Registrants and Wilmington Trust Company, as the owner
trustee (the "Owner Trustee"), to be amended and restated by an Amended and
Restated Trust Agreement to be dated as of October 1, 1997 among the
Registrants and the Owner Trustee, substantially in the form filed as Exhibit
4.3(B) to the Registration Statement (the "Trust Agreement"), (ii) $55,600,000
aggregate principal amount of Class A-2 Asset Backed Notes (the "Class A-2
Notes"), (iii) $50,600,000 aggregate principal amount of Class A-3 Asset Backed
Notes (the "Class A-3 Notes"), (iv) $37,300,000 aggregate principal amount of
Class A-4 Asset Backed Notes (the "Class A-4 Notes"), (v) $29,300,000 aggregate
principal amount of Class A-5 Asset Backed Notes (the "Class A-5 Notes"), (vi)
$27,700,000_ aggregate principal amount of Class A-6 Asset Backed Notes (the
"Class A-6 Notes"), (vii) $10,650,000 aggregate principal amount of Class B
Asset Backed Notes (the "Class B Notes") and (viii) $17,312,029.25 aggregate
principal amount of Class C Asset Backed Notes (the "Class C Notes"; and
together with the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes, the Class A-5 Notes, Class A-6 Notes and the Class B Notes,
the "Notes"), to be issued
<PAGE>
Chase Manhattan Bank USA,
National Association -2- October 9, 1997
The Chase Manhattan Bank
pursuant to an Indenture to be dated as of October 1, 1997 between the Trust and
Norwest Bank Minnesota, National Association, as indenture trustee,
substantially in the form filed as Exhibit 4.2 to the Registration Statement
(the "Indenture"). The Class A Notes will be sold pursuant to the terms of the
Class A Underwriting Agreement, among the Registrants and the underwriters named
in Schedule I thereto, substantially in the form filed as Exhibit 1.1(A) to the
Registration Statement (the "Class A Underwriting Agreement"). The Class B Notes
and the Class C Notes will be sold pursuant to the terms of the Class B and
Class C Underwriting Agreement, among the Registrants and Chase Securities Inc.,
substantially in the form filed as Exhibit 1.1(B) to the Registration Statement
(the " Class B and Class C Underwriting Agreement;" and together with the
Class A Underwriting Agreement, the "Underwriting Agreements").
In that connection, we have examined the Trust Agreement, the
Indenture, the Class A Underwriting Agreement and the Class B and Class C
Underwriting Agreement. In addition, we have examined and relied as to matters
of fact upon, originals or copies, certified or otherwise identified to our
satisfaction, of such corporate records, agreements, documents, and other
instruments and such certificates or comparable documents of public officials
and of officers and representatives of the Registrants, and have made such other
and further investigations, as we have deemed relevant and necessary as a basis
for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents.
Based upon the foregoing, we are of the opinion that when the
Indenture has been duly qualified under the Trust Indenture Act of 1939, as
amended, the issuance and terms of the Notes have been duly authorized by the
Registrants, when the Notes have been duly executed and authenticated in
accordance with the terms of the Indenture, and when the Notes have been
delivered and sold in accordance with the provisions of the Note Underwriting
Agreements as contemplated by the Registration Statement, upon payment of
the consideration therefor provided for therein, the Notes will constitute valid
and legally binding obligations of the Trust, enforceable against the Trust in
accordance with their terms.
Our opinions are subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting
<PAGE>
Chase Manhattan Bank USA,
National Association -3- October 9, 1997
The Chase Manhattan Bank
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State of
New York and the Federal law of the United States.
We hereby consent to the use of our name under the heading "Legal
Matters" in the Prospectus and to the use of this opinion for filing with the
Registration Statement as Exhibit 5.1 thereto.
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
October 10, 1997
Chase Manhattan Bank USA, National Association
802 Delaware Avenue
Wilmington, Delaware 19801
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Re: The Issuance and Sale of Asset Backed
Notes by Chase Manhattan Marine Owner Trust 1997-A
Ladies and Gentlemen:
We have acted as United States federal income tax counsel
("Federal Tax Counsel") for Chase Manhattan Bank USA, National Association, a
national banking association organized under the laws of the United States, and
The Chase Manhattan Bank, a New York banking corporation (together, the
"Sellers"), in connection with the preparation and filing by the Sellers with
the Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-3 (Registration No. 333-32737) as amended (the "Registration
Statement") and the issuance and sale of (i) Class A-1 Asset Backed Notes, (ii)
Class A-2 Asset Backed Notes, (iii) Class A-3 Asset Backed Notes, (iv) Class A-4
Asset Backed Notes, (v) Class A-5 Asset Backed Notes (vi) Class A-6 Asset Backed
Notes, (vii) Class B Asset Backed Notes and (viii) Class C Asset Backed Notes
(collectively, the "Notes"), by Chase Manhattan Marine Owner Trust 1997-A (the
"Trust"), a statutory business trust organized under the Business Trust Act of
the State of Delaware, pursuant to the Indenture, dated as of October 1, 1997
(the "Indenture"), between the Trust and Norwest Bank Minnesota, National
Association, as trustee (the "Indenture Trustee"). The Notes will be offered for
sale to investors pursuant to the Registration Statement.
All capitalized terms used in this opinion letter and not
otherwise defined herein shall have the meaning assigned to such terms in the
Registration Statement.
<PAGE>
-2- October 10, 1997
In delivering this opinion, we have reviewed: (i) the
Registration Statement, (ii) the Indenture, (iii) the Amended and Restated Trust
Agreement, dated as of October 1, 1997 (the "Trust Agreement"), among the
Sellers and Wilmington Trust Company, as Owner Trustee, (iv) the Sale and
Servicing Agreement, dated as of October 1, 1997 (the "Sale and Servicing
Agreement"), among the Sellers, CIT Group/Sales Financing, Inc., as Servicer and
the Trust and (v) forms of the Notes. We also have examined such other
documents, papers, statutes and authorities and made such other inquiries as we
have deemed necessary to form the basis for the opinions expressed herein.
In our examination of such material, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to original documents of copies of documents
submitted to us. As to certain matters of fact relevant to the opinions
hereinafter expressed, we have relied upon the representations and warranties
set forth in the Indenture, the Trust Agreement and the Sale and Servicing
Agreement.
On the basis of the foregoing and assuming, with your permission,
that (i) the Trust is formed and maintained in accordance with the discussion
set forth in the Registration Statement and is operated in compliance with the
terms of the Trust Agreement, (ii) the terms of the Indenture, the Trust
Agreement and the Sale and Servicing Agreement are not amended, and (iii) the
aggregate amount of the Administrative Fees received or accrued each year by the
Trust on, or with respect to, the Receivables will be equal to, or less than,
five percent (5%) of the sum of the aggregate amount of the Administrative Fees
and the interest or other income accrued or received by the Trust on, or with
respect to, the Receivables each such year, we hereby confirm (a) our opinions
set forth in the Registration Statement under the caption "Certain Federal
Income Tax Consequences" and (b) that, subject to the qualifications set forth
therein, the statements set forth in the Registration Statement under the
caption "Certain Federal Income Tax Consequences", insofar as they purport to
constitute summaries of United States federal income tax law and regulations or
legal conclusions with respect thereto, constitute accurate summaries of the
United States federal income tax matters described therein in all material
respects.
We express no opinion with respect to the transactions referred
to herein and in the Registration Statement other than as expressly set forth
herein. Our opinions are not binding on the Internal Revenue Service ("IRS") and
the IRS could disagree with the opinions expressed herein. Although we believe
that the opinions we express herein would be sustained if challenged, there can
be no assurance that this will be the case.
<PAGE>
-3- October 10, 1997
Our opinions are based upon the Code, the Treasury regulations
promulgated thereunder and other relevant authorities and law, all as in effect
on the date hereof. Consequently, future changes in the law may cause the tax
treatment of the transactions referred to herein to be materially different from
that described above.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the federal law of the
United States.
This opinion letter is rendered to you in connection with the
above-described transactions. This opinion may not be relied upon by you for any
other purpose or relied upon by, or furnished to, any other person, firm or
corporation without our prior written consent. We hereby consent to the use of
this opinion for filing as Exhibit 8.1 to the Registration Statement.
Very truly yours,
/s/ Simpson Thacher & Bartlett
Simpson Thacher & Bartlett
<PAGE>
October 10, 1997
The Chase Manhattan Corporation
Treasury
270 Park Avenue, 28th Floor
New York, New York 10017
Re: CHASE MANHATTAN MARINE OWNER TRUST 1997-A
Ladies and Gentlemen:
For the purpose of the sale of Asset-Backed Notes
issued by the Chase Manhattan Marine Owner Trust 1997-A (the "Trust"),
we have acted as Oklahoma tax counsel for you and the Trust regarding
the anticipated Oklahoma income tax characterization of the Trust.
This letter is pursuant to your request that we advise The
Chase Manhattan Corporation regarding the likely characterization under Oklahoma
income tax law of the Trust. We understand the Trust will purchase Marine notes
and/or chattel paper from Chase Manhattan Bank USA, National Association and The
Chase Manhattan Bank, a New York Banking Corporation.
In furnishing this opinion, we have examined copies of the
following documents:
(i) Amendment to the Registration Statement of
Chase Manhattan Marine Owner Trust 1997-A;
(ii) Registration Statement of Chase Manhattan
Marine Owner Trust 1997-A filed with the
Securities and Exchange Commission on
August 1, 1997;
(iii) Chase Manhattan Marine Owner Trust 1997-A
Amended and Restated Trust Agreement among
Chase Manhattan Bank USA, National
<PAGE>
The Chase Manhattan Corporation
October 10, 1997
Page 2
Association and The Chase Manhattan Bank, as
Depositors; and Wilmington Trust Company, as
Owner Trustee;
(iv) the Chase Manhattan Marine Owner Trust
1997-A Indenture;
(v) the Sale and Servicing Agreement among Chase
Manhattan Bank USA, National Association, a
National Banking Association, The Chase
Manhattan Bank, a New York Banking
Corporation, as Sellers; and The CIT
Group/Sales Financing, Inc., a Delaware
Corporation, as Servicer; and Chase
Manhattan Marine Owner Trust 1997-A, as
Issuer;
(vi) the Class A Underwriting Agreement;
(vii) the Class B and Class C Underwriting
Agreement;
(viii) the CITSF Administration Agreement; and
(ix) the Chase Administration Agreement.
