Exhibit 4.3
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FORM OF POOLING AND SERVICING AGREEMENT
among
FRANKLIN CAPITAL CORPORATION,
as Representative,
FRANKLIN RECEIVABLES LLC,
as Seller,
FRANKLIN CAPITAL CORPORATION,
as Servicer,
and
-------------------------
as Trustee and Collateral Agent
Dated as of ___________
FRANKLIN AUTO GRANTOR TRUST 199_-_
___% Asset Backed Certificates
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TABLE OF CONTENTS
Page
ARTICLE I
Special Definitions and Terms
SECTION 1.01. Special Definitions and Terms..............................................................
ARTICLE II
Establishment of Trust
SECTION 2.01. Creation of Trust..........................................................................
SECTION 2.02. Acceptance by Trustee .....................................................................
ARTICLE III
Conveyance of Receivables
SECTION 3.01. Conveyance of Receivables .................................................................
ARTICLE IV
Incorporation of Standard Terms
and Conditions
SECTION 4.01. Incorporation of Standard Terms
and Conditions of Agreement....................................................
ARTICLE V
Additional Representations and
Warranties of the Seller
SECTION 5.01. Additional Representations
and Warranties of the Seller...................................................
ARTICLE VI
Additional Provisions Relating
to Servicer
SECTION 6.01. Servicer Not to Resign..................................................................
ARTICLE VII
The Collateral Agent
SECTION 7.01. The Collateral Agent....................................................................
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of Receivable Files
POOLING AND SERVICING AGREEMENT dated as of ___________, among
FRANKLIN CAPITAL CORPORATION, a Delaware corporation, as representative (the
"Representative") and as servicer (the "Servicer"), FRANKLIN RECEIVABLES LLC, a
Delaware limited liability company, as seller (the "Seller"), and
_________________________ ("_________"), a _______________________, as trustee
and collateral agent (the "Trustee" and "Collateral Agent," respectively).
WHEREAS, the Seller owns certain receivables arising in
connection with prime, non-prime and sub-prime motor vehicle retail installment
sale contracts (the "Contracts") acquired by the Representative through motor
vehicle dealers in the ordinary course of its business; and
WHEREAS, the Representative, the Seller, the Servicer, the
Trustee and the Collateral Agent wish to set forth the terms and conditions
pursuant to which the Trust (as hereinafter defined) will acquire the Contracts
from the Seller, and the Servicer will service the Contracts on behalf of the
Trust;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the Representative, the Seller, the
Servicer, the Trustee and the Collateral Agent agree as follows:
ARTICLE I
Special Definitions and Terms
SECTION 1.01. Special Definitions and Terms. Capitalized terms
used and not defined herein have the meanings assigned thereto in the Standard
Terms and Conditions of Agreement. Whenever used in this Agreement and the
Standard Terms and Conditions of Agreement, the following words and phrases
shall have the following meanings:
"Agreement" means this Pooling and Servicing Agreement,
including the Standard Terms and Conditions of Agreement of Franklin Auto
Grantor Trusts, dated as of ___________, in the form attached hereto.
"Certificate" means a ___% Asset Backed Certificate,
evidencing a beneficial interest in the Trust, substantially in the form of
Exhibit A to the Standard Terms and Conditions of Agreement.
"Certificate Insurer" means _____________________, a financial
guaranty insurance company incorporated under the laws of ________, or any
successor thereto, as issuer of the Policy.
"Closing Date" means _________________.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee, which at the time of execution of this agreement
is____________________________________.
"Cutoff Date" means ___________.
"Depository Agreement" means the agreement dated
_________________, between the Trustee and The Depository Trust Company, as the
initial Clearing Agency, substantially in the form attached as Exhibit C to the
Standard Terms and Conditions of Agreement.
"Distribution Date" means, with respect to each Monthly
Period, the __th day of the following calendar month or, if such day is not a
Business Day, the immediately following Business Day, commencing _____________.
"Final Scheduled Distribution Date" means _____________.
"Final Scheduled Maturity Date" means _______________.
"Initial Certificate Balance" means $_________.
"Pass-Through Rate" means ___%.
"Policy" means the financial guaranty insurance policy number
_________ issued by the Certificate Insurer to the Trustee for the benefit of
the Certificateholders, including any endorsements thereto.
"Policy Payments Account" means the account designated as the
Policy Payments Account in, and which is established and maintained pursuant to,
Section 14.01 of the Standard Terms and Conditions of Agreement
"Purchase Agreement" means the Purchase Agreement dated as of
___________ between the Representative and the Seller relating to the Purchase
by the Seller from the Representative of the Receivables set forth in Exhibit A.
"Receivable" means any receivable conveyed to the Trust
hereunder on the Closing Date.
"Rule of 78s Receivable" means a Receivable which by its terms
calculates interest and principal with respect to each scheduled payment in
accordance with the Rule of 78s method.
"Servicing Fee Rate" means ___% per annum.
"Spread Account Initial Deposit" means an amount equal to __%
of the Initial Certificate Balance, deposited on the Closing Date (which is
equal to $___________).
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"Standard Terms and Conditions of Agreement" means the
Standard Terms and Conditions of Agreement of Franklin Auto Grantor Trusts,
dated as of ___________, in the form attached hereto.
"Trustee" means _________ ____________________________, a
_______________________, its successors in interest and any successor Trustee
hereunder.
"Trustee Fee" means an annual fee of $______, payable in equal
installments on each Distribution Date plus the out-of-pocket expenses
(including the reasonable fees and expenses of counsel) of the Trustee.
ARTICLE II
Establishment of Trust
SECTION 2.01. Creation of Trust. Upon the execution of this
Agreement by the parties hereto, there is hereby created a separate trust, which
shall be known as Franklin Auto Grantor Trust 199_-_ (the "Trust"). The Trust
shall be administered pursuant to the provisions of this Agreement for the
benefit of the Certificateholders.
SECTION 2.02. Acceptance by Trustee. The Trustee hereby
accepts all consideration conveyed by the Seller pursuant to Section 3.01 and
declares that it will hold such consideration upon the trusts set forth herein
for the benefit of the Certificateholders, subject to the terms and provisions
of this Agreement.
ARTICLE III
Conveyance of Receivables
SECTION 3.01. Conveyance of Receivables. In consideration of
the Trustee's delivery on the Closing Date to or upon the order of the Seller of
Certificates in an initial aggregate principal amount equal to the Initial
Certificate Balance, the Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Trustee in trust for the benefit of the
Certificateholders, without recourse (subject to the obligations set forth
herein), all right, title and interest of the Seller in and to:
(1) the Receivables, and all moneys received thereon
after the Cutoff Date and, in the case of Precomputed
Receivables, all moneys received thereon on or prior to the
Cutoff Date that relate to Scheduled Payments due after the
Cutoff Date;
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(2) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables and any other
interest of the Seller in such Financed Vehicles;
(3) any proceeds with respect to the Receivables from
claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors and
any proceeds from the liquidation of the Receivables;
(4) any proceeds from any Receivable repurchased by a
Dealer, pursuant to a Dealer Agreement, as a result of a
breach of representation or warranty in the related Dealer
Agreement;
(5) the related Receivables Files;
(6) all of the Seller's right, title and interest in
its rights and benefits, but none of its obligations or
burdens, under the Purchase Agreement, including the Seller's
rights under the Purchase Agreement, and the delivery
requirements, representations and warranties and the cure and
repurchase obligations of the Representative under the
Purchase Agreement; and
(7) the proceeds of any and all of the foregoing.
It is the intention of the Seller that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the
Receivables and other Trust Property from the Seller to the Trust and the
beneficial interest in and title to the Receivables and the other Trust Property
shall not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. In the
event that, notwithstanding the intent of the Seller, the transfer and
assignment contemplated hereby is held not to be a sale, this Agreement shall
constitute a grant of a security interest in the property referred to in this
Section 3.01 for the benefit of the Certificateholders.
ARTICLE IV
Incorporation of Standard Terms and Conditions
SECTION 4.01. Incorporation of Standard Terms and Conditions
of Agreement. This Pooling and Servicing Agreement does hereby incorporate by
reference the Standard Terms and Conditions of Agreement for Franklin Auto
Grantor Trusts dated as of ___________ (the "Standard Terms and Conditions of
Agreement"), in the form attached hereto.
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ARTICLE V
Additional Representations and Warranties of the Seller
SECTION 5.01. Additional Representations and Warranties of the
Seller. The Representative and the Seller, jointly and severally, make the
following representations and warranties on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates. Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date but shall survive the
sale, transfer and assignment of the Receivables to the Trustee.
(i) Maturity of Receivables. Each Receivable has a final
maturity date not later than _______________; each Receivable has an original
term to maturity of not more than __ months; the weighted average original term
of the Receivables is ___ months; the weighted average remaining term of the
Receivables is ___ months as of the Cutoff Date.
(ii) Financing. Approximately ____% of the aggregate
principal balance of the Receivables, constituting ____% of the number of
Receivables as of the Cutoff Date, represent new vehicles; the remainder of the
Receivables represent used vehicles; approximately ____% of the aggregate
Principal Balance of the Receivables as of the Cutoff Date represent Precomputed
Receivables and the remainder of the Receivables represent Simple Interest
Receivables; all of the Pre-computed Receivables are Rule of 78s Receivables.
The aggregate Principal Balance of the Receivables, as of the Cutoff Date, is
$_________.
(iii) APR. The weighted average Annual Percentage Rate of
the Receivables as of the Cutoff Date is approximately ____%. Each Receivable
has an APR equal to or greater than _____%.
(iv) Number. There are ______ Receivables.
(v) Balance. As of the Cutoff Date, each Receivable has a
remaining
principal balance of not less than $_______ and not more than $_________; as of
the Cutoff Date, the average Principal Balance of the Receivables is $_______.
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ARTICLE VI
Additional Provisions Relating To Servicer
SECTION 6.01. Servicer Not to Resign. Subject to the
provisions of Section 17.03 of the Standard Terms and Conditions of Agreement,
the Servicer may not resign from the obligations and duties hereby imposed on it
as Servicer under this Agreement except upon determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would result in a material adverse effect on the Servicer and the Certificate
Insurer does not elect to waive the obligations of the Servicer to perform the
duties which render it legally unable to act or does not elect to delegate those
duties to another Person. Notice of any such determination permitting the
resignation of the Servicer shall be communicated to the Trustee and the
Certificate Insurer 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 shall be evidenced by an Opinion of Counsel to
such effect delivered to and satisfactory to the Trustee and the Certificate
Insurer concurrently with or promptly after such notice. No such resignation of
the Servicer shall become effective until a successor servicer shall have
assumed the responsibilities and obligations of the Representative in accordance
with Section 18.02 of the Standard Terms and Conditions of Agreement.
ARTICLE VII
The Collateral Agent
SECTION 7.01. The Collateral Agent. _________ hereby accepts
its appointment as Collateral Agent hereunder. The parties hereto acknowledge
that any successor Collateral Agent appointed by the Seller with the consent of
the Certificate Insurer shall be the Collateral Agent for all purposes of the
Agreement; provided, however, that any such successor Collateral Agent shall be
required to execute an instrument of assumption satisfactory to the Trustee
evidencing such successor's assumption of the obligations of the Collateral
Agent hereunder. The Collateral Agent shall promptly notify each of the parties
hereto if it shall resign or be terminated as Collateral Agent. The Collateral
Agent hereby agrees that it shall not be entitled to any additional fees for its
services as Collateral Agent hereunder.
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IN WITNESS WHEREOF, the Representative, the Seller, the
Servicer, the Trustee and Collateral Agent have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
FRANKLIN RECEIVABLES LLC
By:_______________________________
Name:
Title:
FRANKLIN CAPITAL CORPORATION
By:_______________________________
Name:
Title:
---------------------------
as Trustee and Collateral Agent
By:______________________________
Name:
Title:
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SCHEDULE A
SCHEDULE OF RECEIVABLES
(To be delivered to the Trustee at Closing)
SCHEDULE B
LOCATION OF RECEIVABLE FILES
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FORM OF STANDARD TERMS AND CONDITIONS OF AGREEMENT
OF
FRANKLIN AUTO GRANTOR TRUSTS
FRANKLIN CAPITAL CORPORATION
Representative
FRANKLIN RECEIVABLES LLC
Seller
and
FRANKLIN CAPITAL CORPORATION
Servicer
Dated as of ___________
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TABLE OF CONTENTS
Page
ARTICLES I - X
Reserved
ARTICLE XI
Definitions
SECTION 11.01. Definitions ........................................................................
SECTION 11.02. Other Definitional Provisions........................................................
ARTICLE XII
The Receivables
SECTION 12.01. Representations and Warranties
of Seller....................................................................
SECTION 12.02. [RESERVED] ........................................................................
SECTION 12.03. Repurchase Upon Breach ..............................................................
SECTION 12.04. Custody of Receivable Files..........................................................
SECTION 12.05. Duties of Servicer as Custodian.......................................................
SECTION 12.06. Instructions; Authority to Act.......................................................
SECTION 12.07. Custodian's Indemnification..........................................................
SECTION 12.08. Effective Period and Termination ....................................................
ARTICLE XIII
Administration and Servicing of Receivables
SECTION 13.01. Duties of Servicer...................................................................
SECTION 13.02. Collection and Allocation of
Receivable Payments.....................................................
SECTION 13.03. Realization Upon Receivables.........................................................
SECTION 13.04. Physical Damage Insurance............................................................
SECTION 13.05. Maintenance of Security Interests
in Financed Vehicles....................................................
SECTION 13.05A Segregation of Receivables Files......................................................
SECTION 13.06. Covenants of Servicer ...............................................................
SECTION 13.07. Purchase of Receivables Upon Breach..................................................
SECTION 13.08. Servicing Fee........................................................................
SECTION 13.09. Servicer's Certificate...............................................................
SECTION 13.10. Annual Statement as to Compliance
Notice of Default.......................................................
SECTION 13.11. Annual Independent Certified Public
Accountant's Report.....................................................
SECTION 13.12. Access to Certain Documentation and
Information Regarding Receivables.......................................
SECTION 13.13. Servicer Expenses....................................................................
SECTION 13.14. Appointment of Subservicer...........................................................
ARTICLE XIV
Distributions; Spread Account;
Statements to Certificateholders
SECTION 14.01. Establishment of Trust Accounts.......................................................
SECTION 14.01A Investments of Funds in Payahead
Account.................................................................
SECTION 14.02. Collections ........................................................................
SECTION 14.03. Application of Collections...........................................................
SECTION 14.04. Withdrawals From Spread Account......................................................
SECTION 14.05. Additional Deposits..................................................................
SECTION 14.06. Distributions........................................................................
SECTION 14.07. Spread Account.......................................................................
SECTION 14.07A Investments of Funds in Spread
Account.................................................................
SECTION 14.08. Pre-Funding Account..................................................................
SECTION 14.09. Statements to Certificateholders ....................................................
SECTION 14.10. Tax Returns ........................................................................
SECTION 14.11. Net Deposits ........................................................................
SECTION 14.12. Optional Deposits by the
Certificate Insurer.....................................................
ARTICLE XIV A
SECTION 14A.01 The Policy ........................................................................
SECTION 14A.02 Claims Under Policy...................................................................
SECTION 14A.03 Preference Claims; Direction of
Proceedings.............................................................
SECTION 14A.04 Surrender of Policy...................................................................
ARTICLE XV
The Certificates
SECTION 15.01. The Certificates.....................................................................
SECTION 15.02. Authentication of Certificates.......................................................
SECTION 15.03. Registration of Transfer and
Exchange of Certificates................................................
SECTION 15.04. [RESERVED] ........................................................................
SECTION 15.05. Mutilated, Destroyed, Lost or
Stolen Certificates.....................................................
SECTION 15.06. Persons Deemed Owners................................................................
SECTION 15.07. Access to List of Certificateholders'
Names and Addresses.....................................................
SECTION 15.08. Maintenance of Office or Agency......................................................
SECTION 15.09. Book-Entry Certificates..............................................................
SECTION 15.10. Notices to Clearing Agency...........................................................
SECTION 15.11. Definitive Certificates..............................................................
SECTION 15.12. Temporary Certificates...............................................................
ARTICLE XVI
The Seller
SECTION 16.01. Representations of Seller............................................................
SECTION 16.02. Corporate Existence..................................................................
SECTION 16.03. Liabilities of Seller; Indemnities...................................................
SECTION 16.04. Merger or Consolidation of, or
Assumption of the Obligations of,
Seller..................................................................
SECTION 16.05. Limitation on Liability of
Seller and Others.......................................................
SECTION 16.06. Seller May Own Certificates .........................................................
ARTICLE XVII
The Servicer
SECTION 17.01. Representations of Servicer..........................................................
SECTION 17.02. Indemnities of Servicer..............................................................
SECTION 17.03. Merger or Consolidation of,
or Assumption of the Obligations of,
Servicer................................................................
SECTION 17.04. Limitation on Liability of
Servicer and Others.....................................................
ARTICLE XVIII
Default
SECTION 18.01. Events of Default....................................................................
SECTION 18.02. Appointment of Successor ............................................................
SECTION 18.03. [RESERVED] ........................................................................
SECTION 18.04. Notification to Certificateholders ..................................................
SECTION 18.05. Waiver of Past Defaults..............................................................
ARTICLE XIX
The Trustee
SECTION 19.01. Duties of Trustee....................................................................
SECTION 19.02. Certain Matters Affecting Trustee....................................................
SECTION 19.03. Trustee Not Liable for
Certificates or Receivables.............................................
SECTION 19.04. Trustee May Own Certificates.........................................................
SECTION 19.05. Trustee's Fees and Expenses..........................................................
SECTION 19.06. Eligibility Requirements for Trustee.................................................
SECTION 19.07. Resignation or Removal of Trustee....................................................
SECTION 19.08. Successor Trustee....................................................................
SECTION 19.09. Merger or Consolidation of Trustee...................................................
SECTION 19.10. Appointment of Co-Trustee or
Separate Trustee........................................................
SECTION 19.11. Representations and Warranties
of Trustee..............................................................
SECTION 19.12. No Bankruptcy Petition...............................................................
SECTION 19.13. Trustee's Certificate................................................................
SECTION 19.14. Trustee's Assignment of
Purchased Receivables...................................................
ARTICLE XX
Termination
SECTION 20.01. Termination of the Trust.............................................................
SECTION 20.02. Optional Purchase of All Receivables.................................................
ARTICLE XXI
Miscellaneous Provisions
SECTION 21.01. Amendment ........................................................................
SECTION 21.02. Protection of Title to Trust.........................................................
SECTION 21.03. Separate Counterparts................................................................
SECTION 21.04. Limitation on Rights of
Certificateholders......................................................
SECTION 21.05. Governing Law........................................................................
SECTION 21.06. Notices ........................................................................
SECTION 21.07. Severability of Provisions...........................................................
SECTION 21.08. Assignment ........................................................................
SECTION 21.09. Certificates Nonassessable
and Fully Paid..........................................................
SECTION 21.10. Third Party Beneficiaries............................................................
SECTION 21.11. Headings ........................................................................
SECTION 21.12. Nonpetition Covenants................................................................
SECTION 21.13. Financial Security as Controlling
Party...................................................................
Exhibit A Form of Certificate
Exhibit B Form of Depository Agreement
Exhibit C [Reserved]
Exhibit D Form of Servicer's Certificate
Exhibit E-1 Form of Trustee's Certificate - Assignment to Seller
Exhibit E-2 Form of Trustee's Certificate - Assignment to
Servicer
Exhibit F Form of Receivable Stamp Language
FRANKLIN AUTO TRUSTS
STANDARD TERMS AND CONDITIONS OF AGREEMENT
Dated as of ___________
INTRODUCTION
These Standard Terms and Conditions of Agreement shall be
applicable to Franklin Auto Trust grantor trusts formed on or after the date
hereof with respect to which a Pooling and Servicing Agreement incorporating by
reference these Standard Terms and Conditions of Agreement shall have been
executed.
ARTICLES I-X
Reserved
ARTICLE XI
Definitions
SECTION 11.01. Definitions. Whenever used in the Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any 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.
"Aggregate Principal Balance" means, with respect to any
Determination Date, the sum of the Principal Balances for all Receivables (other
than (i) any Receivable that became a Liquidated Receivable during the related
Monthly Period and (ii) any Receivable that was purchased or repurchased by any
Person pursuant to the Agreement during the related Monthly Period) as of the
date of determination.
"Agreement" means a pooling and servicing agreement among
Franklin Capital Corporation, as representative and servicer, Franklin
Receivables LLC, as seller, and the Trustee and Collateral Agent named in such
agreement, into which these Standard Terms and Conditions of Agreement shall be
incorporated by reference, and all amendments and supplements thereto.
"Amount Available" means, with respect to any Distribution
Date, the sum of (i) the Available Funds for the immediately preceding
Determination Date, plus (ii) the Deficiency Claim Amount, if any, received
(from a Certificate Insurer Optional Deposit or the Spread Account or otherwise)
by the Trustee with respect to such Distribution Date, plus (iii) the Policy
Claim Amount, if any, received by the Trustee with respect to such Distribution
Date.
"Amount Financed" means, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and any related costs, including amounts advanced in respect of
sales tax, car club membership fees, accessories, insurance premiums, service
and warranty contracts, other items customarily financed as part of retail
automobile installment sale contracts or promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the
annual percentage rate of finance charges or service charges, as the case may
be, stated in the related Contract.