I. Assumptions and Opinion
In rendering the opinions expressed herein, we have made the
following assumptions, the accuracy of which we have not verified:
1. The Trust has been properly characterized as a nonpublicly
traded Partnership for federal income tax purposes.
2. Any Notes issued by the Trust have been properly
characterized as debt for federal income tax purposes.
Based upon the foregoing and in reliance thereon, and upon
consideration of applicable Oklahoma income tax laws, and subject to the
qualifications and limitations described below, we are of the following
opinions:
1. The Trust will be characterized as a nonpublicly traded
Partnership for purposes of Oklahoma income tax laws, and the nonpublicly
traded Partnership will not be taxed as an entity, but rather, the profits,
income, losses, and deductions of the Trust will, for income tax purposes, flow
through the Trust to the partner level. 68 Okla. Stat. ss. 2353(3) (1996 Supp.);
Oklahoma Tax Commission Rule ss. 710:50-3-35.
2. The Notes will be characterized as debt for Oklahoma
income tax purposes. 68 Okla. Stat. ss. 2353(3) (1996 Supp.); Oklahoma Tax
Commission Rule ss. 710:50-3-35. Noteholders not otherwise subject to taxation
in Oklahoma should not become subject to taxation in Oklahoma because
<PAGE>
The Chase Manhattan Corporation
October 10, 1997
Page 3
of the holder's ownership of Notes. However, a Noteholder already subject to
Oklahoma's income tax could be required to pay additional Oklahoma income tax as
a result of the holder's ownership or disposition of Notes.
II. Additional Discussion
For the purpose of this additional discussion, we have made
the following assumptions, the accuracy of which we have not verified:
1. The Trust is organized as a business trust under the laws
of Delaware. The activities of the Trust occurring within the State of Oklahoma
consist solely of the maintenance of the original notes and/or chattel paper and
of the related contract files and documents with a custodian within the State of
Oklahoma and of the activities described in Paragraph 4 below.
2. Less than ten percent (10%) of the notes and/or chattel
paper acquired by the Trust will originate in Oklahoma.
3. The Trust will acquire the notes and/or chattel paper in a
series of transactions occurring outside of Oklahoma.
4. The only activities which the Servicer, as Servicer of the
Trust, will conduct in Oklahoma is the servicing of the loans evidenced by the
notes and chattel paper including without limitation: (i) the maintenance of
custody of the notes and/or chattel paper; (ii) the maintenance of the
administrative records concerning payments and outstanding balances on the notes
and/or chattel paper; (iii) the receipt of the payments on the notes and/or
chattel paper; (iv) the deposit of the payments received on the notes and/or
chattel paper in an Oklahoma financial institution for purposes of collection;
(v) the collection activities relating to the notes and/or chattel paper; and
(vi) the repossession and sale of the collateral therefor.
As a nonpublicly traded Partnership for Oklahoma and federal
income tax purposes, the Oklahoma distributive share of the partnership income,
gains, losses or deductions of the partnership to be reported by the partners
shall be the same portion of that reported for federal income tax purposes, as
the Oklahoma income, gain, losses or deductions determined under ss.ss. 2358 and
2362 of Title 68 of the Oklahoma Statutes for said partnership, bears to the
federal income, gains, losses or deductions. 68 Okla. Stat. ss. 2363 (1991). The
Oklahoma taxable income of a nonresident includes the distributive share of the
Oklahoma part of partnership income, gains, losses or deductions. 68 Okla. Stat.
ss. 2362(4) (1996 Supp.). However, income from intangible personal property of a
nonresident of Oklahoma is generally excluded from Oklahoma taxable income
except to the extent that such income is from property employed in an Oklahoma
trade or business or from property that has acquired a nonunitary business or
commercial situs in Oklahoma. 68 Okla. Stat. ss.ss. 2358(A)(4)(b), 2362(6) (1996
Supp.). We believe it is unlikely that the Oklahoma Tax Commission would attempt
to classify the income of the Trust as Oklahoma source income or as arising from
an Oklahoma trade or business. Accordingly, a nonresident of Oklahoma should not
incur Oklahoma taxable income solely as a result of an
<PAGE>
The Chase Manhattan Corporation
October 10, 1997
Page 4
ownership interest in the Trust. However, we are not aware of any authority or
pronouncement of the Oklahoma Tax Commission or the Oklahoma courts addressing
this issue on comparable facts and no absolute assurance can be given in this
regard.
III. Qualifications and Limitations
In preparing this letter, we have reviewed Oklahoma Statutes,
Oklahoma court decisions and Oklahoma administrative rules and decisions,
generally available to the public as of the date of this letter. We have no
obligation to update or supplement this opinion to reflect any facts or
circumstances that may hereafter come to our attention or any changes in the law
that may hereafter occur which place a different interpretation on the law other
than that which has been applied herein, including interpretations of the law
whether by way of Oklahoma statutory enactments or amendments, judicial
decisions or administrative actions.
This opinion has been rendered solely for the benefit of The
Chase Manhattan Corporation and the Trust for use in the Trust's offering of the
Asset-Backed Notes and may not be used, circulated, quoted, relied upon or
otherwise referred to for any other purpose without our prior written consent;
provided, however, that this opinion may be delivered to your regulators,
accountants, attorneys and other professional advisers and may be used in
connection with any legal or regulatory proceeding relating to the subject
matter of this opinion and the disclosure statement entitled "Certain State Tax
Consequences" included in the October 10, 1997, draft of the Amendment to the
Registration Statement may be included in the Prospectus related to the
offering. The undersigned shall not be responsible, liable or obligated to any
third party who may obtain access to this letter.
Very truly yours,
CROWE & DUNLEVY
A Professional Corporation
By: /s/James H. Holloman, Jr.
-------------------------------
James H. Holloman, Jr.
<PAGE>
[LETTERHEAD OF CROWE & DUNLEVY]
October 10, 1997
The Chase Manhattan Corporation
Treasury
270 Park Avenue, 28th Floor
New York, New York 10017
Re: CHASE MANHATTAN MARINE OWNER TRUST 1997-A
Ladies and Gentlemen:
We hereby confirm that the statements set forth in the Amendment to the
Registration Statement under the heading "Certain State Tax Consequences"
accurately describe the material Oklahoma income tax consequences to holders of
the securities, as limited by the discussion in our opinion letter dated October
10, 1997.
We hereby consent to the use of our opinion letter dated October 10, 1997,
as an exhibit to the Registration Statement. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the General Rules and Regulations of
the Commission thereunder.
Very truly yours,
CROWE & DUNLEVY,
A Professional Corporation
By: /s/James H. Holloman, Jr.
James H. Holloman, Jr.
<PAGE>
AMENDED AND RESTATED SERVICING AGREEMENT
AMENDED AND RESTATED SERVICING AGREEMENT ("Agreement") dated
as of the 15th day of September, 1997, by and among THE CHASE MANHATTAN BANK, a
banking corporation organized under the laws of the State of New York and having
its principal place of business in New York, New York ("CMB"), CHASE MANHATTAN
BANK USA, NATIONAL ASSOCIATION, a banking association organized under the laws
of the United States and having its principal place of business in Wilmington,
Delaware ("CUSA"), CHASE FINANCIAL HOLDINGS, INC., an Ohio corporation with its
principal place of business in Cleveland, Ohio ("CFHI"), CHASE FINANCIAL
ACCEPTANCE CORPORATION, an Ohio corporation with its principal place of business
in Cleveland, Ohio ("CFAC," and collectively with CMB, CUSA and CFHI, "Chase"),
CHASE FINANCIAL MANAGEMENT CORPORATION, an Ohio corporation with its principal
place of business in Cleveland, Ohio (the "Chase Servicer"), and THE CIT
GROUP/SALES FINANCING, INC., a Delaware corporation ("CIT"), with offices at 650
CIT Drive, Livingston, New Jersey 07039, as servicer (the "Servicer").
RECITALS
WHEREAS, Chase, CIT and The CIT Group/Consumer Finance, Inc.
(NY) ("CITNY") entered into that certain Agreement dated as of May 9, 1997 (the
"Purchase Agreement") pursuant to which CIT and CITNY acquired from Chase
certain assets relating to its marine and recreational vehicle lending
businesses (the "Acquisition");
WHEREAS, in connection with the Acquisition, Chase, the Chase
Servicer and CIT entered into the Servicing Agreement, dated as of May 9, 1997,
as amended by Amendment No. 1 thereto, dated as of August 13, 1997 (the
"Original Servicing Agreement"), pursuant to which Chase and the Chase Servicer
retained the Servicer to service or subservice the Accounts and the Servicer
agreed to perform such services in accordance with the terms and conditions set
forth in the Original Servicing Agreement; and
WHEREAS, Chase, the Chase Servicer and CIT desire to amend and
restate the Original Servicing Agreement in its entirety as set forth in this
Agreement and the Exhibits referred to herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, it is agreed that the Original Servicing Agreement
is hereby amended and restated in its entirety as follows:
<PAGE>
2
ARTICLE I - DEFINITIONS
All capitalized terms not otherwise defined herein are used as
defined in the Purchase Agreement and the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1. Accounts - shall mean the collective reference to the
Chase Accounts, the New Securitization Accounts and the Old Securitization
Accounts;
1.2. Account Owner - shall mean, (i) with respect to a Chase
Account, CMB, CUSA, CFAC or CFHI, as the case may be, (ii) with respect to an
Old Securitization Account, the trustee, acting on behalf of the
certificateholders, identified in the related Pooling and Servicing Agreement
and (iii) with respect to a New Securitization Account, the trustee, acting on
behalf of the certificateholders, or trust identified in the related New
Securitization Servicing Agreement;
1.3. Aggregate Losses - shall mean, with respect to any
calendar year or partial calendar year, an amount equal to (x) the sum of the
Losses for such calendar year or partial calendar year, less (y) any recoveries
(including, but not limited to, sales proceeds and insurance credits) received
during such calendar year or partial calendar year in respect of Accounts in
default in, and included in the calculation of Aggregate Losses with respect to,
any prior calendar year or partial calendar year.
1.4. Agreement - shall mean this Agreement, as the same may
be amended from time to time, and any Exhibits hereto;
1.5. Business Day - shall be any day other than (i) a Saturday
or Sunday, or (ii) a day in which banking institutions in New York, New York,
Cleveland, Ohio or Oklahoma City, Oklahoma are authorized or obligated by law or
executive order to be closed;
1.6. Chase Accounts - shall mean the collective reference to
the Retained Accounts and the Repurchase Accounts;
1.7. Loss - shall mean with regard to any Account in default
the amount obtained by adding to the principal balance of such Account (i)
accrued interest, (ii) collection and insurance charges applicable to such
Account (including, but not limited to, any expenses for which the Servicer is
reimbursed pursuant to Section 8.3 hereof), (iii) repossession and liquidation
expenses incurred in connection with such Account (including, but not limited
to, any expenses for which the Servicer is reimbursed pursuant to Section 8.3
hereof) and (iv) forbearance expenses incurred in connection with such Account,
less any recovery on such Account including, but not limited to, sales proceeds
and insurance credits. Forbearance expenses shall be deemed to include any
losses incurred in connection with a bankruptcy court ordered modification of
the terms of the Account. Accrued interest is calculated at (a) the rate
disclosed in the Account or (b) in the case of precomputed Accounts in which no
rate is disclosed, at the interest rate which the Chase Servicer would be
obligated to use in computing the unpaid principal balance pursuant to the Rule
of 78's or actuarial
<PAGE>
3
method, as applicable, in the event of prepayment by the Obligor under any such
Account, from the last day paid to the Date of Repossession. Date of
Repossession shall be the date on which the Notice of Sale is sent to the
Obligor. Repossession inventory (meaning those Accounts for which the Chase
Servicer has mailed a Notice of Sale) prior to the Transfer Date will not be
taken into consideration when calculating Losses;
1.8. New Securitization Account - shall mean each Retained
Account that is included in a New Securitization;
1.9. New Securitization Servicing Agreement - shall have the
meaning referred to in Section 4.4 hereof;
1.10. Old Securitization Account - shall mean each conditional
sales contract, retail installment sales agreement or note relating to a marine
or recreational vehicle loan, and each security agreement or preferred ship
mortgage related thereto, included in an Old Securitization;
1.11. Repurchase Account - shall mean each conditional sales
contract, retail installment sales agreement or note relating to a marine or
recreational vehicle loan, and each security agreement or preferred ship
mortgage related thereto, that was transferred by Chase in connection with an
Old Securitization, or a New Securitization or transferred to CIT or CITNY
pursuant to the Purchase Agreement and subsequently repurchased by Chase as a
result of a breach of representation and warranty made by Chase in connection
with such Old Securitization, New Securitization or the Purchase Agreement, as
the case may be;
1.12. Retained Account - shall mean each conditional sales
contract, retail installment sales agreement or note relating to a marine or
recreational vehicle loan, and each security agreement or preferred ship
mortgage related thereto, retained by Chase on or after the Closing Date, other
than (i) any such conditional sales contract, retail installment sales agreement
or note relating to a marine or recreational vehicle loan, and each security
agreement or preferred ship mortgage related thereto, transferred to CIT or
CITNY pursuant to the Purchase Agreement on the Cut-Off Date Closing Date or
(ii) any New Securitization Account.
ARTICLE II - RETENTION OF SERVICER;
SERVICER'S GENERAL OBLIGATIONS
2.1. Chase and the Chase Servicer retain the Servicer as an
independent contractor to provide the services described in this Agreement
during the term of this Agreement, and the Servicer agrees to perform such
services in accordance with the terms and conditions contained in this
Agreement.
2.2. In the performance of its duties hereunder, the Servicer
shall be an independent contractor acting on its own behalf and for its own
account. It shall have no authority, express or implied, to act in any manner or
by any means for or on behalf of Chase or the Chase Servicer in any capacity
other than as an independent contractor. It is agreed
<PAGE>
4
that the Servicer and Chase, together with the Chase Servicer, are not partners
or joint venturers, or agents or assignees of each other.
2.3. In the performance of its duties hereunder, the Servicer
shall service all Accounts in compliance with the terms of this Agreement, and
the underlying Accounts, and will comply in all material respects with all
applicable state and federal laws and regulations governing financing,
licensing, loan servicing, debt collection, credit reporting, consumer
protection, foreclosure and other disposition of collateral, and the protection
of any security interest in collateral.
2.4. Promptly after the execution and delivery of this
Agreement, the Servicer shall deliver to the Chase Servicer a list of key
officers of the Servicer that will be involved in, or responsible for, the
servicing of the Accounts, and the Chase Servicer shall deliver to the Servicer
a list of key officers and employees of the Chase Servicer who have been
authorized by Chase Servicer to receive any reports hereunder from the Servicer.
Each party shall notify the other party promptly of any changes to such list.
ARTICLE III - SERVICING OF ACCOUNTS
3.1. The Servicer shall service the Accounts with due care in
accordance with the terms of this Agreement and shall have full power and
authority, acting alone and subject only to the provisions of this Agreement and
applicable law, to do any and all things in connection with the servicing of the
Accounts that it believes to be reasonable and necessary to carry out its
obligations under this Agreement. The Servicer agrees that it shall service the
Accounts using the same standard of care that it uses to service its own loans
or credit sales secured by Boats or Recreational Vehicles, except as otherwise
specifically provided in Exhibit 3.1 hereto. The Servicer shall not make any
change to its current servicing policies and procedures which would have a
material effect on the collectibility of the Accounts, including, but not
limited to, any change to the policies and procedures set forth in Exhibit 3.1
hereto, without the prior written consent of the Chase Servicer.
3.2. The Servicer shall provide servicing of the Accounts
which will include the following: collection of principal, finance and other
charges; payment processing; payment of any applicable taxes; filing and
processing of claims under insurance policies; filing claims in bankruptcy
proceedings; making reports as set forth in Exhibit 3.1 hereto and as otherwise
reasonably required; liquidation, repossession and foreclosure; and other
services with respect to the Accounts customarily provided by servicers
servicing these types of assets.
3.3. The Chase Servicer understands and agrees that the
Servicer shall have no monetary obligation to remit to the Chase Servicer any
sums due on a Account, unless a payment is received from the Obligor, an insurer
or any other party (such as proceeds on sale of collateral) on a Account.
3.4. The Servicer shall take all actions that are necessary or
desirable to maintain continuous perfection and priority of the rights, title
and interests of the Account
<PAGE>
5
Owners (or of the originators in the case of any New Securitization Accounts) in
the Boats and Recreational Vehicles securing the Accounts, including, but not
limited to, the notation on certificates of title and the recording, filing and
refiling of all financing statements, continuation statements, preferred ship
mortgages or other instruments. In addition, if the Servicer discovers any
deficiency in the priority or perfection of the security interest in a Boat or
Recreational Vehicle constituting security for any Account or any other defect
in the documents constituting a part of any Account, which deficiency or defect
can be corrected, the Servicer shall use its best efforts to correct such
deficiency or defect.
ARTICLE IV - SUBSERVICING OF OLD SECURITIZATION ACCOUNTS;
SERVICING OF NEW SECURITIZATION ACCOUNTS
4.1. CMB and the Chase Servicer, in their respective
capacities as "Servicers" under the Pooling and Servicing Agreements, hereby
designate and appoint the Servicer as a subservicer as of the Transfer Date
under the Pooling and Servicing Agreements with respect to the Old
Securitization Accounts. The Servicer hereby agrees to perform and comply with
each and every duty and obligation of CMB or the Chase Servicer, as the case may
be, as "Servicer" under the Pooling and Servicing Agreements with respect to the
Old Securitization Accounts, except such duties and obligations which are set
forth on Exhibit 4.1 hereof as the continuing responsibilities of CMB or the
Chase Servicer. The Servicer shall have full power and authority to perform all
duties, and to exercise all rights and remedies, of CMB or the Chase Servicer,
as the case may be, as Servicer under the Pooling and Servicing Agreements,
except for such duties, rights and remedies as are reserved for CMB or the Chase
Servicer as set forth on Exhibit 4.1 hereof.
4.2. CMB and the Chase Servicer, in their respective
capacities as "Servicers" under the Pooling and Servicing Agreements with
respect to the Old Securitization Accounts, hereby agree that neither shall
consent to any material change to the provisions of the Pooling and Servicing
Agreements to which it is a party relating to the servicing of the Old
Securitization Accounts without the prior written consent of the Servicer, which
such consent shall not be unreasonably withheld.
4.3. In the event that the Servicer shall fail to perform any
obligation or satisfy any liability undertaken or assumed by the Servicer
hereunder, CMB or the Chase Servicer, as the case may be, shall remain obligated
and be liable in accordance with the terms of the Pooling and Servicing
Agreements to which it is a party without diminution of any such obligation or
liability by virtue of the appointment of the Servicer hereunder; provided,
however, that CMB or the Chase Servicer, as the case may be, shall be entitled
to indemnification of any such obligation or liability to the extent set forth
in Section 10.1 hereof.
4.4. The Servicer has agreed under the Purchase Agreement to
use its best efforts to enter into one or more agreements (each a "New
Securitization Servicing Agreement") in connection with each New Securitization
pursuant to which it will agree to service the related New Securitization
Accounts on and after the closing date with respect to
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6
such New Securitization. If the Servicer enters into any New Securitization
Servicing Agreement, the Servicer hereby agrees to perform and comply with each
and every duty of the "Servicer" under such New Securitization Servicing
Agreement with respect to the New Securitization Accounts subject thereto.
ARTICLE V - CONVERSION OF ACCOUNT RECORDS
AND OTHER DOCUMENTS FROM THE CHASE SERVICER TO THE SERVICER
5.1. In order to enable the Servicer to fulfill its
obligations under this Agreement, the Chase Servicer shall timely and
effectively cooperate with and assist the Servicer in, and the Servicer shall
effect, a conversion of the Accounts to the Servicer's computer system on or
before October 1, 1997.