"Available Funds" means, with respect to any Determination
Date, the sum of (i) the Collected Funds for such Determination Date (including
amounts withdrawn from the Payahead Account but excluding amounts deposited into
the Payahead Account), and (ii) all Purchase Amounts deposited in the Collection
Account during the related Monthly Period.
"Average Default Rate" means, with respect to any Distribution
Date, the arithmetic average of the Default Rate for such Distribution Date and
the Default Rates for the two immediately preceding Distribution Dates.
"Average Delinquency Ratio" means, with respect to any
Distribution Date, the arithmetic average of the Delinquency Ratio for such
Distribution Date and the Delinquency Ratios for the two immediately preceding
Distribution Dates.
"Average Net Loss Rate" with respect to any Distribution Date,
the arithmetic average of the Net Loss Rates for the three immediately preceding
Monthly Periods.
"Base Servicing Fee" means, with respect to any Monthly
Period, the fee payable to the Servicer for services rendered during such
Monthly Period, which shall be equal to one-twelfth of the Servicing Fee Rate
multiplied by the Pool Balance as of the first day of such Monthly Period.
"Book-Entry Certificates" means, unless otherwise specified in
the Agreement, a beneficial interest in the Certificates, ownership and
transfers of which shall be registered through book entries by a Clearing Agency
as described in Section 15.09.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions or trust companies in any of The City of
New York and the States of California, Utah and Delaware or any other location
of any successor Servicer or successor Trustee or successor Collateral Agent are
authorized or obligated by law, regulation or executive order to be closed.
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"Certificate Balance" means, as of any date of determination,
the Initial Certificate Balance, as specified in the Agreement, reduced by all
amounts previously distributed to Holders of Certificates and allocable to
principal.
"Certificate Factor" means, as of the close of business on a
Distribution Date, a seven-digit decimal figure equal to the Certificate Balance
as of such Distribution Date divided by the Initial Certificate Balance.
"Certificate Owner" means, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as reflected on the books of the Clearing Agency or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Certificate Register" and "Certificate Registrar" mean the
register maintained and the registrar appointed pursuant to Section 15.03.
"Certificateholder" or "Holder" means a Person in whose name a
Certificate is registered in the Certificate Register.
"Certificates" shall have the meaning set forth in the
Agreement.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"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 and pledges of securities deposited
with the Clearing Agency.
"Closing Date" with respect to each Trust shall have the
meaning set forth in the applicable Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means the Collateral Agent named in an
Agreement, and any successor thereto pursuant to the terms of such Agreement.
"Collected Funds" means, with respect to any Determination
Date, the amount of funds in the Collection Account representing collections on
the Receivables during the related Monthly Period, including all Net Liquidation
Proceeds collected during the related Monthly Period (but excluding any Purchase
Amounts).
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"Collection Account" means the account designated as such,
established and maintained pursuant to Section 14.01(a).
"Computer Tape" means the computer tapes or other electronic
media furnished by the Seller to the Trustee describing certain characteristics
of the Receivables.
"Contract" means a motor vehicle retail installment sale
contract.
"Corporate Trust Office" means the principal office of the
Trustee at the address set forth in the related Agreement or at such other
address as the Trustee may designate from time to time by notice to
Certificateholders, the Seller and the Servicer, or the principal corporate
trust office of any successor Trustee (of which address such successor Trustee
shall notify the Certificateholders, the Seller and Servicer).
"Cram Down Loss" means, with respect to a Receivable, if a
court of appropriate jurisdiction in an insolvency proceeding shall have issued
an order reducing the amount owed on a Receivable or otherwise modifying or
restructuring the scheduled payments to be made on a Receivable, an amount equal
to (i) the excess of the principal balance of such Receivable immediately prior
to such order over the principal balance of such Receivable as so reduced and/or
(ii) if such court shall have issued an order reducing the effective rate of
interest on such Receivable, the net present value (using as the discount rate
the higher of the APR on such Receivable or the rate of interest, if any,
specified by the court in such order) of the scheduled payments as so modified
or restructured. A "Cram Down Loss" shall be deemed to have occurred on the date
of issuance of such order.
"Cutoff Date" means, with respect to any Receivable, the date
after which collections on such Receivable will be included in a Trust or the
related trust account pursuant to the related Agreement.
"Dealer" means the dealer who sold a Financed Vehicle and who
originated and assigned the related Receivable to the Representative under an
existing Dealer Agreement.
"Dealer Agreement" means an agreement between the
Representative and a Dealer relating to the sale of a Contract and all documents
and instruments relating thereto.
"Deemed Cured" means, as of a Determination Date, with respect
to a Trigger Event that has occurred, that no Trigger Event shall have occurred
as of such Determination Date or as of any of the three consecutively preceding
Monthly Periods.
"Default Rate" means, with respect to any Distribution Date
and based on such information provided in the Servicer's Certificate under
Section 13.09, the product of (x) twelve and (y) a fraction (i) the numerator of
which is the sum of (a) the aggregate of the Principal Balances of all
Receivables which became Defaulted Receivables during the related Monthly Period
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and (b) the aggregate of the Principal Balances (as of the related repurchase
date) of Receivables that became Purchased Receivables during the related
Monthly Period that were 30 days or more delinquent with respect to 10% or more
of a Scheduled Payment at the time of such repurchase hereunder and (ii) the
denominator of which is the Aggregate Principal Balance of the Receivables as of
the first day of the related Monthly Period.
"Defaulted Receivable" means a Receivable with respect to
which: (i) ten percent or more of a Scheduled Payment is 120 or more days
delinquent, (ii) the Servicer has repossessed the related Financed Vehicle (and
any applicable redemption period has expired) or (iii) such Receivable is in
default and the Servicer has determined in good faith that payments thereunder
are not likely to be resumed.
"Deficiency Claim Amount" shall have the meaning set forth in
Section 14.04.
"Deficiency Claim Date" means, with respect to any
Distribution Date, the fourth Business Day immediately preceding such
Distribution Date.
"Deficiency Notice" shall have the meaning set forth in
Section 14.04.
"Definitive Certificates" shall have the meaning specified in
Section 15.11.
"Delinquency Ratio" means, with respect to any Distribution
Date, a fraction, expressed as a percentage, (a) the numerator of which is equal
to the aggregate Principal Balance of all Receivables other than those for which
the related Financed Vehicle has been repossessed that were 30 or more days
delinquent with respect to more than 10% of a Scheduled Payment as of the last
day of the related Monthly Period and (b) the denominator of which is equal to
the Aggregate Principal Balance of the Receivables as of the first day of the
related Monthly Period.
"Delivery" means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and are
susceptible of physical delivery, transfer thereof to the Trustee or its nominee
or custodian by physical delivery to the Trustee or its nominee or custodian
endorsed to, or registered in the name of, the Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated security (as
defined in Section 8-102 of the UCC) transfer thereof (i) by delivery of such
certificated security endorsed to, or registered in the name of, the Trustee or
its nominee or custodian or endorsed in blank to a financial intermediary (as
defined in Section 8-313 of the UCC) and the making by such financial
intermediary of entries on its books and records identifying such certificated
securities as belonging to the Trustee or its nominee or custodian and the
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sending by such financial intermediary of a confirmation of the purchase of such
certificated security by the Trustee or its nominee or custodian, or (ii) by
delivery thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate entries on
its books reducing the appropriate securities account of the transferor and
increasing the appropriate securities account of a financial intermediary by the
amount of such certificated security, the identification by the clearing
corporation of the certificated securities for the sole and exclusive account of
the financial intermediary, the maintenance of such certificated securities by
such clearing corporation or a "custodian bank" (as defined in Section 8-102(4)
of the UCC) or the nominee of either, subject to the clearing corporation's
exclusive control, the sending of a confirmation by the financial intermediary
of the purchase by the Trustee or its nominee or custodian of such securities
and the making by such financial intermediary of entries on its books and
records identifying such certificated securities as belonging to the Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"), and, in
any event, any such Physical Property in registered form shall be in the name of
the Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect the complete transfer
of ownership of any such Trust Property to the Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable federal
regulations and Articles 8 and 9 of the UCC: book-entry registration of such
Trust Property to an appropriate book-entry account maintained with a Federal
Reserve Bank by a financial intermediary that is also a "depository" pursuant to
applicable federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Trustee or its nominee or custodian of the purchase by the Trustee or its
nominee or custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to federal book-entry
regulations as belonging to the Trustee or its nominee or custodian and
indicating that such custodian holds such Trust Property solely as agent for the
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Property to the Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the interpretation
thereof; and
(c) with respect to any item of Trust Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, 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 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 Trustee or its nominee or custodian.
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"Determination Date" means, unless otherwise specified in the
Agreement, with respect to a Monthly Period, the fifth Business Day prior to the
related Distribution Date.
"Distribution Amount" means, with respect to a Distribution
Date, the sum of (i) the Available Funds for such Distribution Date, plus (ii)
the Deficiency Claim Amount, if any, received by the Trustee with respect to
such Distribution Date.
"Distribution Date" with respect to each Trust shall have the
meaning set forth in the applicable Agreement.
"Draw Date" means, with respect to any Distribution Date, the
third Business Day immediately preceding such Distribution Date.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the states thereof or the District
of Colombia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution shall have a credit rating from
each Rating Agency in one of its generic rating categories that signifies
investment grade.
"Eligible Institution" means (a) the corporate trust
department of the Trustee or any other entity specified in the Agreement or (b)
a depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), which (i) has either (A) a long-term
unsecured debt rating of AAA or better by Standard & Poor's and Aaa or better by
Moody's or (B) a certificate of deposit rating of A-1+ by Standard & Poor's and
P-1 or better by Moody's or any other short-term or certificate of deposit
rating acceptable to the Rating Agencies and to the Certificate Insurer and (ii)
whose deposits are insured by the FDIC. If so qualified, the Trustee or any such
other entity specified in the Agreement may be considered an Eligible
Institution for the purposes of clause (b) of this definition.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to timely payment by, the United States of
America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company
organized under the laws of the United States of America or
any state thereof or the District of Columbia (or any domestic
branch of a foreign bank) and subject to supervision and
examination by Federal or state banking or depository
institution authorities (including depository receipts issued
by any such institution or trust company as custodian with
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respect to any obligation referred to in clause (a) above or
portion of such obligation for the benefit of the holders of
such depository receipts); provided, however, that at the time
of the investment or contractual commitment to invest therein
(which shall be deemed to be made again each time funds are
reinvested following each Distribution Date), the commercial
paper or other short-term senior unsecured debt obligations
(other than such obligations the rating of which is based on
the credit of a Person other than such depository institution
or trust company) of such depository institution or trust
company shall have a credit rating from Standard & Poor's of
A-1+ and from Moody's of P-1;
(c) commercial paper having, at the time of the
investment or contractual commitment to invest therein, a
rating from Standard & Poor's of A-1+ and from Moody's of P-1;
(d) investments in money market funds (including
funds for which the Trustee or any of its Affiliates is
investment manager or advisor) having a rating from Standard &
Poor's of AAA-m or AAAm-G and from Moody's of Aaa and having
been approved by the Certificate Insurer;
(e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed
by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by
the full faith and credit of the United States of America, in
either case entered into with a depository institution or
trust company (acting as principal) referred to in clause (b)
above; and
(g) any other investment which would satisfy the
Rating Agency Condition and is consistent with the rating of
the Certificates and which, so long as no Insurer Default
shall have occurred and be continuing, has been approved by
the Certificate Insurer.
Any of the foregoing Eligible Investments may be purchased by
or through the Trustee or any of its Affiliates.
"Eligible Servicer" means the Representative, the Trustee or
another Person which at the time of its appointment as Servicer, (i) is
servicing a portfolio of motor vehicle retail installment sales contracts and/or
motor vehicle installment loans, (ii) is legally qualified and has the capacity
to service the Receivables, (iii) has demonstrated the ability professionally
and competently to service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, and (iv) is qualified and entitled to use, pursuant
8
to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Servicer uses in connection with
performing its duties and responsibilities under this Agreement or otherwise has
available software which is adequate to perform its duties and responsibilities
under this Agreement.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Distribution Date" means the date specified
in an Agreement as the final scheduled distribution date with respect to the
related Certificates.
"Final Scheduled Maturity Date" means the final scheduled
maturity date specified in the Agreement in respect of the Receivables
transferred to the Trust under such Agreement.
"Financed Vehicle" means an automobile or light-duty truck,
van or minivan together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"Floor Amount" means, as of any Distribution Date, the lesser
of (i) __% of the Initial Certificate Balance and (ii) the greater of (a) the
outstanding Certificate Balance and (b) $______.
"Initial Certificate Balance" shall have the meaning specified
in the Agreement.
"Insolvency Event" means, with respect to a specified Person,
(a) the filing of a petition against such Person or the entry of a decree or
order for relief by a court having jurisdiction in the premises in respect of
such Person or any substantial part of its property in an involuntary case under
any applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation or
such Person's affairs, and such petition, 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 Agreement" means the Insurance and Indemnity
Agreement among the Certificate Insurer, the Representative, the Seller and the
Servicer.
"Insurance Agreement Event of Default" means an "Event of
Default" as defined in the related Insurance Agreement.
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"Insurance Policy" means, with respect to a Receivable, any
insurance policy (including the insurance policies described in Section
12.01(q)) benefiting the holder of the Receivable providing loss or physical
damage, credit life, credit disability, theft, mechanical breakdown or similar
coverage with respect to the Financed Vehicle or the Obligor.
"Insurer Default" means the occurrence and continuance of any
of the following events:
(a) the Certificate Insurer shall have failed to make
a payment required under the Policy in accordance with its
terms;
(b) The Certificate Insurer shall have (i) filed a
petition or commenced any case or proceeding under any
provision or chapter of the United States Bankruptcy Code or
any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization,
(ii) made a general assignment for the benefit of its
creditors, or (iii) had an order for relief entered against it
under the United States Bankruptcy Code or any other similar
federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization which is final
and nonappealable; or
(c) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory
authority shall have entered a final and nonappealable order,
judgment or decree (i) appointing a custodian, trustee, agent
or receiver for the Certificate Insurer or for all or any
material portion of its property or (ii) authorizing the
taking of possession by a custodian, trustee, agent or
receiver of the Certificate Insurer (or the taking of
possession of all or any material portion of the property of
the Certificate Insurer).
"Interest Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of the Interest Distributable
Amount for such Distribution Date plus (without duplication) any outstanding
Interest Carryover Shortfall from the preceding Distribution Date plus interest
on such outstanding Interest Carryover Shortfall, to the extent permitted by
law, at the Pass-Through Rate from such preceding Distribution Date through the
current Distribution Date, over the amount of interest that Holders of the
Certificates actually received on such current Distribution Date.
"Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of (i) thirty days interest, calculated on the basis
of a 360-day year consisting of twelve 30-day months, at the Pass-Through Rate
on the Certificate Balance as of the close of business on the last day of the
preceding Monthly Period and (ii) any outstanding Interest Carryover Shortfall.
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"Investment Earnings" means, with respect to any Distribution
Date, the investment earnings (net of losses and investment expenses) on amounts
on deposit in the accounts established pursuant to Section 14.01.
"Lien" means a security interest, lien, charge, pledge,
equity, or encumbrance of any kind, other than tax liens, mechanics' liens and
any liens that attach to the respective Receivable by operation of law as a
result of any act or omission by the related Obligor.
"Lien Certificate" means, with respect to a Financed Vehicle,
an original certificate of title, certificate of lien or other notification
issued by the Registrar of Titles of the applicable state to a secured party
which indicates that the lien of the secured party on the Financed Vehicle is
recorded on the original certificate of title. In any jurisdiction in which the
original certificate of title is required to be given to the Obligor, the term
"Lien Certificate" shall mean only a certificate or notification issued to a
secured party.
"Liquidated Receivable" means, with respect to any
Determination Date, a Receivable as to which, as of the last day of the related
Monthly Period, (i) 90 days have elapsed since the Servicer repossessed the
Financed Vehicle, (ii) the Servicer has determined in good faith that all
amounts it expects to recover have been received, (iii) 10% or more of a
Scheduled Payment shall have become 180 or more days delinquent, or (iv) the
Financed Vehicle has been sold and the proceeds received.
"Monthly Period" means a calendar month (or in the case of the
first Distribution Date, the period from and including the Cutoff Date to and
including the last day of the calendar month in which the Closing Date occurs).
"Moody's" means Xxxxx'x Investors Service, Inc., or its
successor.
"Net Liquidation Proceeds" means, with respect to Liquidated
Receivables, (i) proceeds from the disposition of the vehicles securing the
Liquidated Receivables, less reasonable Servicer out-of-pocket costs, including
repossession and resale expenses not already deducted from such proceeds, and
any amounts required by law to be remitted to the Obligor (ii) any insurance
proceeds, or (iii) other monies received from the Obligor or otherwise.
"Net Loss Rate" means for any Monthly Period, the product,
expressed as a percentage, of twelve multiplied by a fraction, the numerator of
which is equal to (i) the aggregate Principal Balance of all Receivables that
became Liquidated Receivables during such Monthly Period less (ii) the Net
Liquidation Proceeds received by the Trust with respect to Receivables which
became Liquidated Receivables in prior Monthly Periods, and the denominator of
which is equal to the Aggregate Principal Balance of the Receivables as of the
first day of such Monthly Period.
"Obligor" on a Receivable means the purchaser or co-purchasers
of the Financed Vehicle and any other Person who owes payments under the
Receivable.
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"Officers' Certificate" means a certificate signed by the (a)
chairman of the board, the president, any executive vice president or any vice
president and (b) any treasurer, assistant treasurer, secretary or assistant
secretary of the Representative, the Seller or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of
counsel, who may be an employee of or counsel to the Representative, the Seller
or the Servicer, which counsel shall be acceptable to the Trustee, the
Certificate Insurer or Rating Agencies, as applicable.
"Original Pool Balance" means the Pool Balance as of the
Cutoff Date.
"Pass-Through Rate" shall have the meaning specified in the
Agreement.
"Payahead" on a Receivable that is a Precomputed Receivable
means the amount, as of the close of business on the last day of a Monthly
Period, computed in accordance with Section 14.03 with respect to such
Receivable.
"Payahead Account" means the account designated as such,
established and maintained pursuant to Section 14.01(c).
"Payahead Balance" on a Precomputed Receivable means the sum,
as of the close of business on the last day of a Monthly Period, of all
Payaheads made by or on behalf of the Obligor with respect to such Precomputed
Receivable, as reduced by applications of previous Payaheads with respect to
such Precomputed Receivable, pursuant to Section 14.03.
"Person" means any legal person, including any individual,
corporation, partnership, limited liability company, joint venture, estate,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof, or any other entity.
"Physical Property" has the meaning assigned to such term in
the definition of "Delivery" above.
"Policy Claim Amount" shall have the meaning set forth in
Section 14A.02.
"Policy Payments Account" means the trust account designated
as such, established pursuant to Section 14.01(a).
"Pool Balance" means, as of any date, the aggregate Principal
Balance of the Receivables as of such date (excluding Purchased Receivables and
Liquidated Receivables).
"Precomputed 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 Rule of 78's Method.
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"Principal Balance" means, with respect to any Receivable, as
of any date, the Amount Financed minus (i) that portion of all amounts
(including Payaheads applied to Scheduled Payments) received on or prior to such
date and allocable to principal in accordance with (x) in the case of Simple
Interest Receivables the terms of the Receivable and (y) in the case of
Precomputed Receivables, the actuarial method, and (ii) any Cram Down Loss in
respect of such Receivable.
"Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of the Principal Distributable
Amount plus any outstanding Principal Carryover Shortfall from the preceding
Distribution Date over the amount of principal that the Holders of the
Certificates receive on such current Distribution Date.
"Principal Distributable Amount" means, with respect to any
Distribution Date, without duplication, the sum of (i) the principal portion
(calculated in the case of Precomputed Receivables on the basis of the actuarial
method and in the case of Simple Interest Receivables, calculated on the basis
of the Simple Interest Method) of all Collected Funds received during the
immediately preceding Monthly Period (other than Liquidated Receivables and
Purchased Receivables) including the principal portion of all prepayments and
all principal amounts required to be withdrawn from the Payahead Account on such
Distribution Date but excluding any Payaheads received during such Monthly
Period that are required to be deposited in the Payahead Account pursuant to
Section 14.03, (ii) the Principal Balance of all Receivables that became
Liquidated Receivables during the related Monthly Period (other than Purchased
Receivables), (iii) the principal portion of the Purchase Amounts received with
respect to all Receivables that became Purchased Receivables during the related
Monthly Period, plus, in the sole discretion of the Certificate Insurer, the
Principal Balance allocable to the Certificates of all the Receivables that were
required to be purchased pursuant to Sections 12.03 and 13.07, during such
Monthly Period but were not purchased, (iv) the aggregate amount of Cram Down
Losses that shall have occurred during the related Monthly Period, and (v) any
outstanding Principal Carryover Shortfall.
"Purchase Amount" means, with respect to a Receivable, the
Principal Balance and all accrued and unpaid interest on the Receivable
(including one month's interest thereon, in the month of payment, at the APR
less, so long as the Representative is the Servicer, the Servicing Fee), after
giving effect to the receipt of any moneys collected (from whatever source) on
such Receivable, if any.