5.2. On or prior to the Transfer Date, Chase or the Chase
Servicer shall provide to the Servicer limited powers of attorney to endorse
checks for deposit only and other instruments of payment in the Account Owners'
names, to sign other documents necessary to the continued perfection of any
security interest, to release liens upon full payment or upon resale of
collateral after repossession, and to initiate suits in the Account Owner's name
on Accounts upon which there has been a default.
5.3. The Chase Servicer and the Servicer shall produce the
following notices in mutually acceptable forms:
(a) Notices to the Obligors of the transfer of the servicing of
the Accounts to the Servicer in accordance with applicable state and
federal laws and regulations; and
(b) Notices to all insurance companies, taxing authorities and
tax sources as appropriate of the transfer of the servicing of the
Accounts to the Servicer.
5.4. On and after the Transfer Date, the Chase Servicer will
(i) continue to cooperate with and provide documents to the Servicer as
reasonably necessary in order to facilitate the servicing of the Accounts and
(ii) promptly forward to the Servicer any correspondence and payments received
by the Chase Servicer which appropriately should have been sent to the Servicer.
ARTICLE VI -- THE SERVICER'S SERVICING OBLIGATIONS
6.1. During the term hereof, the Servicer shall retain
information on its computer system relating to the Accounts (the "Computer
Files") and shall provide the Chase Servicer with on-line computer terminal
access at the Chase Servicer's office to such Computer Files.
6.2. In the event Chase or the Chase Servicer desire some
special services not specified herein, the Servicer shall use its best efforts
to provide such services if the Servicer
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7
reasonably concludes that such services are reasonably attainable and
technically feasible. There will be no additional fee or charge for additional
services unless the Servicer notifies Chase or the Chase Servicer, as the case
may be, in advance of providing such services of the additional charge and Chase
or the Chase Servicer agree to the charge in writing.
6.3. CMB, the Chase Servicer or the Account Owners, as set
forth in the Pooling and Servicing Agreements, may retain physical possession of
the Files. The Servicer shall maintain all documents it holds relating to the
Accounts in a safe, up-to-date manner. The Servicer may, at its sole expense,
use the services of a file storage and retention company reasonably acceptable
to the Chase Servicer. In the event the Servicer obtains any original documents
relating to the Accounts, the Servicer shall hold them in trust for the Account
Owners. Any original documents relating to the Accounts held by the Servicer
shall be maintained in fire-proof files, except those documents held by a file
storage and retention company reasonably acceptable to the Chase Servicer which
does not offer fire-proof storage. The Servicer shall exercise reasonable care
in handling and delivering the documents in its files relating to the Accounts.
Unless otherwise requested by the Chase Servicer or unless otherwise required by
governmental rule, the Servicer shall retain the documents in its files relating
to the Accounts during the time the Account Owners own the Accounts and for the
term of this Agreement. However, the Servicer shall, upon request of the Chase
Servicer, forward to the Chase Servicer the documents in its files relating to
an Account and the related repossession file after the sale of the repossessed
Boat or Recreational Vehicle. The Servicer shall maintain the privacy of the
Obligors in accordance with all applicable governmental rules. The Servicer
shall deliver any of the documents in its files relating to an Account to Chase
or the Chase Servicer upon request.
6.4. The Servicer does not warrant by its acceptance of any
original document relating to the Accounts or any copy of any such document,
forwarded to it by the Chase Servicer, or the related Account Owner, that such
document is legally valid or enforceable in any respect.
6.5. The Servicer shall retain the Computer Files and other
data and records (including, without limitation, computerized records) relating
directly to or maintained in connection with the servicing of the Accounts,
which Computer Files, data and records shall be clearly marked to reflect that
the Accounts are owned by the Account Owners, at the address of the Servicer, or
upon thirty (30) days' advance notice to the Chase Servicer at such other place
where the servicing offices of the Servicer are located and shall be readily
separable from the other files or property of the Servicer.
6.6. Upon the termination of this Agreement, the Servicer
shall, upon request of the Chase Servicer, deliver to the Chase Servicer, at the
Chase Servicer's expense (unless such termination is by the Chase Servicer for
"cause" pursuant to Section 12.3(a) hereof or is a result of a default by the
Servicer hereunder), all data and records (including, without limitation,
computerized records) created or used for the servicing of the Accounts and all
monies received by the Servicer. In addition to delivering such data, records
and monies, the Servicer shall, at the Chase Servicer's expense (unless such
termination is by the Chase Servicer for "cause" pursuant to Section 12.3(a)
hereof or is a result of a default by the
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8
Servicer hereunder), use reasonable efforts to effect the orderly and efficient
transfer of the servicing of the Accounts with respect to which such termination
shall have occurred to such party as may have been appointed by the Chase
Servicer to assume responsibility for such servicing, including, without
limitation, directing the Obligors to remit all payments in respect of the
Accounts to an account or address designated by the Chase Servicer.
6.7. In order to facilitate the servicing of the Accounts by
the Servicer, CMB and the Chase Servicer hereby appoint the Servicer, with
respect to any payments remitted on an Account by any Obligor or other person on
behalf of an Obligor directly to the Servicer, to retain possession of such
payment as custodian and bailee of CMB or the Chase Servicer, as the case may
be. The Servicer shall cause each of such payments to be processed and deposited
in the manner set forth in Article VII on the Business Day following receipt or
as otherwise directed by the Chase Servicer in writing.
6.8. The Servicer shall process normal payoffs of Accounts by
quoting amounts due, accepting payoff amounts, stamping the original contracts
relating to such Accounts "Paid" and returning them to Obligors, and releasing
liens as required.
6.9. If payment of any amount due with respect to an Account
is not received from a Obligor within eleven (11) days after the date such
payment is due under the Account, the Servicer shall, consistent with the
Servicer's collection policies and procedures specified in Exhibit 3.1, contact
such Obligor to effect collection and to discourage delinquencies in payments on
such Account, doing so by lawful means, including, but not limited to, the
following:
(a) Attempting to contact Obligors by telephone to encourage
payment;
(b) Mailing of past due notices as necessary;
(c) Preparing and mailing of collection letters;
(d) Mailing reminder notices to Obligors as deemed
necessary;
(e) Using skip tracing techniques to locate missing
Obligors;
(f) Using field calls directly on Obligors;
(g) Identifying and taking action on reasonable alternatives
to avoid or minimize losses; and
(h) Initiating all steps leading to termination or
foreclosure actions deemed necessary.
Upon receipt of proceeds with respect to any defaulted
Account, the Servicer shall deposit all the proceeds collected without deduction
for any fee or amount due the
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9
Servicer (except for retention of fees pursuant to Section 8.2 hereof), as
provided in Article VII and provide to the Chase Servicer an itemized
accounting.
6.10. Based on an Obligor's reasons for delinquency, the
Servicer may grant extensions (monthly payment deferrals) in accordance with the
criteria set forth on Exhibit 3.1 to those Obligors having temporary cash flow
problems. The Servicer shall exercise care in offering extensions so as not to
defer obvious losses. The Servicer shall provide to the Chase Servicer on the
15th day of each month a list of all extensions granted during the preceding
calendar month and the reasons for such extensions or modifications. The Chase
Servicer reserves the right to direct the Servicer with respect to loss
mitigation strategies, to require the Servicer to initiate repossession or to
direct the Servicer to refrain from repossession, based on reasonable criteria
communicated in writing from time to time.
6.11. The Servicer shall not waive or release any right to
collect any amount due under the Accounts; provided, however, that in connection
with the settlement of a defaulted Account, the Servicer may forgive a portion
of such Account if, in its discretion, it believes that the acceptance of the
settlement proceeds from the related Obligor would result in the receipt of an
amount of collections greater than the net proceeds that would result from
repossessing and liquidating the related Boat or Recreational Vehicle, taking
into account any payments that would be required by law to be remitted to the
Obligor and other expenses customarily deducted from sales proceeds in
connection with sales or other dispositions of Boats or Recreational Vehicles,
as the case may be.
6.12. In the event repossession or foreclosure proceedings are
instituted in respect of the Accounts, whether by the Servicer or otherwise,
then and until otherwise directed by the Chase Servicer, the Servicer, from the
date of the commencement thereof until the termination thereof and the
conveyance of title, or until other disposition of the Account Owner's interest
in the financed Boat or Recreational Vehicle, shall manage and protect the
financed Boat or Recreational Vehicle, including the maintenance of insurance
against loss and damage. If an insurer of any such Boat or Recreational Vehicle
shall from time to time direct the Servicer with respect to the manner or
procedure of the performance of any of the duties and services referred to in
this Agreement, the Servicer will perform such duties and services in accordance
with such direction, anything herein to the contrary notwithstanding. The
Servicer shall be paid additional reasonable compensation as agreed by the
parties and be reimbursed for its expenses if the Chase Servicer or any insurer
requests that it take actions beyond the scope of this Agreement.
6.13. Unless repossessed or liquidated in accordance herewith,
the Servicer shall commence foreclosure proceedings against, or otherwise
comparably convert the ownership of any collateral securing a defaulted Account
as to which no satisfactory arrangements can be made for collection of
delinquent payments. In connection with such foreclosure proceedings or other
conversion, the Servicer shall follow the same practices and procedures as it
does with its own loans or credit sales, except as otherwise specifically
provided in Exhibit 3.1 hereto, and shall be in compliance with all applicable
federal, state and local laws and governmental rules. The Servicer shall also
arrange the foreclosure sale of repossessed Boats and Recreational Vehicles and
Boats and Recreational Vehicles taken by
<PAGE>
10
the Servicer in full satisfaction of any debt in accordance with the criteria
set forth herein or on Exhibit 3.1. The Servicer shall utilize its best efforts
to sell repossessed collateral in such a manner as to minimize losses. The
Servicer warrants that its servicing will not prejudice the rights of the
Account Owners with respect to the Accounts, including the right to collect
deficiency amounts due under the Accounts after repossession or foreclosure.
6.14. The Servicer shall not initiate any litigation in the
name of Chase or the Chase Servicer or pursue any deficiency balance without
Chase's or the Chase Servicer's advance written consent; provided, however, that
(i) the Servicer may initiate litigation to recover possession of or to
foreclose upon collateral securing the Accounts and (ii) the Servicer may
initiate collection suits or actions to recover deficiencies, provided that any
legal counsel retained by the Servicer in connection therewith shall be
compensated on a contingency basis and the total amount of "out-of-pocket"
expenses of such counsel to be reimbursed shall not exceed the amount set forth
in Section 8.3(b) hereof. The Servicer hereby agrees that prior to the
initiation of any litigation to collect amounts owing with respect to an
Account, the Servicer shall review the files, including but not limited to the
Computer Files, relating to such Account to determine if such files indicate
that there exist facts which might constitute a defense or counterclaim in any
such litigation. If such review of the files indicates the existence of facts
which might constitute a defense or counterclaim, the Servicer shall not
initiate any litigation with respect to such Account without the prior written
consent of the Chase Servicer. The Servicer shall give the Chase Servicer prompt
written notice of all litigation including any claims or counterclaims asserted
by the Obligor or any other party.
6.15. The Servicer shall apply payments received on the
Accounts in accordance with the priorities as set forth on Exhibit 6.15 hereto,
except as otherwise provided in any New Securitization Servicing Agreement,
including the procedures for handling insurance proceeds under insurance
policies relating to the Accounts.
6.16. The Servicer agrees at its own cost and expense to
maintain adequate fidelity bond coverage of the officers and employees of the
Servicer who handle or may have occasion to handle or control any funds
collected by the Servicer or documents and papers relating to the Accounts under
this Agreement. Such fidelity bond shall protect against losses, including
forgery, theft, embezzlement and fraud and the coverage under the fidelity bond
shall be at least $5,000,000. On or prior to the Transfer Date, the Servicer
shall furnish to the Chase Servicer certification by the carrier of such
fidelity coverage attesting to the form or type of bond evidencing such
coverage, together with the amount, term, date of commencement, anniversary or
renewal date and name of insured and affirmatively assuring the Chase Servicer
that such coverage cannot be changed, other than by an increase in amount, or
cancelled without prior written notice to the Chase Servicer. Regardless of any
provisions contained in this Agreement which require the Servicer to maintain
fidelity bond coverage, the Servicer shall not be relieved of and from its
accountability and responsibility to Chase and the Chase Servicer for the proper
performance under this Agreement of the duties and obligations to be performed
hereunder by the Servicer.
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11
ARTICLE VII - DEPOSIT OF COLLECTIONS
7.1. Except as otherwise specified in any Pooling and
Servicing Agreement with respect to any Old Securitization Account or in any New
Securitization Servicing Agreement with respect to any New Securitization
Account, upon the Servicer's receipt of any payment on the Accounts, including
principal, interest, insurance proceeds, liquidation proceeds or any other
proceeds on any Account, however or from whomever made, the Servicer shall
within two (2) Business Days deposit such payment by wire transfer of
immediately available funds to account number 322-006716 (ABA Routing Number
021000021) at The Chase Manhattan Bank in the Chase Servicer's name. The
Servicer shall have no rights to such payments. The Servicer shall insure that
deposits into such account with respect to the Accounts will be accomplished and
recorded in such manner as to permit auditing of such transactions in accordance
with the terms hereof.
ARTICLE VIII - COMPENSATION TO THE SERVICER; ADDITIONAL
COMPENSATION TO THE SERVICER; OUT-OF-POCKET EXPENSES
8.1. In consideration of its services provided hereunder with
respect to the Old Securitization Accounts, the Chase Servicer shall pay to the
Servicer a servicing fee for each calendar month equal to one-twelfth of the
product of 0.50% and the aggregate outstanding principal balance (excluding any
separate notes or amounts due from any Obligor for taxes, insurance or other
advances) of all Old Securitization Accounts at the close of business on the
last day of the preceding calendar month. The Chase Servicer shall, upon receipt
of a bill for such service fees and/or out-of-pocket costs described in Section
8.3 hereof, remit payment to the Servicer of such amounts within 30 days of
receipt.
8.2. The Servicer shall be entitled to retain the following
fees payable in respect of the Accounts as additional compensation: late payment
fees, extension fees and transfer of equity and assumption fees accruing and
collected by the Servicer after the Transfer Date. The Servicer shall be
responsible for paying all amounts due dealers in respect of dealer
participations on the Accounts accruing on and after the Transfer Date, which
such payments shall be based upon the information recorded on the conversion
tape provided to the Servicer by the Chase Servicer as of the Transfer Date. The
Servicer shall not be responsible for paying any other amounts due dealers in
respect of dealer participations. The Servicer shall have no liability for
defenses, counterclaims, off-sets or recoupments arising under or in connection
with events which occur prior to the Transfer Date.
8.3. The Servicer shall be responsible for all of its own
expenses and costs in carrying out its obligations under this Agreement, except
that the Chase Servicer shall reimburse the Servicer for the following
"out-of-pocket" expenses:
(a) Customary or necessary repossession expenses reasonably
incurred in connection with the transporting, repair, care, custody,
control and resale of repossessed Boats or Recreational Vehicles;
provided, however, that the Servicer shall
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12
not incur, and the Chase Servicer shall not be obligated to reimburse
the Servicer for, expenses in excess of the dollar amounts set forth
on Exhibit 3.1, unless the express written consent of the Chase
Servicer is obtained in advance of the time such expenses are
incurred;
(b) Expenses of legal counsel retained to enforce Accounts
after default and the related court costs; provided, however, that the
Servicer shall not incur, and the Chase Servicer shall not be
obligated to reimburse the Servicer for, more than $1,000 for legal
fees on any Account, unless the express written consent of the Chase
Servicer is obtained in advance of the time such fees are incurred;
and
(c) Any amounts paid or advanced by the Servicer to pay taxes
or to satisfy any tax lien on any Boat or Recreational Vehicle.
8.4. In consideration of its services provided hereunder with
respect to the Chase Accounts and the New Securitization Accounts, the Chase
Servicer shall pay to the Servicer the fee as agreed to and specified in that
certain Fee Letter, as amended, dated as of May 9, 1997, among Chase, the Chase
Servicer and the Servicer (the "Fee Letter").
ARTICLE IX - REPRESENTATIONS AND WARRANTIES
9.1. The Servicer represents and warrants to Chase and the
Chase Servicer that as of the Closing Date and as of the Transfer Date:
(a) The Servicer (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
(ii) is qualified to transact business in each jurisdiction in which
failure to so qualify would render any Account unenforceable in such
jurisdiction and (iii) has the corporate power to own its property, to
conduct its business and to service the Accounts hereunder;
(b) The Servicer has the corporate power and authority to
enter into and perform its obligations under this Agreement and this
Agreement has been duly authorized, executed and delivered by the
Servicer and constitutes a valid and legally binding obligation of the
Servicer, enforceable in accordance with its terms;
(c) The execution, delivery and performance of this Agreement
by the Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court or the charter or the
by-laws of the Servicer or any mortgage, indenture, contract or other
agreement to which the Servicer is a party or by which the Servicer and
any of its property or assets may be bound;
(d) The Servicer is not required to obtain any consent,
license, approval or authorization, or registration or declaration
with, any governmental authority, bureau or agency in connection with
the execution, delivery and performance of this Agreement;
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13
(e) The Servicer has, or will have prior to the Transfer Date,
sufficient personnel and equipment, including but not limited to
computer, bookkeeping and record keeping capabilities, to perform its
obligations under this Agreement; and
(f) There is no litigation or administrative proceeding of or
before any court, tribunal or governmental body pending or, to the best
of the Servicer's knowledge, threatened, which could reasonably be
expected to affect adversely the validity or enforceability of this
Agreement or the ability of Servicer to service the Accounts hereunder
in accordance with the terms hereof or which could reasonably be
expected to have a material adverse effect on the financial condition
of the Servicer.
9.2. Each of CMB, CUSA, CFHI, CFAC and the Chase Servicer
represents and warrants to the Servicer that as of the Closing Date and as of
the Transfer Date:
(a) It (i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and
(ii) has the corporate power to own its property and to conduct its
business;
(b) It has the corporate power and authority to enter into and
perform its obligations under this Agreement and this Agreement has
been duly authorized, executed and delivered by it and constitutes a
valid and legally binding obligation of it, enforceable in accordance
with its terms;
(c) The execution, delivery and performance of this Agreement
by it will not violate any provision of any existing law or regulation
or any order or decree of any court or its charter or the by-laws or
any mortgage, indenture, contract or other agreement to which it is a
party or by which it and any of its property or assets may be bound;
(d) It is not required to obtain any consent, license,
approval or authorization, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery and performance of this Agreement;
(e) There is no litigation or administrative proceeding of or
before any court, tribunal or governmental body pending or, to the best
of its knowledge, threatened, which could reasonably be expected to
have a material adverse effect on the validity or enforceability of
this Agreement; and
(f) All data provided to the Servicer as to the balances of
the Accounts is correct in all material respects.
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14
ARTICLE X - MUTUAL INDEMNITY
10.1. The Servicer agrees to indemnify Chase and the Chase
Servicer and hold Chase and the Chase Servicer harmless from and against any and
all losses, liabilities, claims, damages and actions, including reasonable
attorneys' fees, reasonable accountants' fees and court costs, arising out of
(i) the Servicer's failure to comply with its obligations, warranties,
representations and covenants contained in this Agreement, (ii) the negligent
action taken or negligent omission of the Servicer in performing its duties
hereunder or (iii) the Servicer's erroneous calculation of the participation due
any dealer on the Accounts, provided that Chase or the Chase Servicer notifies
the Servicer immediately by telephone and thereafter in writing upon receipt of
notice of any such claim made by a dealer; provided, however, that the Servicer
shall not be liable for any losses, liabilities, claims, damages or actions
arising out of any breach by Chase or the Chase Servicer of any of their
obligations, warranties or representations in this Agreement.