"Purchased Receivable" means a Receivable purchased as of the
close of business on the last day of a Monthly Period pursuant to Section 13.07
or Section 12.03.
"Rating Agency" means, unless otherwise specified in the
Agreement, Moody's and Standard & Poor's. If no such organization or successor
maintains a rating on the Certificates, "Rating Agency" shall mean any
13
nationally recognized statistical rating organization or other comparable Person
designated by the Seller and acceptable to the Certificate Insurer (so long as
an Insurer Default shall not have occurred and be continuing) notice of which
designation shall be given to the Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' (or such shorter period
as shall be acceptable to each Rating Agency) prior notice thereof and that each
of the Rating Agencies shall have notified the Seller, the Servicer, the
Certificate Insurer and the Trustee in writing that such action will not result
in a reduction or withdrawal of the then current rating of the Certificates.
"Realized Losses" means, with respect to any Receivable that
becomes a Liquidated Receivable, the excess of the Principal Balance of such
Liquidated Receivable over Net Liquidation Proceeds to the extent allocable to
principal.
"Receivable" means any Contract conveyed to the Trust on the
Closing Date listed on Schedule A to the Agreement (which schedule may be in the
form of microfiche).
"Receivable Files" means the documents specified in Section
12.04.
"Record Date" with respect to each Distribution Date means the
day immediately preceding such Distribution Date, unless otherwise specified in
the Agreement.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Rule of 78's Method" means the method under which a portion
of a payment allocated to earned interest and the portion allocable to principal
is determined according to the sum of the month's digits or any equivalent
method commonly referred to as the "Rule of 78's."
"Scheduled Payment" on a Precomputed Receivable means that
portion of the payment required to be made by the Obligor during the respective
Monthly Period sufficient to amortize the Principal Balance thereof under the
actuarial method over the term of the Receivable and to provide interest at the
APR.
"Seller" means Franklin Receivables LLC, a Delaware limited
liability company, and its successors in interest to the extent permitted
hereunder.
"Servicer" means Franklin Capital Corporation as the servicer
of the Receivables, and each successor Servicer pursuant to Section 17.03 or
18.02.
"Servicer Default" means a default specified in Section 18.01.
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"Servicer's Certificate" means an Officers' Certificate of the
Servicer delivered pursuant to Section 13.09, substantially in the form of
Exhibit D.
"Servicing Fee" means the fee payable to the Servicer for
services rendered during each Monthly Period, determined pursuant to Section
13.08.
"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 (in some
states assuming 30 day months), divided by the actual number of days in a year
(360 days in states which assume 30 day months) 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.
"Specified Spread Account Requirement" means, as of any
Determination Date after giving effect to any principal distributions to be made
on the related Distribution Date (including, without limitation, any principal
distributions to be made from withdrawals from the Spread Account pursuant to
Section 14.04 on the related Distribution Date), the greater of (i) __% of the
outstanding Certificate Balance and (ii) the Floor Amount; provided, however, if
a Trigger Event occurs and has not been Deemed Cured, the amount in (i) above
will equal __%; provided further, however, at such time as a Trigger Event shall
be Deemed Cured, the amount in (i) above shall revert to __%. If an Insurance
Agreement Event of Default shall have occurred, "Specified Spread Account
Requirement" shall mean an unlimited amount and be continuing.
"Spread Account" means the account designated as such,
established and maintained pursuant to Section 14.07.
"Spread Account Initial Deposit" with respect to a Spread
Account and any Trust shall have the meaning set forth in the related Agreement.
"Spread Account Property" has the meaning assigned thereto in
Section 14.07(b).
"Standard & Poor's" means Standard & Poor's Ratings Group, or
its successor.
"Supplemental Servicing Fee" means charges including, in the
case of a Precomputed Receivable that is prepaid in full, the difference between
the Principal Balance of such Receivable (plus accrued interest to the date of
prepayment) and the principal balance of such Receivable computed according to
15
the "Rule of 78s," and other late fees, prepayment fees, administrative fees
and expenses or similar charges allowed by applicable law with respect to
Receivables, collected (from whatever source) on the Receivables during the
related Monthly Period plus reinvestment proceeds on any payments received in
respect of Receivables during the related Monthly Period.
"Trigger Event" means that any of the following tests shall
not be satisfied:
(i) For any Distribution Date, the Average Delinquency Ratio
is less than __%;
(ii) For any Distribution Date, commencing with the
Distribution Date on _____________, the Average Default Rate (determined on the
related Determination Date) is less than __% and for each Distribution Date
thereafter, commencing with the Distribution Date on __________, is less than
__%; and
(iii) For any Distribution Date, commencing with the
distribution Date on _____________, the Average Net Loss Rate (determined on the
related Determination Date) is less than __%, and for each Distribution Date
thereafter, commencing with the Distribution Date on _____________, is less than
___%
"Trust" shall have the meaning set forth in the Agreement.
"Trust Property" means the property and proceeds of every
description conveyed pursuant to Section 3.01 of an Agreement, the Policy,
amounts on deposit in the Collection Account (but not including Investment
Earnings thereon) rights to certain amounts on deposit in the Payahead Account
and the Spread Account as provided herein, and certain other rights under this
Agreement. Neither the Payahead Account nor the Spread Account shall under any
circumstances be deemed to be a part of or otherwise includable in a Trust or
the Trust Property.
"Trustee" with respect to each Trust shall have the meaning
assigned thereto in the Agreement.
"Trustee Officer" means the chairman or vice-chairman of the
board of directors, the chairman or vice-chairman of the executive committee of
the board of directors, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
and any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York on the date hereof.
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SECTION 11.02. Other Definitional Provisions. (a) All terms
defined in this Standard Terms and Conditions of Agreement or any Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto or thereto unless otherwise defined therein.
(b) As used herein, in any Agreement and in any certificate
or other document made or delivered pursuant hereto or thereto, accounting terms
not defined herein or in such Agreement or in any such certificate or other
document, and accounting terms partly defined herein or in such 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 herein, in
any related 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 herein, in such Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of
similar import when used herein shall refer to these Standard Terms and
Conditions of Agreement and the Agreement as a whole and not to any particular
provision of the Standard Terms and Conditions of Agreement or the Agreement;
Article, Section, Schedule and Exhibit references contained in the Standard
Terms and Conditions of Agreement or any Agreement are references to Articles,
Sections, Schedules and Exhibits in or to the Standard Terms and Conditions of
Agreement and the Agreement, respectively; and the term "including" shall mean
"including without limitation".
(d) The definitions contained in these Standard Terms and
Conditions of Agreement and the 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.
(e) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE XII
The Receivables
SECTION 12.01. Representations and Warranties of Seller. The
Representative and the Seller, jointly and severally, make the following
representations and warranties as to the Receivables on which the Trustee shall
be deemed to rely in accepting the Receivables in trust and executing and
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authenticating the Certificates and upon which the Certificate Insurer shall be
deemed to rely in issuing the Policy. Such representations and warranties speak
as of the execution and delivery of the Agreement and as of the Closing Date and
shall survive the sale, transfer and assignment of any Receivables to the Trust.
(a) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the Receivables
from the Seller to the Trust and that the beneficial interest in and title to
such Receivables not be part of the debtor's estate in the event of the filing
of a petition for receivership by or against the Seller. Immediately prior to
the transfer and assignment herein contemplated, the Seller had good and
marketable title to each Receivable, free and clear of all Liens and,
immediately upon the transfer thereof, the Trustee, for the benefit of the
Certificateholders, shall have good and marketable title to each such
Receivable, free and clear of all Liens; and the transfer of the Receivables to
the Trust has been perfected under the UCC. No Dealer or any other Person has
any right to receive proceeds of any Receivables.
(b) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the Trust a first
priority perfected ownership interest in the Receivables shall have been made.
(c) Characteristics of Receivables. Each Receivable
(i) shall have been originated in the United States of America by a Dealer in
connection with the retail sale of a Financed Vehicle in the ordinary course of
such Dealer's business, shall have been fully and properly executed by the
parties thereto, shall have been purchased by the Seller from the Representative
which in turn shall have purchased such Receivable from such Dealer under an
existing dealer agreement with the Representative and shall have been validly
assigned by the Representative to the Seller in accordance with its terms, (ii)
shall have created or shall create a valid, subsisting and enforceable first
priority security interest in favor of the Representative in the Financed
Vehicle, which security interest has been assigned by the Representative to the
Seller, which in turn shall be assignable by the Seller to the Trust, (iii)
shall contain customary and enforceable provisions such that the rights and
remedies of the holder thereof shall be adequate for realization against the
collateral of the benefits of the security, (iv) shall provide for level monthly
payments (provided that the payment in the first or last month in the life of
the Receivable may be minimally different from the level payment) that fully
amortize the Amount Financed by maturity, (v) in the case of a Precomputed
Receivable, shall provide for, in the event that such Contract is prepaid, a
prepayment that fully pays the Principal Balance and includes a full months
interest to the date of payment in the month of prepayment at the Annual
Percentage Rate, and (vi) has not been amended or collections with respect to
which waived, other than as evidenced in the Receivable File relating thereto.
(d) Schedule of Receivables. The information set
forth in Schedule A to each Agreement is true and correct in all material
respects as of the close of business on the Cutoff Date, and no selection
procedures believed by the Seller to be adverse to the Certificateholders were
utilized in selecting the Receivables. Each Computer Tape regarding the
Receivables is true and correct in all material respects as of the Cutoff Date.
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(e) Compliance With Law. Each Receivable shall comply
at the time it was originated or made and at the execution of the Agreement in
all material respects with all requirements of applicable Federal, state and
local laws and regulations thereunder, including, without limitation, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal
Trade Commission Act, the Xxxxxxxx-Xxxx Warranty Act, the Xxxx-Xxxxxxxx Act, the
Federal Reserve Board's Regulations B and Z, state adaptations of the National
Consumer Act and other consumer credit laws and equal credit opportunity and
disclosure laws.
(f) Binding Obligation. Each Receivable shall
represent the legal, valid and binding payment obligation in writing of the
Obligor thereunder, enforceable by the holder thereof in accordance with its
terms except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and similar laws
now or hereafter in effect related to or affecting creditors' rights generally
and subject to general principles of equity (whether applied in a proceeding at
law or in equity); and all parties to each Receivable had full legal capacity to
execute and deliver such Receivable and all other documents related thereto and
to grant the security interest purported to be granted thereby.
(g) No Government Obligor. None of the Receivables
shall be due from the United States of America or any State or from any agency,
department or instrumentality of the United States of America or any State.
(h) Security Interest in Financed Vehicle.
Immediately prior to the sale, assignment and transfer thereof to a Trust, each
Receivable shall be secured by a validly perfected first priority security
interest in the Financed Vehicle in favor of the Representative as secured party
or all necessary and appropriate actions have been commenced that would result
in the valid perfection of a first priority security interest in the Financed
Vehicle in favor of the Representative as secured party. Immediately after the
sale, assignment and transfer thereof to a Trust, although the Lien Certificate
will not indicate the Trust or Trustee as secured party, each Receivable will be
secured by an enforceable and perfected security interest in the Financed
Vehicle in favor of the Trust as secured party, which security interest is prior
to all other Liens in such Financed Vehicle.
(i) Receivables in Force. No Receivable shall have
been satisfied, subordinated or rescinded, nor shall any Financed Vehicle been
released from the Lien granted by the related Receivable in whole or in part
unless another vehicle has been substituted as collateral securing the
Receivable without any other modification to such Receivable.
(j) No Waiver. No provision of a Receivable shall
have been waived except as reflected in the Receivable File relating to such
Receivable.
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(k) No Defenses. No right of rescission, setoff,
counterclaim or defense shall have been asserted or threatened with respect to
any Receivable.
(l) No Liens. There are no Liens or claims, including
Liens for work, labor, materials or unpaid state or federal taxes relating to
any Financed Vehicle securing the related Receivable, that are or may be prior
to or equal to the Lien granted by such Receivable.
(m) No Default. No Receivable has a payment that is
more than 30 days overdue as of the Cutoff Date and, except as permitted in this
paragraph, no default, breach, violation or event (in any such case) permitting
acceleration under the terms of any Receivable has occurred; and no continuing
condition that with notice or the lapse of time would constitute a default,
breach, violation or event (in any such case) permitting acceleration under the
terms of any Receivable shall have arisen as of the Cutoff Date; and the Seller
has not waived and shall not waive any of the foregoing.
(n) No Bankruptcies. No Obligor on any Receivable was
the subject of a bankruptcy proceeding commenced following the execution of the
related Contract.
(o) No Repossessions. As of the Cutoff Date no
Financed Vehicle securing any Receivable is in repossession status.
(p) Adverse Selection. No selection procedures
adverse to the Certificateholders were utilized in selecting the Receivables
from those owned by the Servicer which met the selection criteria contained in
this Agreement.
(q) Chattel Paper. Each Receivable constitutes
"chattel paper" as defined in the UCC.
(r) Insurance. The Seller, in accordance with its
customary procedures, shall have determined that the Obligor, at the time the
Receivable was originated, obtained physical damage insurance covering the
Financed Vehicle and under the terms of the Receivable the Obligor is required
to maintain such insurance.
(s) Lawful Assignment. No Receivable shall have been
originated in, or as of the Cutoff Date is subject to the laws of, any
jurisdiction under which the sale, transfer and assignment of such Receivable or
this Agreement is unlawful, void or voidable.
(t) No Insurance Premiums. No portion of the
Principal Balance of any Receivable shall include amounts attributable to the
payment of any physical damage or theft insurance premium.
(u) One Original. There shall be only one original
executed copy of each Receivable.
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(v) Location of Receivable Files. The Receivable
Files shall be kept at one or more of the locations listed in Schedule B and
each item required to be in a Receivable File is in such Receivable File.
(w) Computer Records. As of the date of execution of
an Agreement, the accounting and computer records relating to the Receivables of
the Seller have been marked to show the absolute ownership by the Trustee on
behalf of the Trust of the Receivables.
(x) Certificate Taxes. To the best knowledge of the
Representative and the Seller, there are no state or local taxing jurisdictions
which have asserted that nonresident holders of certificates in a trust which
holds assets similar to the assets to be held by the Trust are subject to the
jurisdiction's income or other taxes solely by reason of the location in the
jurisdiction of the Trustee, the Seller, the Servicer, the Representative, the
obligors on or the assets securing the Receivables held by the Trust, or the
issuer of a financial guaranty insurance policy.
SECTION 12.02. [RESERVED]
SECTION 12.03. Repurchase Upon Breach. (a) The Representative,
the Seller, the Servicer, the Certificate Insurer or the Trustee, as the case
may be, shall inform the other parties to the Agreement promptly, in writing,
upon the discovery of any breach of the Representative's or the Seller's
representations and warranties made pursuant to Section 5.01 or 12.01 or
Seller's representations and warranties made pursuant to Section 16.01(b). As of
the last day of the second (or, if the Representative or the Seller so elects,
the first) month following the discovery by the Representative or the Seller or
receipt by the Representative or the Seller of notice from any of the
Representative, the Seller, the Servicer, the Certificate Insurer or the Trustee
of such breach, unless such breach is cured by such date, the Representative and
the Seller shall jointly and severally have an obligation to repurchase any
Receivable in which the interests of the Certificateholders or the Certificate
Insurer are materially and adversely affected by any such breach as of such
date. The "second month" shall mean the month following the month in which
discovery occurs or notice is given, and the "first month" shall mean the month
in which discovery occurs or notice is given. In consideration of and
simultaneously with the repurchase of the Receivable, the Representative and/or
the Seller shall remit, or cause the Representative to remit, to the Collection
Account the Purchase Amount in the manner specified in Section 14.05 and the
Trustee shall execute such assignments and other documents reasonably requested
by such Person in order to effect such repurchase. Subject to the provisions of
Section 16.03, the sole remedy of the Trust, the Trustee or the
Certificateholders with respect to a breach of representations and warranties
pursuant to Section 5.01, 12.01 or 16.01(b) and the agreement contained in this
Section shall be the repurchase of Receivables pursuant to this Section, subject
to the conditions contained herein or the repurchase by the Representative of
such Receivables pursuant to the Purchase Agreement. The Trustee shall not have
a duty to conduct any affirmative investigation as to the occurrence of any
conditions requiring the repurchase of any Receivable pursuant to this Section.
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(b) Pursuant to Section 3.01 of the Agreement, the
Seller shall convey to the Trustee all of the Seller's right, title and interest
in its rights and benefits, but none of its obligations or burdens, under the
related Purchase Agreement including the Seller's rights under the Purchase
Agreement and the delivery requirements, representations and warranties and the
cure or repurchase obligations of the Representative thereunder. The Seller
hereby represents and warrants to the Trustee that such assignment is valid,
enforceable and effective to permit the Trustee to enforce such obligations of
the Representative under the Purchase Agreement.
SECTION 12.04. Custody of Receivable Files. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Trustee, upon the execution and delivery of the Agreement, hereby (based on the
direction of the Seller and the Certificate Insurer) revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, to act as the agent
of the Trustee as custodian of the following documents or instruments which are
hereby constructively delivered to the Trustee as of the Cutoff Date with
respect to each Receivable:
(a) the original Receivable;
(b) a record of the information supplied by
the Obligor in the original credit application;
(c) the original certificate of title or
such documents that the Servicer shall keep on file, in
accordance with its customary procedures, evidencing the
security interest of the Representative in the Financed
Vehicle (it being understood that the original certificates of
title generally are not delivered to the Seller for 120 days
but that promptly upon delivery they shall be delivered to the
Servicer as custodian hereunder); and
(d) any and all other documents that the
Servicer shall keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor or a Financed
Vehicle.
SECTION 12.05. Duties of Servicer as Custodian. (a)
Safekeeping. The Servicer shall hold the Receivable Files on behalf of the Trust
and the Trustee and maintain such accurate and complete accounts, records and
computer systems pertaining to each Receivable File as shall enable the Trustee
to comply with this Agreement. In performing its duties as custodian the
Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files
relating to all comparable automotive receivables that the Servicer services for
itself or others, and in any event with no less degree of skill and care than
would be exercised by a prudent servicer or custodian of non-prime motor vehicle
retail installment sales contracts, except that the Servicer shall not be
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obligated, and does not currently intend, to (i) pay any premium of force-placed
insurance concerning any Financed Vehicle or (ii) monitor any Obligor's
maintenance of such insurance. The Servicer shall conduct, or cause to be
conducted, periodic audits of the Receivable Files held by it under this
Agreement and of the related accounts, records and computer systems, in such a
manner as shall enable the Trustee and the Certificate Insurer to verify the
accuracy of the Servicer's record keeping. The Servicer shall promptly report to
the Trustee and the Certificate Insurer any failure on its part to hold the
Receivable Files and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
(b) Maintenance of Records. The Servicer shall
maintain each Receivable File at its office specified in Schedule B to the
Agreement or at such other office as shall be specified to the Trustee and the
Certificate Insurer by written notice not later than 10 days after any change in
location. The Servicer shall (i) at all times maintain the original of the fully
executed Receivable and store such original Receivable in a fireproof cabinet;
and (ii) stamp each Receivable on both the first and the signature page (if
different) as of the Closing Date and in accordance with the instructions from
time to time provided by Upon the Certificate Insurer, in the form attached
hereto as Exhibit F, or such other form as shall be acceptable to the
Certificate Insurer.
(c) Access to Records. The Servicer will provide, on
the Closing Date, an Officer's Certificate stating that the Receivable Files
contain all materials which are required to be kept therein by Section 12.04(a),
(b) and (c). At any time following the Closing Date, the Certificate Insurer may
conduct a review of the Receivable Files, or a sample thereof as it may specify,
at its own expense but with the cooperation of the Servicer. Should the
Certificate Insurer find any documents missing or any other irregularities, then
the Trustee shall perform a review, for the benefit of the Certificate Insurer
and at the expense of the Servicer, of all the Receivables Files.
Upon reasonable prior notice, the Servicer shall make
available to the Trustee, the Certificate Insurer, or any duly authorized
representatives, attorneys or auditors of either, a list of locations of, and
access to, the Receivable Files and records and computer systems maintained by
the Servicer at such times during normal business hours as the Trustee or the
Certificate Insurer shall instruct.
(d) Release of Documents. Upon written instruction
from the Trustee or the Certificate Insurer, at any time following a Servicer
Default or Termination of the Servicer's appointment pursuant to Section 12.08
the Servicer shall release any Receivable File to the Trustee, the Trustee's
agent, or the Trustee's designee, as the case may be, or the Certificate
Insurer, as the case may be, at such place or places as the Trustee or the
Certificate Insurer, as the case may be, may designate, as soon as practicable.
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SECTION 12.06. 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 a Trustee
Officer. A copy of such instructions shall be furnished by the Trustee to the
Certificate Insurer. The Trustee shall not have any duty or obligation to
provide the Servicer with any such instructions with respect to the Receivable
Files.
SECTION 12.07. Custodian's Indemnification. The Servicer as
custodian shall indemnify and hold harmless the Trustee and the Certificate
Insurer and each of its officers, directors, employees and agents for any and
all liabilities, obligations, losses, compensatory damages, payments, costs or
expenses (including reasonable attorneys' fees and expenses) that may be imposed
on, incurred by or asserted against the Trustee or any of its officers,
directors, employees and agents as the result of any improper act or omission in
any way relating to the maintenance and custody by the Servicer as custodian of
the Receivable Files; provided, however, that the Servicer shall not be liable
to the Trustee or the Certificate Insurer, as the case may be, for any portion
of any such amount resulting from the willful misfeasance, bad faith or
negligence of the Trustee or the Certificate Insurer, as the case may be. This
provision shall not be considered to limit the Servicer's or any other party's
rights, obligations, liabilities, claims or defenses which arise as a matter of
law or pursuant to any other provision of the Agreement.
SECTION 12.08. 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 12.08. If the Representative shall resign as Servicer in accordance with
the provisions hereof or if all of the rights and obligations of any Servicer
shall have been terminated under Section 18.01, the appointment of such Servicer
as Custodian shall be terminated in the same manner as the Servicer may be
terminated under Section 18.01. The Trustee may, with the consent of the
Certificate Insurer, and the Certificate Insurer may, terminate the Servicer's
appointment as Custodian, at any time (i) with cause or (ii) upon the occurrence
of an Insurance Agreement Event of Default, upon written notification to the
Servicer and the Trustee or Certificate Insurer, as the case may be. As soon as
practicable after any termination of such appointment, the Servicer shall
deliver the Receivable Files to the Trustee or the Trustee's agent at such place
or places as the Trustee, with the consent of the Certificate Insurer, or
Certificate Insurer may reasonably designate in writing. If the Servicer shall
be terminated as custodian hereunder for any reason but shall continue to serve
as Servicer, the Trustee shall, or shall cause its agent to, make the Receivable
Files available to the Servicer during normal business hours upon reasonable
notice so as to permit the Servicer to perform its obligations as Servicer
hereunder.
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ARTICLE XIII
Administration and Servicing of Receivables
SECTION 13.01. Duties of Servicer. The Servicer, as agent for
the Trust, the Certificateholders and the Certificate Insurer (to the extent
provided herein), shall manage, service, administer and make collections on the
Receivables (other than Purchased Receivables) with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable automotive receivables that it services for itself or others, and in
any event with no less degree of skill and care than would be exercised by a
prudent servicer of non-prime motor vehicle retail installment sales contracts,
except that the Servicer shall not be obligated, and does not currently intend,
to (i) pay any premium of force-placed insurance concerning any Financed Vehicle
or (ii) monitor any Obligor's maintenance of such insurance. The Servicer's
duties shall include collection and posting of all payments, responding to
inquiries of Obligors on such Receivables, investigating delinquencies, sending
payment statements to Obligors, accounting for collections and furnishing
monthly and annual statements to the Trustee and Certificate Insurer with
respect to distributions. Subject to the provisions of Section 13.02, the
Servicer shall follow its customary standards, policies and procedures in
performing its duties as Servicer. Without limiting the generality of the
foregoing, the Servicer is authorized and empowered to execute and deliver, on
behalf of itself, the Trust, the Trustee, the Certificate Insurer and the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to such Receivables or to the Financed Vehicles
securing such Receivables. If the Servicer shall commence a legal proceeding to
enforce a Receivable, the Trustee, on behalf of the Trust, (in the case of a
Receivable other than a Purchased Receivable) shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Receivable to
the Servicer. If in any enforcement suit or legal proceeding it shall be held
that the Servicer may not enforce a Receivable on the ground that it shall not
be a real party in interest or a holder entitled to enforce such Receivable the
Trustee shall, at the Servicer's expense and direction, take steps to enforce
such Receivable, including bringing suit in its name or the name of the Trustee
or the Certificateholders. The Trustee and the Certificate Insurer shall upon
the written request of the Servicer furnish the Servicer with any powers of
attorney and other documents reasonably necessary or appropriate (as certified
to the Trustee and/or the Certificate Insurer by the Servicer) to enable the
Servicer to carry out its servicing and administrative duties hereunder.
SECTION 13.02. Collection and Allocation of Receivable
Payments. (a) The Servicer shall make all reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due and shall follow such collection procedures as it
follows with respect to all comparable automotive receivables that it services
for itself or others, and in any event with no less degree of skill and care
than would be exercised by a prudent servicer of non-prime motor vehicle retail
installment sales contracts. The Servicer shall allocate collections between
principal and interest in accordance with its customary servicing procedures.
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(b) The Servicer may grant extensions, rebates or
adjustments on a Receivable which shall not, for the purposes of the Agreement,
modify the original due dates (other than to permit payment on a different date
in the month) or amounts of the Scheduled Payments (unless the Obligor is in
default or, in the judgment of the Servicer, such default is imminent) on a
Precomputed Receivable or the original due dates (other than to permit payment
on a different date in the month) or amounts of the originally scheduled
payments of interest (unless the Obligor is in default or, in the judgment of
the Servicer, such default is imminent) on Simple Interest Receivables;
provided, however, that if the Servicer extends the date for final payment by
the Obligor of any Receivable beyond the Final Scheduled Maturity Date, it shall
promptly repurchase such Receivable from the Trust in accordance with Section
13.07. The Servicer may in its discretion waive any late payment charge or any
other fees that may be collected in the ordinary course of servicing a
Receivable. The Servicer shall not agree to any alteration of the interest rate
on any Receivable.
SECTION 13.03. Realization upon Receivables. On behalf of the
Trust, the Certificateholders and the Certificate Insurer the Servicer shall use
its best efforts, consistent with its customary servicing procedures, to
repossess or otherwise convert the ownership of the Financed Vehicle securing
any Receivable as to which the Servicer shall have determined eventual payment
in full is unlikely. From time to time, as appropriate for servicing or
liquidating any Receivable, the Trustee shall, upon written request of the
Servicer, execute such documents as shall be reasonably necessary to prosecute
any such proceedings. The Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of automotive receivables, which may include reasonable efforts to
realize proceeds from Receivables repurchased by a Dealer, pursuant to a Dealer
Agreement, as a result of a breach of representation or warranty in the related
Dealer Agreement or a default by an Obligor resulting in the repossession of the
Financed Vehicle under such Dealer Agreement. The foregoing shall be subject to
the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its reasonable discretion that such repair and/or repossession will increase the
Net Liquidation Proceeds by an amount greater than the amount of such expenses.
SECTION 13.04. Physical Damage Insurance. The Servicer shall,
in accordance with its customary servicing procedures, require that each Obligor
shall have obtained and shall maintain fire, theft and collision insurance or
comprehensive and collision insurance covering the Financed Vehicle as of the
execution of the Receivable. The Servicer shall enforce its rights under the
Receivables to require the Obligors to maintain fire, theft and collision
insurance or comprehensive and collision insurance, in accordance with the
Servicer's customary practices and procedures, and in any event with no less
degree of skill and care than would be exercised by a prudent servicer of
non-prime motor vehicle retail installment sales contracts, with respect to
comparable new or used motor vehicle receivables that it services for itself or
others, except that the Servicer shall not be obligated, and does not currently
intend, to (i) pay any premium of force-placed insurance concerning any Financed
Vehicle or (ii) monitor any Obligor's maintenance of such insurance.
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SECTION 13.05. Maintenance of Security Interests in Financed
Vehicles. (a) The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle in
favor of the Seller. The Servicer is hereby authorized to take such steps as are
necessary to re-perfect such security interest on behalf of the Trust in the
event of the relocation of a Financed Vehicle or for any other reason.
(b) Upon the occurrence of an Insurance Agreement Event of
Default, and subject to the other provisions of this Agreement, the Certificate
Insurer may (so long as an Insurer Default shall not have occurred and be
continuing) instruct the Trustee and the Servicer to take or cause to be taken,
or, if an Insurer Default shall have occurred, upon the occurrence of a Servicer
Default Event, the Trustee and the Servicer shall take or cause to be taken such
action as may, in the opinion of counsel to the Certificate Insurer (or, if an
Insurer Default shall have occurred and be continuing, counsel to the Trustee),
be necessary to perfect or reperfect the security interests in the Financed
Vehicles securing the Contracts in the name of the Trustee on behalf of the
Trust by amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Certificate Insurer or
the Trustee (as applicable), be necessary or prudent. The Servicer hereby agrees
to pay all expenses related to such perfection or reperfection and to take all
action necessary therefor.
SECTION 13.05-A. Segregation of Receivable Files. The Servicer
shall maintain the Receivables Files (containing the original Receivable and
Lien Certificate, when such Lien Certificate has been returned from the
appropriate recording office) physically segregated from other files of
automotive receivables owned or serviced by it at the location where the
Receivables Files are kept.
SECTION 13.06. Covenants of Servicer. The Servicer shall not
release the Financed Vehicle securing any Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the Obligor thereunder or payment in full less a deficiency which the
Servicer would not attempt to collect in accordance with its customary
procedures or repossession or except as may be required by an insurer in order
to receive proceeds from insurance covering such Financed Vehicle, nor shall the
Servicer impair the rights of the Trustee, the Certificate Insurer or the
Certificateholders in such Receivables (it being understood that no action of
the Servicer taken in compliance with the terms of this Agreement shall be
deemed to impair such rights), nor shall the Servicer increase the number of
scheduled payments due under a Receivable.
SECTION 13.07. Purchase of Receivables upon Breach. The
Representative, the Seller, the Servicer, the Certificate Insurer or the Trustee
shall inform the other parties promptly, in writing, upon the discovery of any
breach pursuant to Section 13.02, 13.05 or 13.06, or of any breach of the
Servicer's representations and warranties made pursuant to Section 17.01(b). As
of the last day of the second (or, if the Representative or the Servicer so
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elects, the first) month following the discovery by the Representative or the
Servicer or receipt by the Representative or the Servicer of notice from any of
the Representative, the Seller, the Servicer, the Certificate Insurer or the
Trustee of such breach, unless such breach is cured by such date, the
Representative and the Servicer jointly and severally shall be obligated to
purchase any Receivable in which the interests of Certificateholders are
materially and adversely affected by such breach as of such date. The "second
month" shall mean the month following the month in which discovery occurs or
notice is given, and the "first month" shall mean the month in which discovery
occurs or notice is given. In consideration of the purchase of any such
Receivable pursuant to the preceding sentence, the Servicer shall remit (or, if
the Servicer shall fail to so remit, the Representative shall remit) the
Purchase Amount in the manner specified in Section 14.05. The sole remedy of the
Trustee, the Certificate Insurer or the Certificateholders with respect to a
breach pursuant to Section 13.02, 13.05 or 13.06, or to a breach of
representations and warranties pursuant to Section 17.01(b), shall be limited to
the purchase of Receivables in accordance with this Section. The Trustee shall
have no duty to conduct any affirmative investigation as to the occurrence of
any condition requiring the purchase of any Receivable pursuant to this Section.
SECTION 13.08. Servicing Fee. The Servicing Fee for a
Distribution Date shall equal the sum of the Base Servicing Fee, Supplemental
Servicing Fee, all investment earnings (net of losses) on the Collection Account
plus any reimbursement pursuant to Section 17.02. The Servicer also shall be
entitled to retain from collections the Base Servicing Fee and the Supplemental
Servicing Fee, as provided herein. The Servicer, in its discretion at its
election, may defer receipt of all or any portion of the Servicing Fee for any
Monthly Period to and until a later Monthly Period for any reason, including in
order to avoid a shortfall in any payments due on any Certificates. Any such
deferred amount shall be payable to (or may be retained from subsequent
collections by) the Servicer on demand.
SECTION 13.09. Servicer's Certificate. (a) No later than 12:00
p.m. New York City time on each Determination Date, the Servicer shall deliver
to the Trustee, the Certificate Insurer, the Collateral Agent and each Rating
Agency a Servicer's Certificate containing, among other things, (i) all
information necessary to enable the Trustee to make any withdrawal and deposit
required by Section 14.06 to give any notice required by Section 14.04 or 14A.02
and make the distributions required by Section 14.06, (ii) all information
necessary to enable the Trustee to send the statements to Certificateholders and
the Certificate Insurer required by Section 14.09, (iii) a listing of all
Receivables purchased during the related Monthly Period, identifying the
Receivables so purchased, and (iv) all information necessary to enable the
Trustee to reconcile all deposits to, and withdrawals from, the Collection
Account and the Payahead Account for the related Monthly Period and Distribution
Date, including the accounting required by Section 14.11. Receivables purchased
by the Servicer or by the Seller and each receivable which became a Liquidated
Receivable or which was paid in full during the related Monthly Period shall be
identified by account number (as set forth in the Schedule of Receivables). A
copy of such certificate may be obtained by any Certificateholder by a request
in writing to the Trustee addressed to the Corporate Trust Office. The Trustee
shall not be under any obligation to confirm or reconcile the information
provided pursuant to Section 13.09(iv).
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(b) In addition to the information required by
Section 13.09(a), the Servicer shall include in the copy of the Servicer's
Certificate delivered to the Certificate Insurer (i) the Delinquency Ratio,
Average Delinquency Ratio, Default Rate, Average Default Rate, Net Loss Rate and
Average Net Loss Rate for such Determination Date, (ii) whether any Trigger
Event has occurred as of such Determination Date, (iii) whether any Trigger
Event that may have occurred as of a prior Determination Date is Deemed Cured as
of such Determination Date, and (iv) whether to the knowledge of the Servicer an
Insurance Agreement Event of Default has occurred.
(c) If the Servicer's Certificate contains a manifest
error, the Certificate Insurer's written notice to the Servicer and the Trustee
containing the corrected information shall be deemed to amend such Servicer's
Certificate.
SECTION 13.10. Annual Statement as to Compliance; Notice of
Default. (a) The Servicer shall deliver to the Trustee and the Certificate
Insurer, on or before April 30 of each year beginning April 30, 199_, an
Officers' Certificate, dated as of the preceding December 31, stating that (i) a
review of the activities of the Servicer during the preceding 12-month period
(or, in the case of the first such report, during the period from the Closing
Date to December 31, 199_) and of its performance under the Agreement has been
made under such officers' supervision and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under the Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof. The Trustee shall send a copy of
such certificate and the report referred to in Section 13.11 to the Rating
Agencies. A copy of such certificate and the report referred to in Section 13.11
may be obtained by any Certificateholder by a request in writing to the Trustee
addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee, the
Certificate Insurer and the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five (5) Business Days thereafter,
written notice in an Officers' Certificate of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Default under Section
18.01(a) or (b).
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SECTION 13.11. Annual Independent Certified Public
Accountants' Report. The Servicer shall cause a firm of independent certified
public accountants, which may also render other services to the Servicer or the
Seller, to deliver to the Seller, the Certificate Insurer and the Trustee on or
before April 30 of each year beginning April 30, 199_, an agreed-upon procedures
report addressed to the Servicer, the Seller, the Certificate Insurer and the
Trustee and each Rating Agency, expressing a summary of findings, (based on
certain procedures performed on the documents, records and accounting records
that such accountants considered appropriate under the circumstances) relating
to the servicing of the Receivables, or the administration of the Receivables
and of the Trust, as the case may be, during the preceding calendar year (or, in
the case of the first such report, during the period from the Closing Date to
December 31, 199_) and that, on the basis of the accounting and auditing
procedures considered appropriate under the circumstances, such firm is of the
opinion that such servicing or administration was conducted in compliance with
the terms of the 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 report.
Such report will also indicate that the firm is independent of
the Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 13.12. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to representatives of the
Trustee and Certificate Insurer reasonable access to the Receivable Files. The
Servicer shall provide to the Certificateholders access to the Receivable Files
in such cases where the Certificateholders shall be required by applicable
statutes or regulations to review such documentation as demonstrated by evidence
satisfactory to the Servicer in its reasonable judgment. Access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the respective offices of the Servicer. Nothing in this
Section 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.
SECTION 13.13. Servicer Expenses. The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder, including fees and disbursements of independent accountants, taxes
imposed on the Servicer and expenses incurred in connection with distributions
and reports to Certificateholders.
SECTION 13.14. Appointment of Subservicer. The Servicer may at
any time appoint a subservicer to perform all or any portion of its obligations
as Servicer hereunder; provided, however, that the Rating Agency Condition shall
have been satisfied in connection therewith; provided further, that the Servicer
shall remain obligated and be liable to the Issuer, the Trustee, the Certificate
Insurer and the Certificateholders for the servicing and administering of the
Receivables in accordance with the provisions hereof without diminution of such
obligation and liability by virtue of the appointment of such subservicer and to
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the same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Receivables. The fees and expenses of the
subservicer shall be as agreed between the Servicer and its subservicer from
time to time and none of the Trustee, the Certificate Insurer or the
Certificateholders shall have any responsibility therefor. Any such subservicer
shall perform its duties with the same standard of care applicable to the
Servicer pursuant to Section 13.01 of this Agreement.
ARTICLE XIV
Accounts; Collections; Distributions;
Statements to Certificateholders
SECTION 14.01. Establishment of Accounts. (a) (i) The
Servicer, for the benefit of the Certificateholders, shall establish and
maintain in the name of the Trustee an Eligible Deposit Account (the "Collection
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. Investment Earnings
on funds in the Collection Account shall be paid to the Servicer.
(ii) [RESERVED]
(iii) The Servicer, for the benefit of the Certificateholders,
shall establish and maintain in the name of the Trustee a non-interest bearing
account (the "Policy Payments Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders. If at the close of business on a distribution date there
shall be any monies remaining in the Policy Payments Account or any monies in
the Collection Account funded by transfers from the Policy Payments Account, the
Trustee shall remit such monies to the Certificate Insurer on the next Business
Day.
(b) Funds on deposit in the Collection Account and the
Payahead Account shall be invested by the Trustee (or any custodian with respect
to funds on deposit in any such account) in Eligible Investments selected in
writing by the Servicer (pursuant to standing instructions or otherwise);
provided, however, it is understood and agreed that the Trustee shall not be
liable for any loss arising from such investment in Eligible Investments. All
such Eligible Investments shall be held by or on behalf of the Trustee for the
benefit of the Certificateholders. Other than as permitted by the Rating
Agencies and the Certificate Insurer, funds on deposit in the Collection Account
shall be invested in Eligible Investments that will mature so that such funds
will be available at the close of business on the Business day immediately
preceding the next Distribution Date. Funds deposited in the Collection Account
and the Policy Payments Account upon the maturity of any Eligible Investments on
the day immediately preceding a Distribution Date are not required to be
invested overnight.
(c) (i) The Seller shall establish and maintain with the
Collateral Agent an Eligible Deposit Account (the "Payahead Account") bearing a
designation clearly indicating that the funds deposited therein are held in
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trust for the benefit of the Certificateholders. The Payahead Account will
include the money and other property deposited and held therein pursuant to
Section 14.06 and this Section. The Payahead Account shall not be property of
the Trust, but instead will be held by the Collateral Agent, for the benefit of
the Holders of the Certificates and the Certificate Insurer. The Seller hereby
acknowledges that any amounts on deposit in the Payahead Account (and any
Investment Earnings thereon) is owned directly by it, and the Seller hereby
agrees to treat the same as its assets (and earnings) for federal income tax and
all other purposes.
(ii) The Servicer shall on or prior to each Distribution Date
(and prior to deposits to the Collection Account) transfer from the Collection
Account to the Payahead Account all Payaheads as described in Section 14.03
received by the Servicer during the Monthly Period. Notwithstanding the
foregoing and the first sentence of Section 14.02, for so long as the Servicer
is permitted to make monthly remittances to the Collection Account pursuant to
Section 14.02, Payaheads need not be remitted to and deposited in the Payahead
Account but instead may be remitted to and held by the Servicer. So long as such
condition is met, the Servicer shall not be required to segregate or otherwise
hold separate any Payaheads remitted to the Servicer as aforesaid but shall be
required to remit Payaheads to the Collection Account in accordance with Section
14.06(a).
(iii) In order to assure the availability of the amounts
maintained in the Payahead Account, the Seller hereby pledges to the Collateral
Agent, and its successors and assigns, all amounts deposited in or credited to
the Payahead Account from time to time under the Agreement, all Eligible
Investments made with amounts on deposit therein, all earnings and distributions
thereon and proceeds thereof (other than proceeds constituting net Investment
Earnings attributable to the Payahead Account Property) subject, however, to the
limitations set forth below, and solely for the purpose of securing and
providing for payment of the amounts described in Section 14.06(b)(i)-(v) and
this Section (all the foregoing, subject to the limitations set forth below, the
"Payahead Account Property"), to have and to hold all the aforesaid property,
rights and privileges unto the Collateral Agent, its successors and assigns, in
trust for the uses and purposes, and subject to the terms and provisions, set
forth in this Section. The Collateral Agent hereby acknowledges such transfer
and accepts the trusts hereunder and shall hold and distribute the Payahead
Account Property in accordance with the terms and provisions of this Section.
(iv) Consistent with the limited purposes for which such trust
is granted, the amounts on deposit in the Payahead Account on each Distribution
Date shall be available for distribution as provided in Section 14.06.
Investment Earnings attributable to the Payahead Account
Property shall not be subject to any claims or rights of the Certificateholders
or the Servicer. All such investments shall be made in the name of the
Collateral Agent or its nominee, and all income and gain realized thereon shall
be solely for the benefit of the Seller and shall be payable by the Collateral
Agent to the Seller on each Distribution Date. Realized losses, if any, on
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investments of the Payahead Account Property shall be charged first against
undistributed investment earnings attributable to the Payahead Account Property
and then against the Payahead Account Property.