10.2. Chase and the Chase Servicer agree to indemnify the
Servicer and hold the Servicer harmless from and against any and all losses,
liabilities, claims, damages and actions, including reasonable attorneys' fees,
reasonable accountants' fees, and court costs, arising out of (i) Chase or the
Chase Servicer's breach of any of their obligations, warranties, representations
and covenants contained in this Agreement, (ii) any events which occurred prior
to the Transfer Date, (iii) Chase or the Chase Servicer's assignment to the
Servicer of Authorizations for Automatic Payment relating to Automated Clearing
House electronic fund transfers from the Accounts of Obligors or (iv) any claim
by a dealer for an amount in respect of dealer participations greater than the
amount that would be payable to such dealer based upon the information recorded
on the conversion tape provided to the Servicer by the Chase Servicer, provided
that the Servicer notifies Chase and the Chase Servicer immediately by telephone
and thereafter in writing upon receipt of notice of any such claim made by a
dealer; provided, however, that neither Chase nor the Chase Servicer shall be
liable for any losses, liabilities, claims, damages or actions arising out of
any breach by the Servicer of any of its obligations, warranties or
representations in this Agreement.
ARTICLE XI - AUDIT RIGHTS: FINANCIAL STATEMENTS
11.1. At all times during the term of this Agreement, the
Servicer shall afford the Chase Servicer and the Account Owners and their
authorized agents, subject to appropriate notice, reasonable access during
normal business hours to audit the Servicer's books, records, data, premises and
operations relating to the Accounts and will cause its personnel to assist in
any examination of such records. The examination referred to in this Section
will be conducted in a timely manner which does not interfere unreasonably with
the Servicer's normal operations or customer or employee relations and shall be
at the Chase Servicer's or the Account Owner's sole expense.
11.2. The Servicer shall deliver to the Chase Servicer on or
before March 31 of each year, commencing March 31, 1998, an Officers'
Certificate stating, that (i) a review of the activities of the Servicer during
the preceding calendar year (or since execution of this
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15
Agreement in the case of the first such Officers' Certificate required to be
delivered) and of performance under this Agreement has been made under such
officer's supervision, and (ii) to the best of such officer's knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout the period covered by such review, or, if there has been a
default in the fulfillment of any such obligations, specifying each such default
known to such officer and the nature and status thereof.
11.3. Annually on or before each March 31st, commencing March
31, 1998, so long as the Servicer shall be servicing Accounts, the Servicer
shall, at its option, either (a) provide the Chase Servicer's auditors with
adequate information and access to financial data, Account data, systems,
procedures, testing and support to enable the Chase Servicer's auditors to
provide the following described report or (b) furnish to the Chase Servicer a
statement for the most recently ended calendar year certified by a firm of
independent public accountants with respect to the Servicer to the effect that
such firm has examined certain documents and records relating to the servicing
of the Accounts and that, on the basis of an examination conducted substantially
in compliance with a recognized program for auditing the servicing of loans
similar to the Accounts, that such firm is of the opinion that such servicing
has been conducted in compliance with this Agreement except for (i) such
exceptions as such firm shall believe to be immaterial and (ii) such other
exceptions as shall be set forth in such statement.
ARTICLE XII - TERM AND TERMINATIONS
12.1. Unless sooner terminated as herein provided or by mutual
agreement, this Agreement shall continue from the date hereof during the term of
the Accounts and until all of the principal, finance charges and other charges
of all of the Accounts are paid in full, or until proceedings to foreclose are
terminated finally and title to all collateral which are the subject of such
proceeds is liquidated and received by the Chase Servicer or the Account Owner.
12.2. Notwithstanding any provision of this Agreement to the
contrary, this Agreement shall become and be terminated immediately with respect
to all Accounts other than the New Securitization Accounts upon the mailing of
written notice of termination by the party described below upon the occurrence
of any one or more of the following events:
(a) By the Chase Servicer in the event that, subject to
Section 15.7 hereof, due to a delay attributable to the Servicer, the
Transfer Date shall not have occurred on or before October 1, 1997. In
such circumstance, the Servicer will pay the Chase Servicer, promptly
after the end of each calendar year over the life of the Accounts, the
difference, if any, between (x) the fees to be paid to any third-party
substitute servicer under a servicing agreement negotiated in good
faith by Chase and such third-party substitute servicer and (y) the
product of (i) 0.50% and (ii) the quotient obtained by dividing (A) the
sum of the aggregate principal balances of all Accounts as of the close
of business on the last Business Day of each month of such calendar
year by (B) twelve (12).
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16
(b) By the Chase Servicer in the event of any failure by the
Servicer to make any deposit or payment, or to remit to the Chase
Servicer any payment, required to be made under the terms of this
Agreement, any Pooling and Servicing Agreement or any New
Securitization Servicing Agreement which continues unremedied for a
period of two Business Days after notice of such failure, but in any
event not more than five Business Days after receipt of written notice
of such failure; or
(c) By the Chase Servicer in the event of a failure on the
part of the Servicer to deliver reports to the Chase Servicer or the
Account Owners which failure continues unremedied for a period of five
(5) Business Days after receipt of written notice of such failure, or
(d) By the non-defaulting party, other than as a result of
voluntary proceedings (covered by (e) below), if the other party shall
be adjudged bankrupt or insolvent by a court of competent jurisdiction,
or an order shall be made by a court of competent jurisdiction for the
appointment of a receiver, liquidator or trustee of such party or of
all or substantially all of its property or approving any petition
filed against such party for its reorganization, and such adjudication
or order shall remain in force or unstayed for a period of thirty (30)
days; or
(e) By either party if the other party shall institute
proceedings for voluntary bankruptcy, or shall file a petition seeking
reorganization under the federal bankruptcy laws or for relief under
any law for the relief to debtors, or shall consent to the appointment
of a receiver of such party or of all or substantially all of its
property, or shall make a general assignment for the benefit of its
creditors, or shall admit in writing its inability to pay its debts
generally as they become due; or
(f) By the Chase Servicer if the Servicer shall assign or
delegate its rights or its duties hereunder to any Person other than an
Affiliate without the prior written consent of the Chase Servicer; or
(g) By the Chase Servicer if the Servicer shall merge with or
consolidate into any other corporation, other than a merger by the
Servicer into another wholly-owned subsidiary of The CIT Group Holdings
Inc., without the prior written consent of the Chase Servicer, which
such consent shall not be unreasonably withheld; or
(h) By the Chase Servicer if the Servicer shall sell or
otherwise dispose of all or substantially all of its property or
assets, except to another wholly owned subsidiary of The CIT Group
Holdings, Inc., without the prior written consent of the Chase
Servicer.
The Servicer agrees that if any of the events specified in subparagraphs (b)
through (h) of this Section 12.2 shall happen, it will give written notice
thereof to the Chase Servicer within five (5) days after the occurrence of such
event.
<PAGE>
17
12.3. Notwithstanding any provision of this Agreement to the
contrary, this Agreement may also become and be terminated with respect to all
Accounts other than the New Securitization Accounts upon the occurrence of any
one or more of the following events:
(a) The Chase Servicer may terminate this Agreement for
"cause" without payment of any additional compensation to the Servicer.
If the Chase Servicer terminates this Agreement for "cause" and, as a
result of such termination, a servicing systems conversion is required,
the Servicer shall pay the expenses of such conversion, including, but
not limited to, the expenses of formatting all information into a
format acceptable to the successor Servicer. "Cause" shall exist if,
during any calendar year or partial calendar year, (i) Aggregate Losses
with respect to Accounts secured by Recreational Vehicles exceed 0.80%
of the Average Annual Balance (as such term is defined in the Fee
Letter) for such calendar year or partial calendar year or (ii)
Aggregate Losses with respect to Accounts secured by Boats exceed 1.20%
of the Average Annual Balance (as such term is defined in the Fee
Letter) for such calendar year or partial calendar year. If during any
calendar year or partial calendar year (i) Aggregate Losses with
respect to Accounts secured by Recreational Vehicles exceed 0.80% of
the Average Annual Balance (as such term is defined in the Fee Letter)
or (ii) Aggregate Losses with respect to Accounts secured by Boats
exceed 1.20% of the Average Annual Balance (as such term is defined in
the Fee Letter) for such calendar year or partial calendar year, the
Chase Servicer shall, in addition to its right to terminate the
Agreement, have the right to (i) conduct a full audit of the operations
and procedures of the Servicer with respect to the Accounts and (ii)
require that the Servicer produce a detailed plan acceptable to the
Chase Servicer for reducing Losses; or
(b) Either party may terminate this Agreement with respect to
all Accounts other than the New Securitization Accounts in the event
that the other party materially defaults in the performance of any of
its respective covenants, agreements, representations, warranties,
duties or obligations hereunder, which default shall not be
substantially cured within forty-five (45) days after written notice is
received by the other party specifying the default, or, with respect to
any default which cannot be reasonably cured within forty-five (45)
days, if the defaulting party fails to diligently proceed within
forty-five (45) days to commence curing said default and thereafter to
proceed with all due diligence to substantially cure the same, then the
non-defaulting party may, by giving written notice thereof to the other
party, terminate this Agreement as of a date specified in such notice
of termination; provided, however, that in the event a breach of
warranty cannot be reasonably cured, the non-defaulting party may not
terminate this Agreement if the defaulting party indemnifies the
non-defaulting party pursuant to Article X; or
(c) Either party may terminate this Agreement with respect to
all Accounts other than the New Securitization Accounts immediately
upon notice if the other party fails to make any other payment due
under this Agreement within five (5) Business Days after receipt of
notice thereof from the party entitled to payment.
<PAGE>
18
12.4. Notwithstanding any provision of this Agreement to the
contrary, this Agreement shall become and be terminated with respect to any New
Securitization Account immediately upon the termination of the Servicer as
"Servicer" under the related New Securitization Servicing Agreement.