(v) With respect to the Payahead Account Property, the Seller,
on behalf of itself, its successors and assigns, and the Collateral Agent agree
that:
(A) Any Payahead Account Property that is held in deposit
accounts shall be held solely in the name of the Collateral Agent at an Eligible
Institution. Each such deposit account shall be subject to the exclusive custody
and control of the Collateral Agent, and the Collateral Agent shall have sole
signature authority with respect thereto.
(B) Any Payahead Account Property that constitutes Physical
Property shall be delivered to the Collateral Agent in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Collateral Agent, or a financial intermediary (as
such term is defined in Section 8-313(4) of the UCC) acting solely for the
Collateral Agent.
(C) Any Payahead Account Property that is a book-entry
security held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Collateral Agent,
pending maturity or disposition, through continued book-entry registration of
such Payahead Account Property as described in such paragraph.
(D) Any Payahead Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause (C)
above shall be delivered to the Collateral Agent, in accordance with paragraph
(c) of the definition of "Delivery" and shall be maintained by the Collateral
Agent, pending maturity or disposition, through continued registration of the
Collateral Agent's (or its custodian's or it nominee's) ownership of such
security.
Effective upon Delivery of any Payahead Account Property in
the form of Physical Property, book-entry securities or uncertificated
securities, the Collateral Agent shall be deemed to have purchased such Payahead
Account Property for value, in good faith and without notice of any adverse
claim thereto.
(vi) Each of the Seller and the Servicer agrees to take or
cause to be taken such further actions, to execute, deliver and file or cause to
be executed, delivered and filed such further documents and instruments
(including, without limitation, any UCC financing statements or the Agreement)
as may be determined to be necessary in an Opinion of Counsel to the Seller
delivered to the Collateral Agent in order to perfect the interests created by
this Section and otherwise fully to effectuate the purposes, terms and
conditions of this Section.
The Seller shall:
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(A) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments, certificates, and
other documents with respect to such interests and perform all such other acts
as may be necessary in order to perfect or to maintain the perfection of the
Collateral Agent's security interest; and
(B) file the necessary financing statements or amendments
thereto within five days, and promptly notify the Collateral Agent of any such
filing, after the occurrence of any of the following: (1) any change in its
corporate name or any trade name; (2) any change in the location of its chief
executive office or principal place of business; and (3) any merger or
consolidation or other change in its identity or corporate structure and
promptly notify the Collateral Agent of any such filings.
(vii) The Collateral Agent shall not enter into any
subordination or intercreditor agreement other than as contemplated hereby with
respect to the Payahead Account Property.
(viii) Following the payment in full of the Certificate
Balance and of all other amounts owing or to be distributed under the Agreement
to Certificateholders and the termination of the Trust, any amount remaining on
deposit in the Payahead Account shall be distributed to the Seller.
(ix) The Collateral Agent in acting under this agreement shall
be afforded the same rights and protections available to the Trustee pursuant to
Article Nineteen hereof.
SECTION 14.01A. Investments of Funds in Payahead Account. (a)
Funds held in the Payahead Account shall be invested and reinvested by the
Collateral Agent, at the written direction (which may include, subject to the
provisions hereof, general standing instructions) of the Seller (unless a
Servicer Default shall have occurred and be continuing, in which case at the
written direction of the Certificate Insurer) or its designee received by the
Collateral Agent by 1:00 P.M. New York City time on the Business Day prior to
the date on which such investment shall be made, in one or more Eligible
Investments in the manner specified in Section 14.01A(c) hereof. If no written
direction with respect to any portion of such Payahead Account is received by
the Collateral Agent, the Collateral Agent shall invest such funds overnight
pursuant to such general standing instructions of the Seller delivered to the
Trustee as described in the preceding sentence, provided that the Collateral
Agent shall not be liable for any loss or absence of income resulting from such
investments.
(b) Each investment made pursuant to this Section 14.01A on
any date shall mature not later than the Business Day immediately preceding the
Distribution Date next succeeding the day investment is made.
(c) Subject to the other provisions hereof, the Collateral
Agent shall have sole control over each such investment and the income thereon,
and any certificate or other instrument evidencing any such investment, if any,
shall be delivered directly to the Collateral Agent or its agent, together with
each document of transfer, if any, necessary to transfer title to such
investment to the Collateral Agent.
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(d) The Collateral Agent shall not be liable by reason of any
insufficiency in the Payahead Account, if any, resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Collateral Agent's failure to make payments on Eligible Investments as to which
the Collateral Agent, in its commercial capacity, is obligated.
SECTION 14.02. Collections. (a) The Servicer shall remit
within two Business Days of receipt thereof to the Collection Account all
payments by or on behalf of the Obligors with respect to the Receivables (other
than Purchased Receivables) and all Liquidation Proceeds, both as collected
during the Monthly Period less any payments owed thereon to the Servicer.
Notwithstanding the foregoing, for so long as (i) the Representative remains the
Servicer, (ii) no Servicer Default shall have occurred and be continuing, (iii)
there exists no Insurer Default and the Certificate Insurer has furnished its
prior written consent and (iv) the Rating Agency Condition shall have been
satisfied (and any conditions or limitations imposed by the Rating Agencies in
connection therewith are complied with), the Servicer may remit such collections
with respect to the preceding calendar month to the Collection Account on the
Determination Date immediately preceding the related Distribution Date. For
purposes of this Article XIV the phrase "payments by or on behalf of Obligors"
shall mean payments made with respect to the Receivables by Persons other than
the Servicer or the Seller.
(b) The Servicer will be entitled to be reimbursed from
amounts on deposit in the Collection Account with respect to a Monthly Period
for amounts previously deposited in the Collection Account but later determined
by the Servicer to have resulted from mistaken deposits or postings or checks
returned for insufficient funds. The amount to be reimbursed hereunder shall be
paid to the Servicer on the related Distribution Date pursuant to Section
14.06(b)(i) upon certification by the Servicer of such amounts and the provision
of such information to the Trustee and the Certificate Insurer as may be
necessary in the opinion of the Certificate Insurer to verify the accuracy of
such certification. In the event that the Certificate Insurer has not received
evidence satisfactory to it of the Servicer's entitlement to reimbursement
pursuant to Section 14.02(b), the Certificate Insurer shall (unless an Insurer
Default shall have occurred and be continuing) give the Trustee notice to such
effect, following receipt of which the Trustee shall not make a distribution to
the Servicer in respect of such amount pursuant to Section 14.06, or if the
Servicer prior thereto has been reimbursed pursuant to Section 14.06 or Section
14.11, the Trustee shall withhold such amounts from amounts otherwise
distributable to the Servicer on the next succeeding Distribution Date.
SECTION 14.03. Application of Collections. All
collections for the Monthly Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor, (other than Supplemental
Servicing Fees with respect to such Receivable, to the extent collected) shall
be applied first, in the case of Pre-Computed Receivables, to the Scheduled
35
Payment and, in the case of Simple Interest Receivables, to interest and
principal in accordance with the Simple Interest Method. With respect to
Precomputed Receivables, any remaining excess shall be added to the Payahead
Balance, and shall be applied to prepay the Precomputed Receivable, but only if
the sum of such excess and the previous Payahead Balance shall be sufficient to
prepay the Receivable in full. Otherwise, any such remaining excess payments
shall constitute a Payahead and shall increase the Payahead Balance.
All amounts collected that are payable to the Servicer as
Supplemental Servicing Fees hereunder shall be deposited in the Collection
Account and paid to the Servicer in accordance with Section 14.06(b).
SECTION 14.04. Withdrawals from Spread Account. (a) In the
event that the Servicer's Certificate with respect to any Determination Date
shall state that the amount of the Available Funds with respect to such
Determination Date is less than the sum of the amounts payable on the related
Distribution Date pursuant to clauses (i) through (v) of Subsection 14.06(b)
(such deficiency being a "Deficiency Claim Amount") then on the Deficiency Claim
Date immediately preceding such Distribution Date, the Trustee shall deliver to
the Collateral Agent, the Certificate Insurer and the Servicer, by hand
delivery, telex or facsimile transmission, a written notice (a "Deficiency
Notice") specifying the Deficiency Claim Amount for such Distribution Date. Such
Deficiency Notice shall direct the Collateral Agent to remit such Deficiency
Claim Amount (to the extent of the funds available in the Spread Account) to the
Trustee for deposit in the Collection Account on the related Distribution Date,
and the Collateral Agent, following receipt of such Deficiency Notice, shall so
remit such Deficiency Claim Amount (to the extent of the funds available in the
Spread Account) on such Distribution Date.
(b) Any Deficiency Notice shall be delivered by 10:00 am., New
York City time, on the fourth Business Day preceding such Distribution Date. The
amounts distributed by the Collateral Agent to the Trustee pursuant to a
Deficiency Notice shall be deposited by the Trustee into the Collection Account
pursuant to Section 14.05.
SECTION 14.05. Additional Deposits. The Servicer and the
Seller shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Receivables, and the
Servicer shall deposit therein all amounts to be paid under Section 20.02. The
Servicer shall deposit the aggregate Purchase Amount with respect to Purchased
Receivables when such obligations are due, unless the Servicer shall not be
required to make daily deposits pursuant to Section 14.02 in which event such
Purchase Amounts shall be deposited on the Determination Date following the date
on which such obligations are due. On or before each Draw Date, the Trustee
shall remit to the Collection Account any amounts delivered to the Trustee by
the Collateral Agent.
SECTION 14.06. Distributions. (a) On each Distribution Date,
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the Trustee shall (based solely on the information contained in the Servicer's
Certificate delivered on the related Determination Date) cause to be made the
following transfers and distributions in the amounts set forth in the Servicer's
Certificate for such Distribution Date:
(i) From the Collection Account to the Payahead Account, in
immediately available funds, the aggregate Payaheads referred to in Section
14.03 for the Monthly Period related to such Determination Date.
(ii) From the Payahead Account (a) to the Collection Account,
in immediately available funds, the portion of Payaheads constituting Scheduled
Payments on PreComputed Receivables or that are to be applied to prepay a
PreComputed Receivable in full under Section 14.03 and (b) to the Seller, in
immediately available funds, all Investment Earnings on funds in the Payahead
Account.
(b) On each Distribution Date, the Trustee shall (x)
distribute all amounts deposited by the Certificate Insurer under Section 14.12
as directed by the Certificate Insurer, and (y) (based solely on the information
contained in the Servicer's Certificate delivered with respect to the related
Determination Date) distribute the following amounts and in the following order
of priority:
(i) first, from the Distribution Amount, to the Servicer, the
Base Servicing Fee for the related Monthly Period, any Supplemental Servicing
Fees for the related Monthly Period, and any amounts specified in Section
14.02(b), to the extent the Servicer has not reimbursed itself in respect of
such amounts pursuant to Section 14.11 and to the extent not retained by the
Servicer;
(ii) second, from the Distribution Amount, to the Trustee, the
Trustee's Fees;
(iii) third, from the Amount Available, to the
Certificateholders, the Interest Distributable Amount for such Distribution
Date;
(iv) fourth, from the Amount Available to the
Certificateholders, the Principal Distributable Amount for such Distribution
Date;
(v) fifth, from the Distribution Amount, to the Certificate
Insurer, to the extent of any amounts owing to the Certificate Insurer under the
Insurance Agreement and not paid;
(vi) sixth, from Available Funds, to the Collateral Agent,
amounts for deposit in the Spread Account up to the Specified Spread Account
Requirement; and
(vii) seventh, from Available Funds, to the Seller, any
remaining funds.
(c) Subject to Section 20.01 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of record on the
37
preceding Record Date either 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
Trustee and the Servicer appropriate instructions prior to such Distribution
Date and such Holder's Certificates in the aggregate evidence a denomination of
not less than $1,000,000, or, if not, by check mailed to such Certificateholder
at the address of such Holder appearing in the Certificate Register, the amounts
to be distributed to such Certificateholder pursuant to such Holder's
Certificates except that with respect to Certificates registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee.
SECTION 14.07. Spread Account. (a) In order to assure that
sufficient amounts to make required distributions to Certificateholders will be
available, the Servicer shall establish and maintain an Eligible Deposit Account
(the "Spread Account") with the Collateral Agent, bearing a designation clearly
indicating that the funds deposited therein are held in trust for the benefit of
the Certificateholders. The Spread Account will include the money and other
property deposited and held therein pursuant to Section 14.06 and this Section.
On or prior to the Closing Date, the Seller shall deposit an
amount equal to the Spread Account Initial Deposit into the Spread Account. The
Spread Account and the Spread Account Property shall not be part of the Trust,
but instead will be held by the Collateral Agent, for the benefit of the Holders
of the Certificates and the Certificate Insurer. The Seller hereby acknowledges
that the Spread Account Initial Deposit (and any investment earnings thereon) is
owned directly by it, and the Seller hereby agrees to treat the same as its
assets (and earnings) for federal income tax and all other purposes.
(b) In order to assure the availability of the amounts
maintained in the Spread Account, the Seller hereby sells, conveys and transfers
to the Collateral Agent, and its successors and assigns, the Spread Account
Initial Deposit and all proceeds thereof and hereby pledges to the Collateral
Agent, and its successors and assigns, all other amounts deposited in or
credited to the Spread Account from time to time under the Agreement, all
Eligible Investments made with amounts on deposit therein, all earnings and
distributions thereon and proceeds thereof (other than proceeds constituting net
investment earnings attributable to the Spread Account Property) subject,
however, to the limitations set forth below, and solely for the purpose of
securing and providing for payment of the amounts described in Section
14.06(b)(i)-(v) and this Section (all the foregoing, subject to the limitations
set forth below, the "Spread Account Property"), to have and to hold all the
aforesaid property, rights and privileges unto the Collateral Agent, its
successors and assigns, in trust for the uses and purposes, and subject to the
terms and provisions, set forth in this Section. The Collateral Agent hereby
acknowledges such transfer and accepts the trusts hereunder and shall hold and
distribute the Spread Account Property in accordance with the terms and
provisions of this Section.
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(c) Consistent with the limited purposes for which such trust
is granted, the amounts on deposit in the Spread Account on each Distribution
Date shall be available for distribution as provided in Section 14.06, in
accordance with and subject to the following: if the amount on deposit in the
Spread Account (after giving effect to all deposits thereto and withdrawals
therefrom on such Distribution Date) is greater than the Specified Spread
Account Requirement, the Collateral Agent shall release and distribute all such
excess amounts to the Seller. Upon any such distribution to the Seller, the
Certificateholders will have no further rights in, or claims to, such amounts.
Investment earnings attributable to the Spread Account
Property shall not be subject to any claims or rights of the Certificateholders
or the Servicer. All such investments shall be made in the name of the
Collateral Agent or its nominee, and all income and gain realized thereon shall
be solely for the benefit of the Seller and shall be payable by the Collateral
Agent to the Seller on each Distribution Date. Realized losses, if any, on
investments of the Spread Account Property shall be charged first against
undistributed investment earnings attributable to the Spread Account Property
and then against the Spread Account Property.
(d) With respect to the Spread Account Property, the Seller,
on behalf of itself, its successors and assigns, and the Collateral Agent agree
that:
(i) Any Spread Account Property that is held in deposit
accounts shall be held solely in the name of the Collateral Agent at an Eligible
Institution. Each such deposit account shall be subject to the exclusive custody
and control of the Collateral Agent, and the Collateral Agent shall have sole
signature authority with respect thereto.
(ii) Any Spread Account Property that constitutes Physical
Property shall be delivered to the Collateral Agent in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Collateral Agent, or a financial intermediary (as
such term is defined in Section 8-313(4) of the UCC) acting solely for the
Collateral Agent.
(iii) Any Spread Account Property that is a book-entry
security held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Collateral Agent,
pending maturity or disposition, through continued book-entry registration of
such Spread Account Property as described in such paragraph.
(iv) Any Spread Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause (C)
above shall be delivered to the Collateral Agent, in accordance with paragraph
(c) of the definition of "Delivery" and shall be maintained by the Collateral
Agent, pending maturity or disposition, through continued registration of the
Collateral Agent's (or its custodian's or it nominee's) ownership of such
security.
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Effective upon Delivery of any Spread Account Property in the
form of Physical Property, book-entry securities or uncertificated securities,
the Trustee shall be deemed to have purchased such Spread Account Property for
value, in good faith and without notice of any adverse claim thereto.
(e) Each of the Seller and the Servicer agrees to take or
cause to be taken such further actions, to execute, deliver and file or cause to
be executed, delivered and filed such further documents and instruments
(including, without limitation, any UCC financing statements or the Agreement)
as may be determined to be necessary in an Opinion of Counsel to the Seller
delivered to the Collateral Agent in order to perfect the interests created by
this Section and otherwise fully to effectuate the purposes, terms and
conditions of this Section.
The Seller shall:
(i) promptly execute, deliver and file any financing
statements, amendments, continuation statements, assignments, certificates, and
other documents with respect to such interests and perform all such other acts
as may be necessary in order to perfect or to maintain the perfection of the
Collateral Agent's security interest; and
(ii) file the necessary financing statements or amendments
thereto within five days, and promptly notify the Collateral Agent of any such
filing, after the occurrence of any of the following: (1) any change in its
corporate name or any trade name; (2) any change in the location of its chief
executive office or principal place of business; and (3) any merger or
consolidation or other change in its identity or corporate structure and
promptly notify the Collateral Agent of any such filings.
(f) The Collateral Agent shall not enter into any
subordination or intercreditor agreement other than as contemplated hereby with
respect to the Spread Account Property.
(g) Following the payment in full of the Certificate Balance
and of all other amounts owing or to be distributed under the Agreement to
Certificateholders, the Certificate Insurer and any other Person who is entitled
to payment thereon and the termination of the Trust, any amount remaining on
deposit in the Spread Account shall be distributed to the Seller.
SECTION 14.07A. Investments of Funds in Spread Account. (a)
Funds held in the Spread Account shall be invested and reinvested by the
Collateral Agent, at the written direction (which may include, subject to the
provisions hereof, general standing instructions) of the Seller (unless a
Servicer Default shall have occurred and be continuing, in which case at the
written direction of the Certificate Insurer) or its designee received by the
Collateral Agent by 1:00 P.M. New York City time on the Business Day prior to
the date on which such investment shall be made, in one or more Eligible
Investments in the manner specified in Section 14.07A(c) hereof. If no written
direction with respect to any portion of such Spread Account is received by the
Collateral Agent, the Collateral Agent shall invest such funds overnight
pursuant to such general standby instruction of the Seller delivered to the
Trustee as described in the preceding sentence in such Eligible Investments as
the Collateral Agent may select, provided that the Collateral Agent shall not be
liable for any loss or absence of income resulting from such investments.
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(b) Each investment made pursuant to this Section 14.07A on
any date shall mature not later than the Business Day immediately preceding the
Distribution Date next succeeding the day such investment is made.
(c) Subject to the other provisions hereof, the Collateral
Agent shall have sole control over each such investment and the income thereon,
and any certificate or other instrument evidencing any such investment, if any,
shall be delivered directly to the Collateral Agent or its agent, together with
each document of transfer, if any, necessary to transfer title to such
investment to the Collateral Agent.
(d) The Collateral Agent shall not be liable by reason of any
insufficiency in the Spread Account, if any, resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Collateral Agent's failure to make payments on Eligible Investments as to which
the Collateral Agent, in its commercial capacity, is obligated.
SECTION 14.08. [RESERVED]
SECTION 14.09. Statements to Certificateholders. On each
Distribution Date, the Servicer shall provide to the Certificate Insurer, the
Rating Agencies and the Trustee for the Trustee to forward to each
Certificateholder of record as of the most recent Record Date, a statement
substantially in the form of Exhibit D setting forth at least the following
information as to the Certificates:
(i) the amount of such distribution allocable to interest on
or with respect to the Certificates;
(ii) the amount of such distribution allocable to principal on
or with respect to the Certificates;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Spread Account or pursuant to a claim on the Policy;
(iv) the Pool Balance as of the close of business on the last
day of the preceding Monthly Period;
(v) the Certificate Balance and the Certificate Factor and
after giving effect to all payments reported under clause (ii) above on such
date;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Monthly Period and/or due but unpaid with respect to such
Monthly Period or prior Monthly Periods, as the case may be;
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(vii) the amount of the Principal Carryover Shortfall and
Interest Carryover Shortfall, as applicable, if any, on such Distribution Date
and the change in the Principal Carryover Shortfall, and Interest Carryover
Shortfall, as applicable, from the preceding Distribution Date;
(viii) the amount of aggregate Realized Losses, if any, for
the second preceding Monthly Period;
(ix) the aggregate Purchase Amounts for Receivables, if any,
that were repurchased in such period; and
(x) the aggregate Payahead Balance and the change in such
balance from the preceding Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iii), (vi) and (vii)
above shall be expressed as a dollar amount per $1,000 of original principal
balance of Certificate.
SECTION 14.10. Tax Returns. The Trustee shall deliver to each
Holder of a Certificate a statement setting forth the aggregate amount
distributed pursuant to Section 14.09(i), (ii) and (vi) for the preceding
calendar year to enable each Holder to prepare its federal and state income tax
returns.
SECTION 14.11. Net Deposits. As an administrative convenience,
unless the Servicer is required to remit collections daily, the Servicer will be
permitted to make the deposit of collections on the Receivables and Purchase
Amounts for or with respect to each Monthly Period net of distributions to be
made to the Servicer with respect to such Monthly Period. The Servicer, however,
will account to the Trustee and to the Certificateholders as if all deposits,
distributions and transfers were made individually.
SECTION 14.12. Optional Deposits by the Certificate Insurer.
The Certificate Insurer shall at any time, and from time to time, with respect
to a Distribution Date, have the option (but shall not be required, except as
provided in Section 14A.02 and in accordance with the terms of the Policy) to
deliver amounts to the Trustee for deposit into the Collection Account for any
of the following purposes: (i) to provide funds in respect of the payment of
fees or expenses of any provider of services to the Trust with respect to such
Distribution Date, or (ii) to include such amount as part of the Amount
Available for such Distribution Date to the extent that without such amount a
draw would be required to be made on the Policy.
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ARTICLE XIV A
The Policy
SECTION 14A.01. The Policy. The Servicer and the Seller agree,
simultaneously with the execution and delivery of this Agreement, to cause the
Certificate Insurer to issue the Policy for the benefit of the Trust in
accordance with the terms thereof.
SECTION 14A.02. Claims Under Policy. (a) In the event that the
Trustee has delivered a Deficiency Notice with respect to any Determination
Date, the Trustee shall determine on the related Draw Date whether the sum of
(i) the amount of Available Funds with respect to such Determination Date (as
stated in the Servicer's Certificate with respect to such Determination Date)
plus (ii) the amount of the Deficiency Claim Amount, if any, to be delivered by
the Collateral Agent to the Trustee in accordance with Section 14.04(a) would be
insufficient, after giving effect to the distributions required by Section
14.06(b)(i)-(ii), to pay the sum of the Interest Distributable Amount and the
Principal Distributable Amount for the related Distribution Date, then in such
event the Trustee shall furnish to the Certificate Insurer (with a copy to the
Servicer) no later than 12:00 noon New York City time on the related Draw Date a
completed Notice of Claim in the amount of the shortfall in amounts so available
to pay the Interest Distributable Amount and the Principal Distributable Amount
with respect to such Distribution Date (the amount of any such shortfall being
hereinafter referred to as the "Policy Claim Amount"). Amounts paid by the
Certificate Insurer under the Policy shall be deposited by the Trustee into the
Policy Payments Account and thereafter into the Collection Account for payment
to Certificateholders on the related Distribution Date (or promptly following
payment on a later date as set forth in the Policy).
(b) Any notice delivered by the Trustee to the Certificate
Insurer pursuant to subsection 14A.02(a) shall specify the Policy Claim Amount
claimed under the Policy and shall constitute a "Notice of Claim" under the
Policy. In accordance with the provisions of the Policy, the Certificate Insurer
is required to pay to the Trustee the Policy Claim Amount properly claimed
thereunder by 12:00 noon, New York City time, on the later of (i) the third
Business Day following receipt on a Business Day of the Notice of Claim, and
(ii) the applicable Distribution Date. Any payment made by the Certificate
Insurer under the Policy shall be applied solely to the payment of the
Certificates, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Certificateholder any Policy Claim Amount from the Certificate Insurer and (ii)
deposit the same in the Policy Payments Account and thereafter into Collection
Account for disbursement to the Certificateholders as set forth in clauses (iii)
and (iv) of subsection 14.06(b). Any and all Policy Claim Amounts disbursed by
the Trustee from claims made under the Policy shall not be considered payment by
the Trust or from the Spread Account with respect to such Certificates, and
shall not discharge the obligations of the Trust with respect thereto. The
Certificate Insurer shall, to the extent it makes any payment with respect to
the Certificates, become subrogated to the rights of the recipients of such
payments to the extent of such payments. Subject to and conditioned upon any
payment with respect to the Certificates by or on behalf of the Certificate
Insurer, the Trustee shall assign to the Certificate Insurer all rights to the
payment of interest or principal with respect to the Certificates which are then
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due for payment to the extent of all payments made by the Certificate Insurer
and the Certificate Insurer may exercise any option, vote, right, power or the
like with respect to the Certificates to the extent that it has made payment
pursuant to the Policy. To evidence such subrogation, the Certificate Registrar
shall note the Certificate Insurer's rights as subrogee upon the register of
Certificateholders upon receipt from the Certificate Insurer of proof of payment
by the Certificate Insurer of any Interest Distributable Amount or Principal
Distributable Amount.
(d) The Trustee shall be entitled to enforce on behalf of the
Certificateholders the obligations of the Certificate Insurer under the Policy.
Notwithstanding any other provision of this Agreement, the Certificateholders
are not entitled to make a claim directly under the Policy or institute
proceedings directly against the Certificate Insurer.
SECTION 14A.03. Preference Claims; Direction of Proceedings.
(a) In the event that the Trustee has received a certified copy of an order of
the appropriate court that any Interest Distributable Amount or Principal
Distributable Amount paid on a Certificate has been avoided in whole or in part
as a preference payment under applicable bankruptcy law, the Trustee shall so
notify the Certificate Insurer, shall comply with the provisions of the Policy
to obtain payment by the Certificate Insurer of such avoided payment, and shall,
at the time it provides notice to the Certificate Insurer, notify Holders of the
Certificates by mail that, in the event that any Certificateholder's payment is
so recoverable, such Certificateholder will be entitled to payment pursuant to
the terms of the Policy. Pursuant to the terms of the Policy, the Certificate
Insurer will make such payment on behalf of the Certificateholder to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order (as defined in the Policy) and not to the Trustee or any
Certificateholder directly (unless a Certificateholder has previously paid such
payment to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy, in which case the Certificate Insurer will make such payment to the
Trustee for distribution to such Certificateholder upon proof of such payment
reasonably satisfactory to the Certificate Insurer).
(b) The Trustee shall promptly notify the Certificate Insurer
of any proceeding or the institution of any action (of which the Trustee has
actual knowledge) seeking the avoidance as a preferential transfer under
applicable bankruptcy, insolvency, receivership, rehabilitation or similar law
(a "Preference Claim") of any distribution made with respect to the
Certificates. Each Holder, by its purchase of Certificates, and the Trustee
hereby agree that so long as an Insurer Default shall not have occurred and be
continuing, the Certificate Insurer may at any time during the continuation of
any proceeding relating to a Preference Claim direct all matters relating to
such Preference Claim including, without limitation, (i) the direction of any
appeal of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal at the expense
of the Certificate Insurer, but subject to reimbursement as provided in the
Insurance Agreement. In addition, and without limitation of the foregoing, as
set forth in Section 14A.02(c), the Certificate Insurer shall be subrogated to,
and each Certificateholder and the Trustee hereby delegate and assign, to the
fullest extent permitted by law, the rights of the Trustee and each
Certificateholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
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proceeding action with respect to any court order issued in connection with any
such Preference Claim.
SECTION 14A.04. Surrender of Policy. The Trustee shall
surrender the Policy to the Certificate Insurer for cancellation upon its
expiration in accordance with the terms thereof.
ARTICLE XV
THE CERTIFICATES
SECTION 15.01. The Certificates. Unless otherwise specified in
the Agreement, the Certificates shall be issued in fully registered form in
minimum denominations of $1,000. The Certificates shall be executed on behalf of
the Trust by manual or facsimile signature of an authorized officer of the
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 Trust, shall be validly issued and entitled to the
benefit of the 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.
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 such transferee's acceptance of a Certificate
duly registered in such transferee's name pursuant to Section 15.03.
SECTION 15.02. Authentication of Certificates. The Trustee
shall cause the Certificates to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Seller, signed
by its chairman of the board, its president, any vice president, secretary, or
assistant treasurer, without further corporate action by the Seller, in
authorized denominations, pursuant to the Agreement. No Certificate shall
entitle its Holder to any benefit under the 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
Trustee by manual 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.
SECTION 15.03. Registration of Transfer and Exchange of
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 15.08, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Unless otherwise specified in the
Agreement, the Trustee shall be the initial Certificate Registrar.
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Upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office, the Trustee shall execute, authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates in authorized denominations of a like aggregate amount dated
the date of authentication by the Trustee. At the option of a Holder,
Certificates may be exchanged for other Certificates of authorized denominations
of a like aggregate amount upon surrender at the Corporate Trust Office of the
Certificates to be exchanged.
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 Trustee and the Certificate Registrar duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer and exchange shall be
canceled and subsequently disposed of by the Trustee in accordance with its
customary procedures.
No service charge shall be made for any registration of
transfer or exchange of Certificates, but the Trustee 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 15.04. [Reserved]
SECTION 15.05. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or 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, the Trustee and (unless
an Insurer Default shall have occurred and be continuing) the Certificate
Insurer 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 has been
acquired by a bona fide purchaser, the Trustee on behalf of the Trust shall
execute, and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and denomination. In connection with the issuance of
any new Certificate under this Section, the Trustee and 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 ownership in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
SECTION 15.06. Persons Deemed Owners. Prior to due
presentation of a Certificate for registration of transfer, the Trustee or the
Certificate Registrar may treat the Person in whose name any Certificate shall
be registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 14.06 and for all other purposes whatsoever,
and neither the Trustee, the Certificate Insurer, the Certificate Registrar nor
any agent of the Trustee, Certificate Insurer or Certificate Registrar shall be
bound by any notice to the contrary.
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SECTION 15.07. Access to List of Certificateholders' Names and
Addresses. The Trustee shall furnish or cause to be furnished to the Servicer,
and (unless an Insurer Default shall have occurred and be continuing) the
Certificate Insurer, within 15 days after receipt by the Trustee of a request
therefor from such party in writing, a list, in such form as such party 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
Holders of Certificates evidencing not less than 25% of the Certificate Balance
apply in writing to the Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under the Agreement or under the Certificates and such application shall be
accompanied by a copy of the communication that such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt
for 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 neither the Servicer nor
the Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 15.08. Maintenance of Office or Agency. The Trustee
shall maintain in the City of _____, _________, an office or offices or agency
or agencies where Certificates may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Trustee in respect of
the Certificates and the Agreement may be served. The Trustee initially
designates its office at _________ __________________ as its office for such
purposes. The Trustee shall give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 15.09. Book-Entry Certificates. The Certificates may
be issued in the form of one or more typewritten Certificates representing
Book-Entry Certificates, to be delivered by, or on behalf of, the Seller to the
initial Clearing Agency, which, unless otherwise specified in the Agreement,
shall be The Depository Trust Company. In such case, the Certificates delivered
to the Depository Trust Company shall initially be registered on the Certificate
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in the Certificates, except as provided in Section
15.11. Unless and until definitive, fully registered Certificates (the
"Definitive Certificates") have been issued to such Certificate Owners pursuant
to Section 15.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Seller, the Servicer, the Certificate Insurer, the
Certificate Registrar and the Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on such Certificates) as the
sole Holder of such Certificates and shall have no obligation to the related
Certificate Owners;
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(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions of this
Section shall control;
(iv) the rights of such Certificate Owners shall be exercised
only through the Clearing Agency and shall be limited to those established by
law and agreements between such Certificate Owners and the Clearing Agency
and/or the Clearing Agency Participants. Pursuant to the Depository Agreement,
unless and until Definitive Certificates are issued pursuant to Section 15.11,
the initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit distributions of principal and
interest on such Certificates to such Clearing Agency Participants; and
(v) whenever the Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified percentage of the Certificate Balance, the Clearing
Agency shall be deemed to represent such percentage only to the extent that it
has received instructions to such effect from Certificate Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in such Certificates and has delivered
such instructions to the Trustee.
SECTION 15.10. Notices to Clearing Agency. Whenever notice or
other communication to the Certificateholders is required under this Agreement,
unless and until Definitive Certificates shall have been issued to Certificate
Owners pursuant to Section 15.11, the Trustee and the Servicer shall give all
such notices and communications specified herein to be given to Certificate
Owners to the Clearing Agency.
SECTION 15.11. Definitive Certificates. If (i) the Servicer
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities under the Depository Agreement
and the Seller is unable to locate a qualified successor, (ii) the Seller at its
option advises the Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (iii) after the occurrence of a Servicer
Default, Certificate Owners representing beneficial interests aggregating not
less than a majority of the aggregate outstanding principal amount of the
Book-Entry Certificates advise the Trustee and the Clearing Agency in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Certificate Owners, then the Clearing Agency
shall notify all Certificate Owners and the Trustee of the occurrence of such
event and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Trustee of the typewritten
Certificates representing the Book-Entry Certificates by the Clearing Agency,
accompanied by registration instructions, the Trustee shall execute and
authenticate the Definitive Certificates in accordance with the instructions of
the Clearing Agency. None of the Seller, the Certificate Registrar or the
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 Definitive Certificates, the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder. The
Definitive Certificates shall be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Trustee, as
evidenced by its execution thereof.
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SECTION 15.12. Temporary Certificates. In the event that the
Agreement provides that the Certificates are not to be issued in book-entry form
pursuant to Section 15.09, pending the preparation of definitive Certificates,
the Trustee, on behalf of the Trust, may execute, authenticate and deliver,
temporary Certificates that are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Certificates in lieu of which they are issued. If
temporary Certificates are issued, the Seller will cause definitive Certificates
to be prepared without unreasonable delay. After the preparation of definitive
Certificates, the temporary Certificates shall be exchangeable for definitive
Certificates upon surrender of the temporary Certificates at the office or
agency to be maintained as provided in Section 15.08, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute, authenticate and deliver in exchange
therefor a like principal amount of definitive Certificates in authorized
denominations. Until so exchanged, the temporary Certificates shall in all
respects be entitled to the same benefits under the Agreement as definitive
Certificates.
ARTICLE XVI
The Seller
SECTION 16.01. Representations of Seller. The Seller makes the
following representations on which the Certificate Insurer shall be deemed to
have relied in executing and delivering the Policy and on which Trustee shall be
deemed to have relied in accepting the Receivables in trust and executing and
authenticating the Certificates. The representations speak as of the execution
and delivery of the Agreement and as of the Closing Date, in the case of
Receivables, and shall survive the sale of the Receivables to the Trust.
(a) Organization and Good Standing. The Seller is duly
organized and validly existing as a limited liability company in good standing
under the laws of the State of Delaware, with the 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, the corporate power, authority and legal right to acquire and own the
Receivables.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign limited liability company in good standing, and has
obtained all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property, including the Receivables, or the conduct of its
business shall require such qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver the Agreement and to carry out its terms; the
Seller has full power and authority to sell and assign the property to be sold
and assigned to and deposited with the Trustee as part of the Trust, and the
Seller shall have duly authorized such sale and assignment to the Trustee by all
necessary action.
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(d) Binding Obligation. The Agreement shall constitute legal,
valid and binding obligations of the Seller enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization and similar laws now or hereafter in
effect relating to creditors' rights generally and subject to general principles
of equity (whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof and
thereof 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 certificate of incorporation or bylaws of the Seller, or any
indenture, agreement or other instrument to which the 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 (other than pursuant to the Agreement); nor violate any law or,
to the best of the Seller's knowledge, any order, rule or regulation applicable
to the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Seller or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending against the Seller or, to its best knowledge, threatened against the
Seller, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of the Agreement or the Certificates;
(ii) seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by the Agreement; (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, the Agreement or the Certificates, or (iv) that might
adversely affect the federal income tax attributes of the Certificates.
(g) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by the Seller in connection with the execution and
delivery by the Seller of the Agreement and the performance by the Seller of the
transactions contemplated by this Agreement, have been duly obtained, effected
or given and are in full force and effect, except where failure to obtain the
same would not have a material adverse effect upon the rights of the Trustee or
the Certificateholders.
(h) Chief Executive Office. The chief executive office of the
Seller is at __________________________.
SECTION 16.02. Corporate Existence. (a) During the term of
this Agreement, the Seller will keep in full force and effect its existence,
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rights and franchises as a corporation under the laws of the jurisdiction of its
incorporation 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 Agreement and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall
observe the applicable legal requirements for the recognition of the Seller as a
legal entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall maintain corporate records and books of
account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the
Seller shall not commingle its assets and funds with those of its Affiliates;
(iii) the Seller shall hold such appropriate meetings of its
Board of Directors as are necessary to authorize all the Seller's corporate
actions required by law to be authorized by the Board of Directors, shall keep
minutes of such meetings and of meetings of its stockholder(s) and observe all
other customary corporate formalities (and any successor Seller not a
corporation shall observe similar procedures in accordance with its governing
documents and applicable law);
(iv) the Seller shall at all times hold itself out to the
public under the Seller's own name as a legal entity separate and distinct from
its Affiliates; and
(v) all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
SECTION 16.03. Liabilities of Seller; Indemnities. The Seller
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under the Agreement.
(a) The Seller shall indemnify, defend and hold harmless the
Trustee, the Certificate Insurer, and the Trust from and against any taxes that
may at any time be asserted against the Trustee, the Certificate Insurer, or the
Trust with respect to the transactions contemplated in the Agreement, including
any sales, gross receipts, general corporation, tangible personal property,
privilege, or license taxes (but, in the case of the Trust, not including any
taxes asserted with respect to, federal or other income taxes arising out of the
distributions on the Certificates) and costs and expenses in defending against
the same.
(b) The Seller shall indemnify, defend and hold harmless the
Trustee, the Certificate Insurer and the Certificateholders from and against any
loss, liability or expense incurred by reason of (a) the Seller's willful
misfeasance, bad faith or negligence in the performance of its duties under the
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Agreement, or by reason of reckless disregard of its obligations and duties
under the Agreement, and (b) the Seller's or Trust's violation of federal or
state securities laws in connection with the offering and sale of the
Certificates.
(c) The Seller shall indemnify, defend and hold harmless the
Trustee and its officers, directors, employees and agents from and against all
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 and in the Agreement contained, except to the extent that such
cost, expense, loss, claim, damage or liabilities shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Trustee.
Indemnification under this Section 16.03 shall survive the
resignation or removal of the Trustee and the termination of the Agreement and
shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Seller shall have made any indemnity payments to the Trustee
or the Certificate Insurer, as the case may be, pursuant to this Section and the
Trustee or the Certificate Insurer, as the case may be, thereafter shall collect
any of such amounts from others, the Trustee or the Certificate Insurer, as the
case may be, shall promptly repay such amounts to the Seller, without interest.
SECTION 16.04. Merger or Consolidation of, or Assumption of
the Obligations of, Seller. Any Person (a) into which the Seller may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Seller shall be a party or (c) which may succeed to the properties and
assets of the Seller substantially as a whole, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Seller under the Agreement, shall be the successor to the Seller
hereunder without the execution or filing of any document or any further act by
any of the parties to the Agreement; provided, however, that (i) the Seller
shall have received the written consent of the Certificate Insurer prior to
entering into any such transaction (ii) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 12.01 shall
have been breached and no Servicer Default, and no event which, after notice or
lapse of time, or both, would become a Servicer Default shall have happened and
be continuing, (iii) the Seller shall have delivered to the Trustee and the
Certificate Insurer an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in the Agreement relating to such transaction have been complied
with, (iv) the Rating Agency Condition shall have been satisfied with respect to
such transaction and (v) the Seller shall have delivered to the Trustee and the
Certificate Insurer an Opinion of Counsel stating that, in the opinion of such
counsel, either (A) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables and reciting
the details of such filings or (B) no such action shall be necessary to preserve
and protect such interest. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clauses
(i), (ii), (iii), (iv) and (v) above shall be conditions to the consummation of
the transactions referred to in clauses (a), (b) or (c) above.
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SECTION 16.05. Limitation on Liability of Seller and Others.
The Seller and any director, officer, employee or agent of the 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. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under the Agreement and that in its opinion may involve it in any
expense or liability.
SECTION 16.06. Seller May Own Certificates. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates with the same rights as it would have if it were not
the Seller or an Affiliate thereof, except as otherwise provided herein.
Certificates so owned by the Seller or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates, provided
however, that any Certificates owned by the Seller or any Affiliate thereof,
during the time such Certificates are owned by them, shall be without voting
rights for any purpose set forth in this Agreement and will not be entitled to
the benefits of the Policy. The Seller shall notify the Trustee and the
Certificate Insurer promptly after it or any of its Affiliates become the owner
of a Certificate.
ARTICLE XVII
The Servicer
SECTION 17.01. Representations of Servicer. The Servicer makes
the following representations on which the Certificate Insurer shall be deemed
to have relied in executing and delivering the Policy and on which the Trustee
shall be deemed to have relied in accepting the Receivables in trust and
executing and authenticating the Certificates. The representations speak as of
the execution and delivery of the Agreement and as of the Closing Date, in the
case of the Receivables, and shall survive the sale of the Receivables to the
Trust.
(a) Organization and Good Standing. The Servicer is duly
organized and validly existing as a corporation in good standing under the laws
of the state of its incorporation, with the corporate 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, the power, authority and legal right to acquire, own, sell and service
the Receivables and to hold the Receivable Files as custodian.
(b) Due Qualification. The Servicer is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business (including the ownership or servicing of the Receivables as required by
the Agreement) shall require such qualifications, and was duly qualified and had
all licenses in all relevant jurisdictions required for the origination of the
Receivables.
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(c) Power and Authority of the Servicer. The Servicer has the
corporate power and authority to execute and deliver the Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of the Agreement have been duly authorized by the Servicer by all necessary
corporate action. All authorizations, consents, orders or approvals of or
registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by the Servicer in connection with the execution and delivery by the
Servicer of the Agreement and the performance by the Servicer of the
transactions contemplated by the Agreement have been duly obtained, effected or
given and are in full force and effect, except where failure to obtain the same
would not have a material adverse effect upon the rights of the Trustee or the
Certificateholders.
(d) Binding Obligation. The Agreement constitutes a legal,
valid and binding obligation of the Servicer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally, and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof shall 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 incorporation or bylaws of the Servicer, or any indenture, agreement
or other instrument to which the Servicer is a party or by which it is bound; or
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
(other than the Agreement); or violate any law or, to the best of the Servicer's
knowledge, any order, rule or regulation applicable to the Servicer of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties.
(f) No Proceedings. There are no proceedings or investigations
pending against the Servicer, or, to its best knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of the Agreement or the Certificates,
(ii) seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by the Agreement, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, the Agreement or the Certificates, or (iv) relating to the
Servicer and which might adversely affect the federal income tax or ERISA
attributes of the Certificates.
(g) No Insolvent Obligors. As of the Cutoff Date, no Obligor
on a Receivable shall be shown on the Receivable Files as the subject of a
bankruptcy proceeding commenced following the execution of the related Contract.
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SECTION 17.02. Indemnities of Servicer. The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under the Agreement and the representations made by
the Servicer herein.
(a) The Servicer shall defend, indemnify and hold harmless the
Trustee, the Trust, the Collateral Agent, the Certificate Insurer, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, damages, claims, and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any Affiliate thereof of a
Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Trustee, the Seller, the Trust, the Collateral Agent, the Certificate Insurer,
their respective officers, directors, agents and employees and the
Certificateholders from and against any and 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 any such Person through,
the negligence, willful misfeasance or bad faith of the Servicer in the
performance of its duties under the Agreement or by reason of reckless disregard
of its obligations and duties under the Agreement.
(c) The Servicer shall indemnify, defend and hold harmless the
Trustee and its officers, directors, employees and agents from and against all
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 and in the Agreement contained, except to the extent that such
costs, expense, loss, claim, damage or liability shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Trustee.
For purposes of this Section, in the event of the termination
of the rights and obligations of the Representative (or any successor thereto
pursuant to Section 17.03) as Servicer pursuant to Section 18.01, or a
resignation by such Servicer pursuant to the Agreement, such Servicer shall be
deemed to be the Servicer pending appointment of a successor Servicer (other
than the Trustee) pursuant to Section 18.02.
Indemnification under this Section shall survive the
resignation or removal of the Trustee or the termination of the Agreement and
shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts from
others, such Person shall promptly repay such amounts to the Servicer, without
interest.
SECTION 17.03. Merger or Consolidation of, or Assumption of
the Obligations of Servicer. Any Person (a) into which the Servicer may be
merged or consolidated, (b) which may result from any merger or consolidation to
which the Servicer shall be a party, (c) which may succeed to the properties and
assets of the Servicer substantially as a whole or (d) with respect to the
Servicer's obligations hereunder, which is a corporation 50% or more of the
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voting stock of which is owned, directly or indirectly, by Franklin Capital
Corporation, which Person executed an agreement of assumption to perform every
obligation of the Servicer hereunder shall be the successor to the Servicer
under the Agreement without further act on the part of any of the parties to the
Agreement; provided, however, that (i) the Servicer shall have received the
written consent of the Certificate Insurer prior to entering into any such
transaction; (ii) immediately after giving effect to such transaction, no
Servicer Default and no event which, after notice or lapse of time, or both,
would become a Servicer Default shall have happened and be continuing, (iii) the
Servicer shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent provided for in the Agreement relating to such transaction
have been complied with, (iv) the Rating Agency Condition shall have been
satisfied with respect to such transaction and (v) the Servicer shall have
delivered to the Trustee an Opinion of Counsel stating that, in the opinion of
such counsel, either (A) all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables and reciting
the details of such filings or (B) no such action shall be necessary to preserve
and protect such interest. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clauses
(i), (ii), (iii), (iv) and (v) above shall be conditions to the consummation of
the transactions referred to in clauses (a), (b) or (c) above.
SECTION 17.04. Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of its directors, officers, employees or agents
shall be under any liability to the Trust or the Certificateholders, except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to the Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
such person against any liability that would otherwise 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 under the Agreement. The
Servicer or any subservicer and any of their respective directors, officers,
employees or agents may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising under the Agreement.
Except as provided in the Agreement the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its respective duties to service the Receivables in
accordance with the Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that the Servicer may (but shall not be
required to) undertake any reasonable action that it may deem necessary or
desirable to protect the interests of the Certificateholders under the
Agreement.
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ARTICLE XVIII
Default
SECTION 18.01. Servicer Default. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
(a) Any failure by the Servicer to deliver to the Trustee for
deposit to the Collection Account any proceeds or payment required to be so
delivered under the terms of the Certificates and the Agreement that shall
continue unremedied for a period of five Business Days after written notice of
such failure is received by the Servicer from the Trustee or the Certificate
Insurer or after discovery of such failure by an officer of the Servicer; or
(b) Failure by the Servicer duly to observe or to perform in
any material respect any other covenants or agreements of the Servicer or the
Seller (as the case may be) set forth in the Certificates or in the Agreement,
which failure shall (x) materially and adversely affect the rights of
Certificateholders and (y) continue unremedied for a period of 10 business 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 Trustee or the
Certificate Insurer or (2) to the Servicer and to the Trustee by the Holders of
Certificates evidencing not less than 25% of the Certificate Balance (or for
such longer period, not in excess of 120 days, as may be reasonably necessary to
remedy such default; provided that such default is capable of remedy within 120
days and the Servicer delivers an Officers' Certificate to the Trustee and the
Certificate Insurer to such effect and to the effect that the Servicer has
commenced or will promptly commence, and will diligently pursue, all reasonable
efforts to remedy such default); or
(c) The occurrence of an Insolvency Event with respect to the
Servicer; or
(d) So long as an Insurer Default shall not have occurred and
be continuing, an Insurance Agreement Event of Default described in Section 5.01
of the Insurance Agreement shall have occurred;
then, and in each and every case, so long as no Insurer Default shall have
occurred and be continuing, the Certificate Insurer, subject to subsection (b)
of this Section 18.01, (or, if an Insurer Default shall have occurred and be
continuing, any of the Trustee or the Holders of Certificates evidencing not
less than a majority of the Certificates then outstanding by notice given in
writing to the Servicer (and to the Trustee if given by the Certificate Insurer
or the Certificateholders) may terminate all of the rights and obligations of
the Servicer under the Agreement. On or after the receipt by the Servicer of
such written notice, all authority, power, obligations and responsibilities of
the Servicer under this Agreement, whether with respect to the Certificates or
the Trust Property or otherwise, automatically shall pass to, be vested in and
become obligations and responsibilities of the Trustee provided that the Trustee
is not unwilling or unable to act; provided, however, that the Trustee shall
have no liability with respect to any obligation which was required to be
performed by the prior Servicer prior to the date that the Trustee becomes the
Servicer or any claim of a third party based on any alleged action or inaction
of the prior Servicer. The Trustee is authorized and empowered by this
57
Agreement, as successor Servicer to execute and deliver, on behalf of the prior
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 notice of termination, whether to
complete the transfer and endorsement of the Receivables and the other Trust
Property and related documents to show the Trustee as lienholder or secured
party on the related Lien Certificates, or otherwise. The prior Servicer agrees
to cooperate with the successor Servicer in effecting the termination of the
responsibilities and rights of the prior Servicer under this agreement,
including, without limitation, the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
prior Servicer for deposit, or have been deposited by the prior Servicer, in the
Collection Account or thereafter received with respect to the Receivables and
the delivery to the successor Servicer of all Receivables Files, records and a
computer tape in readable form containing all information necessary to enable
the successor Servicer to service the Receivables and the other Trust Property.
The terminated Servicer shall grant the Trustee, (in its capacity as Trustee
and/or successor Servicer) and the Certificate Insurer reasonable access to the
terminated Servicer's premises at the Servicer's expense.
SECTION 18.02. Appointment of Successor. (a) Upon the
Servicer's receipt of notice of termination pursuant to Section 18.01 or the
Servicer's resignation in accordance with the terms of the Agreement, the
predecessor Servicer shall continue to perform its functions as Servicer under
the Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the later of
(x) the date 45 days from the delivery to the Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of the Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of the Servicer's
termination hereunder, the Trustee shall; provided it is not unwilling or unable
to act, assume the obligations of Servicer hereunder, and shall accept its
appointment by a written assumption in form acceptable to the Certificate
Insurer. Notwithstanding the above, the Trustee, with the prior written consent
of the Certificate Insurer, or the Certificate Insurer shall, if the Trustee
shall be unwilling or legally unable so to act, appoint, or petition a court of
competent jurisdiction to appoint, any established institution having a net
worth of not less than $50,000,000 and whose regular business shall include the
servicing of automotive receivables as the successor to the Servicer under the
Agreement.
(b) Upon appointment, the successor Servicer (including the
Trustee acting as successor Servicer) shall be the successor in all respects to
the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer and shall be entitled to the Servicing Fee and all of the
rights granted to the predecessor Servicer by the terms and provisions of the
Agreement.
(c) The Servicer may not resign unless it is prohibited from
serving as such by law.
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SECTION 18.03. [RESERVED]
SECTION 18.04. Notification to Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article XVIII, the Trustee shall give prompt written notice thereof to
Certificateholders and to the Rating Agencies.
SECTION 18.05. Waiver of Past Defaults. So long as no Insurer
Default shall have occurred and be continuing, the Certificate Insurer (or, if
an Insurer Default shall have occurred and be continuing, the Holders of
Certificates evidencing not less than a majority of the Certificate Balance)
may, on behalf of all Holders of Certificates, waive any default by the Servicer
in the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from an Account in
accordance with the Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Default arising therefrom shall
be deemed to have been remedied for every purpose of the Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
ARTICLE XIX
The Trustee And Collateral Agent
SECTION 19.01. Duties of Trustee. (a) If a Servicer Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by the 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.
(b) Except during the continuance of a Servicer Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in the Agreement and no implied
covenants or obligations shall be read into the Agreement against the Trustee;
and
(ii) in the absence of bad faith on its part, the 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
Trustee and conforming to the requirements of the Agreement; provided, however,
that the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of the Agreement.
(c) The Trustee shall take and maintain custody of the
Schedule of Receivables included as an exhibit to the Agreement and shall retain
all Servicer's Certificates identifying Receivables that become Purchased
Receivables and Liquidated Receivables.
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(d) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken in good faith in accordance with the
Agreement or at the direction of the Certificate Insurer or Holders of
Certificates evidencing not less than 25% of the Certificate Balance relating to
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee
under the Agreement;
(e) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of clause (d) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trustee Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to the Agreement.
(f) No provision of the Agreement shall require the 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 adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 19.02. Certain Matters Affecting Trustee. Except as
otherwise provided in Section 19.01:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in any such document.
(b) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters or relating to the Agreement or
the Certificates shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it under the
Agreement in good faith and in accordance with such advice or opinion of such
counsel.
(c) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by the Agreement, or to institute, conduct
or defend any litigation under the Agreement at the request, order or direction
of the Certificate Insurer or any of the Certificateholders pursuant to the
provisions of the Agreement, unless the Certificate Insurer or such
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Certificateholders, as the case may be, shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby.
(d) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith which it believes to be authorized or
within its rights or powers conferred upon it by the Agreement; provided, that
such conduct does not constitute willful misconduct, bad faith or negligence on
the part of the Trustee.
(e) The Trustee may execute any of the trusts or powers or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence of any such agent, attorney or custodian appointed with
due care by it hereunder.
SECTION 19.03. Trustee Not Liable for Certificates or
Receivables. The recitals contained herein and in the Certificates (other than
the certificate of authentication on the Certificates) shall be taken as the
statements of the Seller or the Servicer, as the case may be, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of the Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to any offering materials used
in connection with the sale of the Certificates, the legality, validity and
enforceability of any Receivable, or the perfection and priority of any security
interest created by any Receivable in any Financed Vehicle or the maintenance of
any such perfection and priority, or for or with respect to the efficacy of the
Trust, the representations, warranties and covenants of the Trust or its ability
to generate the payments to be distributed to Certificateholders under the
Agreement, including, without limitation: the existence, condition and ownership
of any Financed Vehicle; the existence and enforceability of any insurance
thereon; the existence and contents of any Receivable or any computer or other
record thereof; the validity of the assignment of any Receivable to the Trust or
of any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by the Seller or
the Servicer with any covenant, warranty or representation made under the
Agreement or in any related document and the accuracy of any such covenant,
warranty or representation or any action of the Servicer taken in the name of
the Trustee.
SECTION 19.04. Trustee May Own Certificates. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Certificates and may deal with the Seller and the Servicer in banking
transactions with the same rights as it would have if it were not Trustee.
SECTION 19.05. Trustee's Fees and Expenses. The Trustee shall
be entitled to receive the Trustee Fee pursuant to Section 14.06 for all
services rendered by it in the execution of the trusts created by the Agreement
and in the exercise and performance of any of the Trustee's powers and duties
under the Agreement. The Trustee Fee shall be the only fee payable to the
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Trustee for its services as Trustee and Collateral Agent, provided that the
Trustee and the Collateral Agent shall be entitled to their out-of-pocket
expenses in accordance with the Agreement. The Trustee and the Collateral Agent
shall be entitled to be reimbursed by the Servicer for its reasonable expenses
under the Agreement, including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the
Trustee may employ in connection with the exercise and performance of its rights
and duties under the Agreement.
SECTION 19.06. Eligibility Requirements for Trustee. The
Trustee shall at all times be a corporation having an office in the same state
as the location of the Corporate Trust Office; organized and doing business
under the laws of any state or the United States of America; authorized under
any laws to exercise corporate trust powers; having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authorities; and (so long as an Insurer Default shall not have
occurred and be continuing) satisfactory to the Certificate Insurer, and having
(or having a parent that has) a rating of at least Baa3 by Xxxxx'x. 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
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 19.07.
SECTION 19.07. Resignation or Removal of Trustee. The Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Servicer and the Certificate Insurer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 19.06 and shall fail to resign after
written request therefor by the Servicer or the Certificate Insurer, or if at
any time the Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer or the Certificate Insurer may remove the
Trustee. If the Servicer or the Certificate Insurer shall remove the Trustee
under the authority of the immediately preceding sentence, the Servicer (so long
as an Insurer Default shall not have occurred and be continuing) with the
written consent of the Certificate Insurer, or (unless an Insurer Default shall
have occurred and be continuing) at the written request of the Certificate
Insurer shall, or the Certificate Insurer shall promptly appoint a successor
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Trustee (which successor Trustee, if appointed by the Certificate Insurer, shall
be subject to the prior written consent of the Servicer, which consent shall not
be unreasonably withheld) by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Trustee so removed and one copy to
the successor Trustee, and shall pay all fees owed to the outgoing Trustee. Any
successor trustee shall (so long as an Insurer Default shall not have occurred
and be continuing) be acceptable to the Certificate Insurer.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 19.08 and payment of all fees and expenses owed to the
outgoing Trustee. The Servicer shall provide notice of such resignation or
removal of the Trustee to each of the Rating Agencies.
SECTION 19.08. Successor Trustee. Any successor Trustee
appointed pursuant to Section 19.07 shall execute, acknowledge and deliver to
the Servicer and the Certificate Insurer and to its predecessor Trustee an
instrument accepting such appointment under the Agreement as Trustee and
Collateral Agent, and thereupon the resignation or removal of the predecessor
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor under the Agreement, with like effect
as if originally named as Trustee and Collateral Agent. The predecessor Trustee
shall upon payment of its fees and expenses deliver to the successor Trustee all
documents and statements and monies held by it under the Agreement; and the
Servicer and the predecessor 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 Trustee all such rights, powers, duties
and obligations.
No successor Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 19.06.
Upon acceptance of appointment by a successor Trustee pursuant
to this Section, the Servicer shall mail notice thereof to all
Certificateholders, the Certificate Insurer and the Rating Agencies. If the
Servicer shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.
SECTION 19.09. Merger or Consolidation of Trustee. Any
corporation into which the 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 Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 19.06, 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. The Trustee shall mail
notice of any such merger or consolidation to the Rating Agencies and the
Certificate Insurer.
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SECTION 19.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of the Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer,
the Certificate Insurer (provided an Insurer Default shall not have occurred and
be continuing) and the Trustee shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the Trust
or any part thereof and, subject to the other provisions of this Section, such
powers, duties, obligations, rights, and trusts as the Servicer, the Certificate
Insurer and the Trustee may consider necessary or desirable. If the Servicer and
the Certificate Insurer shall not have joined in (or rejected the entity named
in the request) such appointment within 15 days after the receipt by it of a
request so to do, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under the Agreement shall be
required to meet the terms of eligibility as a successor Trustee pursuant to
Section 19.06 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 19.08.
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 any such separate trustee or co- trustee shall be conferred upon
and exercised or performed by the 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 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 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 Trust 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 Trustee;
(ii) No trustee under the Agreement shall be personally liable
by reason of any act or omission of any other trustee under the Agreement; and
(iii) Provided no Insurer Default shall have occurred and be
continuing, the Certificate Insurer may, and, in the event an Insurer Default
shall have occurred and be continuing, then, the Servicer and the 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 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 the Agreement and
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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 Trustee or
separately, as may be provided therein, subject to all the provisions of the
Agreement, specifically including every provision of the Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Each such instrument shall be filed with the Trustee and a copy thereof
given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the
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 the
Agreement 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
Trustee, to the extent permitted by law, without the appointment of a new or
successor co-trustee or separate trustee.
SECTION 19.11. Representations and Warranties of Trustee. The
Trustee shall make the following representations and warranties on which the
Representative, the Seller and Certificateholders shall be deemed to rely:
(i) The Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of its place of
incorporation.
(ii) The Trustee has full corporate power, authority and legal
right to execute and deliver, and to perform its obligations under, the
Agreement as Trustee and Collateral Agent, and shall have taken all necessary
action to authorize the execution and delivery of, and the performance of its
obligations under, the Agreement.
(iii) The Agreement shall have been duly executed and
delivered by the Trustee.
SECTION 19.12. No Bankruptcy Petition. The Trustee, by
entering into the Agreement, and each Certificateholder, by accepting a
Certificate, hereby covenant and agree that they will not at any time, prior to
the date that is one year and one day after the termination of the Agreement,
institute against, or join any other Person in instituting against, the Seller
or the Trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other similar proceedings under any federal or state
bankruptcy or similar law in connection with the Certificates or the Agreement.
SECTION 19.13. Trustee's Certificate. On or as soon as
practicable after each Record Date as of which Receivables shall be assigned to
the Seller or the Servicer pursuant to Section 19.14, the Trustee shall execute
a Trustee's Certificate (in the form of Exhibit E-1 or Exhibit E-2, as
applicable), based on the information contained in the Servicer's Certificate
for the related Monthly Period, amounts deposited to the Collection Account and
notices received pursuant to the Agreement, identifying the Receivables
repurchased by the Seller pursuant to Section 12.03 or purchased by the Servicer
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pursuant to Section 13.07 or Section 20.02 during such Monthly Period, and shall
deliver such Trustee's Certificate, accompanied by a copy of the Servicer's
Certificate for such Monthly Period, to the Seller or the Servicer, as
applicable. The Trustee's Certificate submitted with respect to such
Distribution Date shall operate, as of such Distribution Date, as an assignment,
without recourse, representation or warranty, to the Seller or the Servicer, as
applicable, of all the Trustee's right, title and interest in and to any such
Purchased Receivable and to the other property conveyed to the Trust with
respect thereto, and all security and documents relating thereto, such
assignment being an assignment outright and not for security.
SECTION 19.14. Trustee's Assignment of Purchased Receivables.
With respect to all Receivables repurchased by the Seller pursuant to Section
12.03 or purchased by the Servicer pursuant to Section 13.07 or Section 20.02,
the Trustee shall by a Trustee's Certificate (in the form of Exhibit E-1 or
Exhibit E-2, as applicable) assign, without recourse, representation or
warranty, to the Seller or the Servicer, as applicable, all the Trustee's right,
title and interest in and to any such Receivable and the other property conveyed
to the Trust with respect thereto, and all security and documents relating
thereto, such assignment being an assignment outright and not for security.
ARTICLE XX
Termination
SECTION 20.01. Termination of the Trust. (a) The respective
obligations and responsibilities of the Seller, the Servicer, the Trustee and
Collateral Agent created hereby and the Trust created by the Agreement shall
terminate upon the latest of (i) the maturity or other liquidation of the last
Receivable (including the purchase of the corpus of the Trust pursuant to
Section 20.02) and the disposition of any amounts received upon liquidation of
any remaining Receivables, (ii) the payment to Certificateholders, the
Certificate Insurer and all Persons entitled to payment under the Agreement, of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust and (iii) the expiration
of any preference period related thereto and payment to the Certificate Insurer
of all amounts payable or reimbursable to it pursuant to the Agreement and the
Insurance and Indemnity Agreement; provided, however, that in no event shall the
trust created by the Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
ambassador of the United States to the Court of St. Xxxxx, living on the date of
the Agreement. The Servicer shall promptly notify the other parties hereto and
the Certificate Insurer of any prospective termination pursuant to this Section.
(b) Except as provided in Section 20.01(a), neither the Seller
nor any Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
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cancellation of the Certificates, shall, upon receipt by the Trustee from the
Servicer of such notice, be given by the Trustee by letter to Certificateholders
mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the specified Distribution Date stating (A) the
Distribution Date upon which final payment of the Certificates shall be made
upon presentation and surrender of the Certificates at the office of the Trustee
therein designated, (B) the amount of such final payment and (C) 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 Trustee therein specified. The Trustee shall give such notice to
the Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 14.06.
In the event that 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 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 such second notice all of the Certificates
shall not have been surrendered for cancellation, the 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 the Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Trustee to the Seller.
As soon as practicable after the termination of the Trust, the Trustee shall
surrender the Policy to the Certificate Insurer for cancellation.
SECTION 20.02. Optional Purchase of All Receivables. On the
last day of any Monthly Period as of which the Pool Balance shall be less than
or equal to 10% of the Original Pool Balance, the Servicer shall have the option
to purchase the corpus of the Trust (with the consent of the Certificate Insurer
if such purchase would result in a claim on the Policy or would result in any
amount owing to the Certificate Insurer, under the Insurance Agreement,
remaining unpaid). To exercise such option the Servicer shall deposit pursuant
to Section 14.05 in the Collection Account an amount equal to the aggregate
Purchase Amount for the Receivables (including Defaulted Receivables), plus the
appraised value of any other property held by the Trust, such value to be
determined by an appraiser mutually agreed upon by the Servicer, the Certificate
Insurer and the Trustee, and shall succeed to all interests in and to the Trust.
ARTICLE XXI
MISCELLANEOUS PROVISIONS
SECTION 21.01. Amendment. (a) The Agreement may be amended
from time to time by the Representative, the Seller, the Servicer and the
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Trustee by written agreement, upon the prior written consent of the Certificate
Insurer, without the notice to or consent of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement or the Insurance Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel delivered to the
Trustee, adversely affect in any material respect the interests of any
Certificateholder.
The Agreement may also be amended from time to time by the
Seller, the Servicer and the Trustee with the prior written consent of the
Certificate Insurer and the Holders of Certificates (which consent shall be
conclusive and binding on such Holders and on all future Holders of such
Certificates and of any Certificates issued upon the transfer therefor or in
exchange thereof or in lieu thereof, whether or not notation of such consent is
made upon the Certificates), evidencing not less than a majority of the
Certificate Balance for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Agreement, or of
modifying in any manner the rights of 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 Receivables or
distributions that shall be required to be made on any Certificate or (b) reduce
the aforesaid percentage of the Certificate Balance required to consent to any
such amendment without the consent of the Holders of all Certificates then
outstanding; provided further, that if an Insurer Default has occurred and is
continuing, such action shall not materially adversely affect the interest of
the Certificate Insurer.
Promptly after the execution of any such amendment or consent,
the Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and the Rating Agencies.
It shall not be necessary for the consent of
Certificateholders 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 Certificateholders provided for in this Agreement) and of
evidencing the authorization of any action by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to the Agreement, the
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 the Agreement
and the Opinion of Counsel referred to in Section 21.02(i)(1). The Trustee may,
but shall not be obligated to, enter into any such amendment that affects the
Trustee's own rights, duties or immunities under the Agreement or otherwise.
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(b) Notwithstanding anything to the contrary contained in
subsection 21.01(a) above, the provisions of the Agreement relating to (i) the
Spread Account, the Specified Spread Account Requirement, a Trigger Event or any
component definition of a Trigger Event and (ii) any additional sources of funds
which may be added to the Spread Account or uses of funds on deposit in the
Spread Account may be amended in any respect by the Seller, the Servicer, the
Trustee and the Certificate Insurer without the consent of, or notice to, the
Certificateholders.
SECTION 21.02. Protection of Title to Trust. (a) The Seller
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 interest of the
Certificateholders and the Trustee in the Receivables and in the proceeds
thereof. The Seller shall deliver (or cause to be delivered) to the Trustee and
the Certificate Insurer file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Trustee and Certificate Insurer at
least 20 days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements. Promptly upon such filing, the Seller or the Servicer,
as the case may be, shall deliver an Opinion of Counsel in form and substance
reasonably satisfactory to the Certificate Insurer, either (A) all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trust 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) no such action shall
be necessary to preserve and protect such interest.
(c) Each of the Seller and the Servicer shall have an
obligation to give the Trustee and Certificate Insurer 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 UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement, and shall promptly file any such
amendment or new financing statement. The Servicer shall at all times maintain
its principal executive office and each office from which it shall service
Receivables 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
and Payahead Account in respect of such Receivable.
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(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under the Agreement of the Receivables to the
Trustee, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly the interest of the Trust, in
such Receivable, and that such Receivable is owned by the Trust. Indication of
the Trust's ownership of a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, such Receivable shall have been
paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
automotive receivables to, any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or print-outs (including any restored
from back-up 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 Trustee.
(g) The Servicer shall permit the Trustee and the Certificate
Insurer and their respective agents at any time during normal business hours to
inspect, audit and make copies of and abstracts from the Servicer's records
regarding any Receivable or any other portion of the Trust Property. The
preceding sentence shall not create any duty or obligation on the part of the
Trustee to perform any such acts.
(h) Upon request, the Servicer shall furnish to the Trustee or
the Certificate Insurer, within five Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of Receivables and
to each of the Servicer's Certificates furnished before such request indicating
removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee and the
Certificate Insurer:
(1) promptly after the execution and delivery of the Agreement
and, if required pursuant to Section 21.01, of each amendment, an Opinion of
Counsel stating that, in the opinion of such Counsel, in form and substance
reasonably satisfactory to the Certificate Insurer, either (A) all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trust 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) no such action shall
be necessary to preserve and protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months after
the Cutoff Date, an Opinion of Counsel, dated as of a date during such 90-day
period, stating that, in the opinion of such counsel, either (A) all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trust 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) no such action shall
be necessary to preserve and protect such interest.
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Each Opinion of Counsel referred to in clause (l) or (2) above shall specify any
action necessary (as of the date of such opinion) to be taken in the following
year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable
law, cause the Certificates to be registered with the Securities and Exchange
Commission pursuant to Section 12(b) or Section 12(g) of the Securities Exchange
Act of 1934 within the time periods specified in such sections.
SECTION 21.03. Separate Counterparts. The 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 21.04. Limitation on Rights of Certificateholders. (a)
The death or incapacity of any Certificateholder shall not operate to terminate
the Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties to
the Agreement or any of them.
(b) No Certificateholder shall have any right to vote (except
as provided in Section 21.01 or 18.05) or in any manner otherwise control the
operation and management of the Trust or the obligations of the parties to the
Agreement; nor shall any provision in the Agreement or contained in the
Certificates be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken pursuant to any provision of the Agreement.
(c) No Certificateholder shall have any right to institute any
suit, action or proceeding in equity or at law upon or under or with respect to
the Agreement, unless: (i) such Holder previously shall have given to the
Trustee written notice of a continuing Servicer Default; (ii) the Holders of
Certificates evidencing not less than 25% of the Certificate Balance shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee under the Agreement and shall have offered
to the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby; (iii) the Trustee,
for 60 days after its receipt of such notice, request and offer of indemnity
shall have neglected or refused to institute any such action, suit or
proceeding; and (iv) during such 60-day period no request or waiver inconsistent
with such written request shall have been given to the Trustee by Holders
representing a majority of the Certificate Balance. It is understood and
intended that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue of, or by availing of, any provisions of the Agreement
to affect, disturb or prejudice the rights of any other Holders of Certificates,
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or to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under the Agreement, except in the manner
provided in the Agreement. Nothing in this Agreement shall be construed as
giving the Holders any right to make a claim under the Policy.
SECTION 21.05. Governing Law. THE AGREEMENT 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 UNDER THE AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 21.06. Notices. All demands, notices and
communications upon or to the Seller, the Servicer, the Trustee or the Rating
Agencies under the 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 the Seller, to Franklin Receivables
LLC _____________________, Attention of ___________, (b) in the case of the
Servicer, to ___________________________; (c) in the case of the Trustee or
Collateral Agent, at the Corporate Trust Office; (d) in the case of the
Certificate Insurer, to _____________________, _______________________;
Attention: _____________ (in each case in which notice or other communication to
the Certificate Insurer refers to a Servicer Default, a claim on the Policy, a
Deficiency Notice pursuant to Section 14.04 of this Agreement or with respect to
which failure on the part of the Certificate Insurer to respond shall be deemed
to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of each of the General
Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED"); (e) in the
case of Moody's, to Xxxxx'x Investors Service, Inc., ABS Monitoring Department,
00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and (f) in the case of Standard &
Poor's, to Standard & Poor's Ratings Group, 00 Xxxxxxxx - 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Asset Backed Surveillance Department. Any notice
required or permitted to be mailed 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 the
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder shall receive such notice.
SECTION 21.07. Severability of Provisions. Any provision of
the 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 of the Agreement,
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 21.08. Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 16.04 and 17.03 and as
provided in the provisions of the Agreement concerning the resignation of the
Servicer, the Agreement may not be assigned by the Seller or the Servicer
without the prior written consent of the Trustee and the Certificate Insurer (or
if an Insurer Default shall have occurred and be continuing the Holders of
Certificates evidencing not less than 66% of the Certificate Balance).
72
SECTION 21.09. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever.
SECTION 21.10. Third-Party Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. No other Person shall have any
right or obligation hereunder. The Certificate Insurer and its successors and
assigns shall be a third-party beneficiary to the provisions of this Agreement,
and shall be entitled to rely upon and directly enforce such provisions of this
Agreement so long as no Insurer Default shall have occurred and be continuing.
Except as expressly stated otherwise herein, any right of the Certificate
Insurer to direct, appoint, consent to, approve of, or take any action under
this Agreement, shall be a right exercised by the Certificate Insurer in its
sole and absolute discretion. The Certificate Insurer may disclaim any of its
rights and powers under this Agreement (but not its duties and obligations under
the Policy) upon delivery of a written notice to the Trustee.
SECTION 21.11. 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 21.12. Nonpetition Covenants. (a) Notwithstanding any
prior termination of this Agreement, the Servicer and the Seller shall not,
prior to the date that is one year and one day after the termination of the
Agreement with respect to the Trust, acquiesce to, petition or otherwise invoke
or cause the Trust to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Trust 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 Trust or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust.
(b) Notwithstanding any prior termination of the Agreement,
the Servicer shall not, prior to the date that is one year and one day after the
termination of the Agreement with respect to the Seller, acquiesce to, petition
or otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller under any federal or state bankruptcy, insolvency or similar law,
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator,
or other similar official of the Seller or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Seller.
SECTION 21.13. Financial Security as Controlling Party. Each
Certificateholder by purchase of the Certificates held by it acknowledges that
the Trustee on behalf of the Trust, as partial consideration of the issuance of
the Policy, has agreed that the Certificate Insurer shall have certain rights
73
hereunder for so long as no Insurer Default shall have occurred and be
continuing. So long as an Insurer Default has occurred and is continuing, any
provision giving the Certificate Insurer the right to direct, appoint or consent
to, approve of, or take any action under this Agreement shall be inoperative
during the period of such Insurer Default and such right shall instead vest in
the Trustee acting at the direction of the Holders of Certificates. The
Certificate Insurer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Policy) upon delivery of
a written notice to the Trustee. The Certificate Insurer may give or withhold
any consent hereunder in its reasonable discretion.
74
EXHIBIT A
FORM OF CERTIFICATE
UNLESS THIS CERTIFICATE 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 CERTIFICATE 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.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS
CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ON THE FACE HEREOF.
NUMBER $ CUSIP NO.
R-
FRANKLIN AUTO GRANTOR TRUST 199_-_
____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of priime, non-prime and sub-prime retail
installment sale contracts secured by new and used automobiles and light trucks.
(This Certificate does not represent an interest in or obligation of the
Representative, Franklin Receivables LLC or any of their respective affiliates,
except to the extent described below.)
THIS CERTIFIES THAT _________________________________________
is the registered owner of _______________________________________ DOLLARS
nonassessable, fully-paid, fractional undivided interest in Franklin Auto Trust
199_-_ (the "Trust") formed pursuant to the Pooling and Servicing Agreement (the
"Agreement") dated as of ___________, among Franklin Receivables LLC, a Delaware
limited liability company, as seller (the "Seller"), the Franklin Capital
Corporation, a Delaware corporation, as servicer (the "Servicer"), and as
representative (the "Representative") and _________
____________________________, a _______________________, as Trustee and
Collateral Agent, 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 the Agreement.
This Certificate is one of a duly authorized series of
Certificates, designated as the ___% Asset Backed Certificates (herein called
the "Certificates"), all issued under the Agreement, to which Agreement
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Representative, the Seller, the Servicer, the
Trustee and Collateral Agent, and Holders of the Certificates. The Certificates
are subject to all terms of the Agreement.
The property of the Trust includes a pool of non-prime retail
installment sale contracts secured by new and used automobiles, vans and light
duty trucks (collectively, the "Receivables"), all monies received under such
Receivables after the related Cutoff Date (and, in the case of Precomputed
Receivables, all monies received on or prior to the Cutoff Date that relate to
Scheduled Payments after the Cutoff Date, security interests in the vehicles
financed thereby, certain bank accounts and the proceeds thereof, a financial
guaranty insurance policy (the "Policy") issued by _____________________ (the
"Certificate Insurer"), certain rights against the Representative in the event
of breaches of representations or warranties with respect to the Receivables,
proceeds from claims on certain insurance policies and all proceeds of the
foregoing.
Under the Agreement, there will be distributed on the __th day
of each month or, if such __th day is not a Business Day, the next Business Day
(each, a "Distribution Date"), commencing on _____________, to the Person in
whose name this Certificate is registered at the close of business on the day
immediately preceding such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date.
Full and complete payment of the Guaranteed Distribution on
each Distribution Date is unconditionally and irrevocably guaranteed pursuant to
the Policy.
It is the intent of the Seller and the Certificateholders
that, for purposes of federal income, state and local income and single business
tax and any other income taxes, the Trust will be treated as a grantor trust and
the Certificates will be treated as interests in a grantor trust. The
Representative, the Seller, the Servicer, the Trustee and the Collateral Agent,
and 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 interests in a grantor trust.
Distributions on this Certificate will be made as provided in
the Agreement by the Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Certificate or the making of any notation hereon, except
that with respect to Certificates registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in the city of
__________,____________.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual signature, this
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
THIS TRUST CERTIFICATE 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.
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Certificate to be duly executed.
Date: FRANKLIN AUTO TRUST 199_-_
By: ______________________________,
not in its individual capacity
but solely as Trustee
By: ______________________________
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Agreement.
Date: __________________________________ as Trustee
By: ______________________________ Authorized Signatory
(REVERSE OF CERTIFICATE)
The Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Trustee, and the Collateral Agent or
any affiliates of any of them, and no recourse may be had against such parties
or their assets except as expressly set forth or contemplated herein or in the
Agreement. In addition, this Certificate is limited in right of payment to
certain collections and recoveries with respect to the Receivables (and certain
other amounts) and claims made under the Policy, all as more specifically set
forth herein and in the Agreement. A copy of the Agreement may be examined by
any Certificateholder upon written request during normal business hours at the
principal office of the Seller and at such other places, if any, designated by
the Seller.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller, the Servicer and the Trustee and the rights of the
Certificateholders at any time by the Seller, the Servicer and the Trustee with
the consent of the Certificate Insurer and the Holders of Certificates
evidencing not less than a majority of the Certificate Balance. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such Holder
and on all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registerable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Trustee in the Borough of Manhattan, The City of New York, accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Agreement is _________________________.
Except as provided in the Agreement, the Certificates are
issuable only as registered certificates without coupons in a minimum
denomination of $1,000. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee or the Certificate Registrar may require payment of a sum sufficient to
cover any tax or governmental charge payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the
Trustee or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Trustee, the Certificate Registrar or any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held by the Trust. The Servicer of
the Receivables may at its option purchase the Trust property at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates; however,
such right of purchase is exercisable only as of the last day of any Monthly
Period as of which the Pool Balance is less than or equal to 10% of the Original
Pool Balance.
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 within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing ____________________________ 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 as it
appears upon 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.
EXHIBIT D
FORM OF SERVICER'S CERTIFICATE
TMS AUTO RECEIVABLES TRUST 199_-_
___% Asset Backed Certificates.
Distribution Date:
Monthly Period:
Under the Pooling and Servicing Agreement dated as of
___________ by and among Franklin Receivables LLC, as Seller, Franklin Capital
Corporation, as Representative ans Servicer and _________
____________________________, as Trustee and Collateral Agent, the Servicer is
required to prepare certain information each month regarding current
distributions to Certificateholders and the performance of the Trust during the
previous month. The information that is required to be prepared with respect to
the Distribution Date and Monthly Period listed above is set forth below.
Certain of the information is presented on the basis of an original principal
amount of $1,000 per Certificate, and certain other information is presented
based upon the aggregate amounts for the Trust as a whole.
A. Information Regarding the Current Monthly Distribution.
1. Certificates.
(a) The aggregate amount of the distribution to Certificateholders........ $________
(b) The amount of the distribution set forth in paragraph A.1.(a) above in $________
respect of interest....................................................
(c) The amount of the distribution set forth in paragraph A.1.(a) above in $________
respect of principal...................................................
(d) The amount of the distribution set forth in paragraph A.1.(a) above per $________
$1,000 interest .......................................................
(e) The amount of the distribution set forth in paragraph A.1.(b) above per $________
$1,000 interest........................................................
(f) The amount of the distribution set forth in paragraph A.1.(c) above per $________
$1,000 interest........................................................
B. Information Regarding the Performance of the Trust.
1. Pool Balance and Certificate Balances.
(a) The Pool Balance close of business on the last day of the preceding $_____
Monthly Period.........................................................
(b) The Certificate Balance as of the close of business on the last day of $_____
the preceding Monthly Period, after giving effect to payments
allocated to principal set forth in Paragraph A.1(c) above.............
(c) The Certificate as of the close of business on the last day of the $_____
preceding Monthly Period...............................................
The change in the Principal Carryover Shortfall from the previous
(d) Distribution Date...................................................... $_____
The change in the Interest Carryover Shortfall from the previous
Distribution Date......................................................
(e) $_____
The amount of aggregate Realized Losses for the second preceding
Monthly
Period.................................................................
(f) $_____
2. Servicing Fee.
(a) The aggregate amount of the Servicing Fee paid to the Servicer with $_____
respect to the preceding Monthly Period...............................
(b) The amount of such Servicing Fee per $1,000 interest.................. $_____
(c) The amount of any unpaid Servicing Fee................................. $_____
(d) The change in the amount of any unpaid Servicing Fee from the $_____
previous Distribution Date............................................
3. Payment Shortfalls.
(a) The amount of the Interest Carryover Shortfall after giving effect to the
payments set forth in paragraph A.1(b) above.............................................$_____
(b) The amount of the Principal Carryover Shortfall after giving effect to the
payment set forth in paragraph A.1(c) above..............................................$_____
4. Payahead Account.
(a) The aggregate Payahead Balance......................................... $_____
(b) The change in the Payahead Balance from the previous Distribution Date $_____
5. Spread Account.
(a) The amount of such distribution payable out of amounts withdrawn from $_____
the Spread Account.....................................................
(b) The Spread Account balance after giving effect to distributions made $_____
on such Distribution Date..............................................
6. Purchase Amounts.
(a) The aggregate Purchase Amounts for Receivables, that were purchased $____
from the previous Distribution Date....................................
7. The Policy.
(a) The amount of such distribution payable for the Policy................. $____
EXHIBIT E-1
FORM OF TRUSTEE' CERTIFICATE - ASSIGNMENT TO SELLER
Trustee's Certificate pursuant to Section 19.14 of the Pooling
and Servicing Agreement.
_________ ____________________________, as trustee (the
"Trustee") of Franklin Auto Trust 199_-_, created pursuant to the Pooling and
Servicing Agreement, dated as of ___________ (including the Standard Terms and
Conditions of Agreement incorporated by reference therein, the "Pooling and
Servicing Agreement"), among Franklin Receivables LLC (the "Seller"), Franklin
Capital Corporation (the "Representative" and the "Servicer") and the Trustee,
does hereby sell, transfer, assign and otherwise convey to the Seller, without
recourse, representation or warranty, all of the Trustee's right, title and
interest in and to all of the Receivables (as defined in the Pooling and
Servicing Agreement) identified in the attached Servicer's Certificate as
"Purchased Receivables," which are to be repurchased by the Seller pursuant to
Section 12.03 of the Pooling and Servicing Agreement, and all security and
documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this _______
day of ______________________, 199___.
-------------------------------
EXHIBIT E-2
FORM OF TRUSTEE' CERTIFICATE - ASSIGNMENT TO SERVICER
Trustee's Certificate pursuant to Section 19.14 of the pooling
and Servicing Agreement.
_________ ____________________________, as trustee (the
"Trustee") of Franklin Auto Trust 199_-_, created pursuant to the Pooling and
Servicing Agreement, dated as of ___________ (including the Standard Terms and
Conditions of Agreement incorporated by reference therein, the "Pooling and
Servicing Agreement among Franklin Receivables LLC (the "Seller"), Franklin
Capital Corporation (the "Representative" and the "Servicer") and the Trustee,
does hereby sell, transfer, assign and otherwise convey to the Servicer, without
recourse, representation or warranty, all of the Trustee's right, title and
interest in and to all of the Receivables (as defined in the Pooling and
Servicing Agreement) identified in the attached Servicer's Certificate as
"