12.5. From and after the effective date of termination of this
Agreement pursuant to Section 12.1, 12.2 or 12.3, the Servicer shall not be
entitled to compensation for servicing the Accounts (other than the New
Securitization Accounts) after such effective date and shall be relieved of
further responsibility in connection therewith. In any such event the rights,
duties, powers and authority of the Servicer hereunder with respect to all
Accounts other than the New Securitization Accounts shall immediately terminate,
and, without limitation, the Chase Servicer is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
termination, whether to complete the transfer and endorsement or assignment of
the Accounts and related documents, or otherwise. The Servicer shall forthwith
upon such termination pay over to the Chase Servicer all monies collected and
held by it with respect to all Accounts other than the New Securitization
Accounts pursuant to this Agreement, and shall deliver to the Chase Servicer (a)
all documents relating to all Accounts being serviced hereunder other than the
New Securitization Accounts, a payment history on each such Account, ledger
cards, tax bills, accrual records and insurance policies and (b) a full
accounting, including a statement showing the monthly payments or other payments
collected by it and a statement of monies held by it with respect to the
Accounts other than the New Securitization Accounts. The Servicer shall
cooperate with the Chase Servicer in effecting any such termination and any
successor servicer's administration of the Accounts.
12.6. From and after the effective date of termination of this
Agreement with respect to any New Securitization Accounts pursuant to Section
12.4 hereof, the Servicer shall not be entitled to compensation for servicing
such New Securitization Accounts after such effective date and shall be relieved
of further responsibility in connection therewith. In any such event the rights,
duties, powers and authority of the Servicer hereunder with respect to such New
Securitization Accounts shall immediately terminate. The servicing of such New
Securitization Accounts shall be transferred to a successor servicer in
accordance with the related New Securitization Servicing Agreement.
ARTICLE XIII - CONFIDENTIALITY
13.1. The Servicer shall keep confidential and shall not make
available to any Person not employed by the Servicer or any Affiliate, or its
counsel, accountants or other experts, any information relating to the Accounts
or reports without the specific authorization of the Chase Servicer unless such
disclosure is necessary to comply with law or with the requirements of this
Agreement; provided, however, that the Servicer may disclose such information as
is necessary for the Servicer to perform and comply with each and every duty of
the Servicer under any New Securitization Servicing Agreement or in connection
with any New Securitization.
<PAGE>
19
13.2. In order to permit the Servicer to perform its
obligations hereunder, and to permit the Chase Servicer to assist the Servicer
in doing so, the Chase Servicer and the Servicer may from time to time have
access to each other's computer systems and certain of the data stored therein.
The Chase Servicer and the Servicer will each use its best efforts not to access
any information from the other except information reasonably needed to fulfill
the terms of this Agreement. The Servicer and the Chase Servicer each agree that
they shall treat as confidential, consistent with their duties and obligations
hereunder, any information received from the other whether obtained through the
other's computer system or otherwise and will only permit those employees
engaged in the rendering of the services hereunder, or assisting the other in
rendering services hereunder, to have access to the other party's computer
system and the information with respect to the Accounts received from the other.
ARTICLE XIV - SURVIVAL OF AGREEMENTS, WARRANTIES
COVENANTS AND REPRESENTATIONS
14.1. The covenants and indemnities of Chase, the Chase
Servicer and the Servicer that are contained in this Agreement shall survive its
termination for (i) a period of two (2) years with respect to (x) any claim
asserted by Chase or the Chase Servicer against the Servicer or (y) any claim
asserted by the Servicer against Chase or the Chase Servicer or (ii) a period of
four (4) years with respect to any claim arising as a result of a claim asserted
by a Person other than Chase, the Chase Servicer or the Servicer.
ARTICLE XV - MISCELLANEOUS
15.1. This Agreement and the Exhibits hereto set forth the
entire agreement and understanding between Chase, the Chase Servicer and the
Servicer and supersede any and all representations, promises, and statements,
oral or written, made in connection with the subject matter of this Agreement
and the negotiation hereof. No such representation, promise or statement not
written in this Agreement and the Exhibits hereto shall be binding on the
parties. Notwithstanding the foregoing, if any provision of this Agreement or
the Exhibits hereto is found to be inconsistent with any provision of the
Pooling and Servicing Agreements with respect to the Old Securitizations or the
New Securitization Servicing Agreements with respect to the New Securitization
Accounts, the provisions of such Pooling and Servicing Agreements or New
Securitization Servicing Agreements, as the case may be, shall govern. This
Agreement may not be varied or altered nor its provisions waived except by an
agreement in writing executed by duly authorized officers of Chase, the Chase
Servicer and the Servicer.
15.2. Any corporation or other entity (i) into which any party
hereto may be merged or consolidated, (ii) which may result from any merger,
conversion or consolidation to which any party hereto shall be a party or (iii)
which may succeed to all or substantially all of the business of any party
hereto, shall be bound to perform every obligation of such party under this
Agreement and shall be successor to such party hereunder without execution or
filing of any document or any further act by any of the parties hereto;
provided, however,
<PAGE>
20
that, in accordance with Section 12.2 hereof, the Servicer shall not (i) merge
with or consolidate into any other corporation, other than a merger by the
Servicer into another wholly-owned subsidiary of The CIT Group Holdings Inc.,
without the prior written consent of the Chase Servicer, which such consent
shall not be unreasonably withheld, or (ii) sell or otherwise dispose of all or
substantially all of its property or assets, except to another wholly owned
subsidiary of The CIT Group Holdings, Inc., without the prior written consent of
the Chase Servicer.
15.3. This Agreement shall be binding upon and inure to the
benefit of Chase, the Chase Servicer and the Servicer and each of their
respective successors and assigns, provided, however, no party may assign or
transfer this Agreement without the prior written consent of the others, which
such consent shall not be unreasonably withheld, except that the Servicer may
assign or transfer this Agreement to any of its Affiliates. In the event that
any such assignee or transferee shall fail to perform any obligation or satisfy
any liability undertaken or assumed by the Servicer hereunder, the Servicer
shall remain obligated and be liable in accordance with the terms of this
Agreement without diminution of any such obligation or liability by virtue of
such assignment or transfer. Any assignment or transfer in violation of this
paragraph shall constitute a material breach of this Agreement.
15.4. Captions in this Agreement are for convenience of
reference only and are not to be considered as defining or limiting in any way
the scope or intent of the provisions of this Agreement.
15.5. The waiver of any breach, term, provision, or condition
of this Agreement shall not be construed to be a waiver of any other or
subsequent breach, term, provision, or condition. All remedies afforded by this
Agreement for a breach hereof shall be cumulative.
15.6. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable, the validity, legality and the
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
15.7. Wherever under this Agreement one party is required or
permitted to give written notice to the others, such notice shall be deemed
given upon receipt after its mailing by the party providing notice by certified
mail or registered mail (postage prepaid) or by overnight delivery service
addressed as follows:
In the case of the CMB, CUSA, CFAC, CFHI and the Chase Servicer:
c/o Chase Financial Corporation
250 W. Huron
Cleveland, Ohio 44113
Attn: Chief Financial Officer
With a copy to:
<PAGE>
21
Chase Financial Corporation
250 W. Huron
Cleveland, Ohio 44113
Attn: General Counsel
In the case of the Servicer:
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attn: President
With a copy to:
The CIT Group/Sales Financing, Inc.
715 South Metropolitan Avenue, Suite 150
Oklahoma City, Oklahoma 73108-2090
Attn: John Alkire, Senior Vice President
Any writing which may be mailed pursuant to the foregoing may also be delivered
by hand.
15.8. Anything in this Agreement to the contrary
notwithstanding, Chase, the Chase Servicer and the Servicer shall be excused
from performing any of their respective obligations under this Agreement, which
are prevented or delayed by any occurrence not within their respective control
including but not limited to strikes or other labor matters, destruction of or
damage to any building, natural disasters, accidents, riots, or any regulation,
rule, law, ordinance or order of any federal state or local government
authority.
<PAGE>
22
15.9. This Agreement may be executed in several counterparts,
all of which taken together shall constitute one single Agreement among the
parties hereto.
THE CHASE MANHATTAN BANK
By: /s/ William Hoefling
--------------------------------
Title: Executive Vice President
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION
By: /s/ William Hoefling
--------------------------------
Title: Director
CHASE FINANCIAL ACCEPTANCE
CORPORATION
By: /s/ Thomas M. Boylan
--------------------------------
Title: Senior Vice President
CHASE FINANCIAL HOLDINGS, INC
By: /s/ Thomas M. Boylan
--------------------------------
Title: Senior Vice President
CHASE FINANCIAL MANAGEMENT
CORPORATION
By: /s/ Thomas M. Boylan
--------------------------------
Title: Senior Vice President
THE CIT GROUP/SALES FINANCING, INC.
By: /s/ Frank Garcia
--------------------------------
Title: Vice President
<PAGE>
EXHIBIT 3.1
SERVICING STANDARDS
A. STANDARDS
1. Delinquent Accounts will be collected with the same
care and diligence as those originated and owned by
CIT. CIT staffing and expertise of staff will be
consistent with those servicing its own portfolio.
2. Accounts will be downloaded to the autodialer at 11
days delinquent. Daily passes will be made between
the hours of 7 a.m. and 11 p.m. Central Time on the
accounts to contact the customers to collect the
arrearage. After the Account has been on the
autodialer more than 10 days without contact, a
manual review will be made on the Account to
determine the appropriate course of action. Accounts
will be referred to manual collections when
potentially 60 days delinquent and will remain
assigned to a specific collector until cured. CIT
will use the same prudent judgment to cure
delinquents that it does with its own portfolio,
utilizing, including, but not limited to, deferments,
reschedules, settlements, etc.
3. Repossession will be initiated when it is evident the
customer can no longer pay or the collateral is at
risk.
4. If CIT utilizes consignment dealers to remarket
collateral, total units at one dealership cannot
exceed ten (10). All consignment dealers utilized
must have a UCC-1 agreement and a consignment
agreement satisfactory to Chase.
5. Total collection Accounts per employee cannot exceed
eight hundred (800). Collection Accounts per employee
defined as total Accounts entering collections in a
month divided by total number of collectors assigned.
B. SERVICE POWERS
1. CIT requires Chase's approval for each repossession
sale or short sale/settlement in which the present
loss to balance exceeds 60% and the loan balance
exceeds $30,000.
2. CIT requires Chase's approval for each
non-repossession sale charge off in which the charge
off exceeds $50,000.
<PAGE>
2
C. REPORTING
1. CIT must provide Chase a month-end report of all
Accounts carried 30 days or more past due that have
balances greater than $150,000. The report must
include:
(a) Account Number
(b) Customer Name
(c) Days Past Due
(d) Balance
(e) Brief Status
2. CIT must provide Chase a month-end report by product
identifying total on-hand repossession inventory
(number of units and dollar value), total
repossession sales for the month, total percent loss
to balance for month and year-to-date.
3. CIT must provide Chase a month-end report identifying
all repossessions on-hand more than 90 days.
4. CIT must provide Chase a month-end report by product
identifying total bankruptcy inventory (number of
claims and dollar value) for the month and total
litigation inventory (number of claims and dollar
value) for the month.
5. CIT must provide Chase a terminal to access
collection activity on Accounts real-time.
D. USE OF SUBCONTRACTORS/SUBSERVICERS
1. No use of subcontractors or subservicers is permitted
with the exception of the hiring of vendors to
perform an assigned function on an individual
Account, (i.e. a company to perform a repossession/an
attorney to handle a bankruptcy/litigation) or the
use of third party collection agencies to collect
post-charged off Accounts. Agency fees for primary
placement should not exceed 25%. Fee schedule for
repossessions pursuant to Section 8.3 of the
Servicing Agreement will be a standard flat rate of
$1000.00 (exclusive of sales commissions to dealers).
E. MISDIRECTED COLLECTIONS AND CORRESPONDENCE
1. All correspondence will be mailed overnight to CIT.
<PAGE>
3
F. SYSTEM CONVERSION PLAN
1. Chase is reviewing plan to provide
(a) A file from TCS with collection comments of
active accounts
(b) A file from BART with all repossession
inventory information of transfer date.
G. TRANSFER PLAN FOR COLLECTIONS/REPOSSESSION
1. CIT will have appropriate
collection/repossession/customer service personnel 1
to 3 weeks before transfer to work with counterparts
to ensure a smooth hand-off.
H. STANDARDS
1. Current account will be serviced with the same care
and diligence as those originated and owned by CITSF.
CITSF staffing and expertise will be consistent with
those servicing its own portfolio.
2. Performance measurements for the portfolio are as
follows
<TABLE>
<CAPTION>
Call Center: Monthly Abandon Rate Less than 8%
-----------
<S> <C> <C>
Average Speed of Answer Less than 45 seconds
Hours of Operation Call Center: 8:00 AM - 7:00 PM, M-F
Back Office: Resolution Rate Complete inquiries within 7-10 days
Escalated Complaints Completed in 3-5 days
Lien Releases Within normal processing (not to
exceed 45 days) or as dictated by state
parameter
Overages Due to
Customer Within normal processing (not to
exceed 60 days) or as dictated by state
parameter
</TABLE>
I. SERVICE POWERS
1. CIT requires Chase approval for any loan balance
write off in excess of $5,000.00 due to errors and
omissions.
<PAGE>
4
J. REPORTING
1. CIT must provide Chase a month-end report of the
outstanding loan balances for the approximately 200
loans with previously placed credit/life insurance
for as long as such loans shall be in existence.
Chase agrees that such loans will be identified on
the master loan file to facilitate this reporting
requirement.
2. CIT must provide Chase a month-end report detailing:
(a) Call Volume
(b) Abandon Rate
(c) Number of Escalated Complaints
3. CIT must provide Chase a month-end report by product
detailing any significant issue that impacted the
agreed upon service quality and target resolution and
timeframe.
4. CIT must provide Chase a month-end report for each
calendar month until and including March 1998 of all
loans which were (i) originated after February 1,
1997 and (ii) paid off in full as of the previous
month. Such report shall include: customer name,
account number, dealer name, dealer number, contract
date and effective date of payoff. In connection with
such report, CIT shall also provide Chase conversion
tables for account numbers and dealer numbers.
K. NOTIFICATION
1. CIT must provide Chase (names to be provided) notice
immediately, or no later than 24 hours after the
occurrence, of:
(a) An unplanned shut down
(b) A disaster recovery situation and re-up plan
2. CIT must provide Chase (names to be provided) at
least 48 hours advance notice of:
(a) A planned shut down (meetings, etc.)
(b) A system shut down that would impact
servicing.
L. MISDIRECTED CORRESPONDENCE
1. All correspondence will be mailed to CIT, or to Chase
if received by CIT in error, overnight.
M. TRANSFER PLAN FOR SERVICING
<PAGE>
5
1. CIT will have appropriate staffing personnel hired
and trained 3 weeks prior to the transfer of
servicing.
N. TRAINING/MONITORING
1. All CIT servicing reps, including phone center and
back office will receive at least 1 week of product
and systems training.
2. Service quality evaluations will be done on all reps
at least once a month with retraining sessions
scheduled as needed based on performance monitoring.
<PAGE>
EXHIBIT 4.1
CONTINUING RESPONSIBILITIES OF CMB AND THE CHASE SERVICER UNDER
THE OLD SECURITIZATIONS
1. CFAC Grantor Trust 1991-A. The Chase Servicer shall remain responsible
for the duties and obligations of the Servicer with respect to Sections
5.09(a), 5.09(b), 5.09(d), 5.11(a), 5.11(c), 5.11(d), 5.11(e), 5.12,
10.02 and 11.06(c) of the Pooling and Servicing Agreement, dated as of
December 1, 1991, among CFAC, as Seller, CFMC, as Servicer, and
Sumitomo Bank of New York Trust Company, a New York trust company, as
Trustee of the CFAC Grantor Trust 1991-A.
2. CBNJ Boat Loan Trust 1994-1. CMB shall remain responsible for the
duties and obligations of the Servicer with respect to Sections
5.09(a), 5.09(b), 5.09(d), 5.11(a), 5.11(c), 5.11(d), 5.11(e), 5.12,
10.02 and 11.06(c) of the Pooling and Servicing Agreement, dated as of
June 9, 1994, among CMB, as Seller and Servicer, CFMC, as Subservicer,
and Bankers Trust Company, a New York banking corporation, as Trustee
of CBNJ Boat Loan Trust 1994-1.
<PAGE>
EXHIBIT 6.15
PAYMENT PROCESSING SEQUENCE
ALS - Precompute and Simple Interest Accounts
Primary Sequence -- INTEREST*, DEALER RESERVE INTEREST*, FORCE PLACED
INSURANCE, PRINCIPAL
Overage Sequence -- LATE CHARGES, INTEREST, FORCE PLACED INSURANCE,
PRINCIPAL
ACLS - Precompute, Simple Interest & Fixed Amortizations
Primary Sequence -- EXTENSION FEES, INTEREST, INSURANCES, PRINCIPAL, LATE
CHARGES, FORCE PLACED INSURANCE, EXPENSES
Overage Sequence -- INTEREST, LATE CHARGES, INSURANCE, FORCE PLACED
INSURANCE, EXPENSES, EXTENSIONS, PRINCIPAL
- --------
* The sum of (i) interest and (ii) dealer reserve interest equals the total
customer finance charge.
<PAGE>
Exhibit 25.1
Filing pursuant to Registrtation
Statement number 333-32737/-01/-02
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-----------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
___ SECTION 305(b) (2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. National Banking Association 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
Stanley S. Stroup, General Counsel
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Name, address and telephone number of Agent for Service)
-----------------------------
Chase Manhattan Marine Owner Trust 1997-A
(Exact name of obligor as specified in its charter)
Delaware 52-6867635
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Wilmington Trust Company
Attn: Corporate Trust Administration
Rodney Square North
1100 North Market Square
<PAGE>
Wilmington, DE 19890-0001
(Address of principal executive offices) (Zip code)
-----------------------------
Asset Backed Notes of Chase Manhattan Marine Owner Trust 1997-A
(Title of the indenture securities)
2
<PAGE>
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust
powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1, pursuant to General
Instruction B, because the obligor is not in default as provided under Item 13.
Item 15. Foreign Trustee. Not applicable.
Item 16. List of Exhibits. List below all exhibits filed as a part of
this Statement of Eligibility.
Exhibit 1. a. A copy of the Articles of Association of the
trustee now in effect.*
Exhibit 2. a. A copy of the certificate of authority of
the trustee to commence business issued June
28, 1872, by the Comptroller of the Currency
to The Northwestern National Bank of
Minneapolis.*
b. A copy of the certificate of the Comptroller
of the Currency dated January 2, 1934,
approving the consolidation of The
Northwestern National Bank of Minneapolis
and The Minnesota Loan and Trust Company of
Minneapolis, with the surviving entity being
titled Northwestern National Bank and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January
12, 1943, as to change of corporate title of
Northwestern National Bank and Trust Company
of Minneapolis to Northwestern National Bank
of Minneapolis.*
d. A copy of the letter dated May 12, 1983 from
the Regional Counsel, Comptroller of the
Currency, acknowledging receipt of notice of
name
3
<PAGE>
change effective May 1, 1983 from
Northwestern National Bank of Minneapolis to
Norwest Bank Minneapolis, National
Association.*
e. A copy of the letter dated January 4, 1988
from the Administrator of National Banks for
the Comptroller of the Currency certifying
approval of consolidation and merger
effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with
various other banks under the title of
"Norwest Bank Minnesota, National
Association."*
Exhibit 3. A copy of the authorization of the trustee to
exercise corporate trust powers issued January 2,
1934, by the Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. Consolidated Reports of Condition and Income of the
trustee as of June 30, 1997.(P)*
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Filed pursuant to a continuous hardship exemption of Form SE.
* Incorporated by reference to the corresponding numbered
exibits to the form T-1 filed as Exhibit 25 to registration
statement number 33-66026.
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 26th day of August, 1997.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Marianna C. Stershic
-------------------------
Marianna C. Stershic
Assistant Vice-President
5
<PAGE>
EXHIBIT 6
August 26, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Marianna C. Stershic
-------------------------
Marianna C. Stershic
Assistant Vice-President
6
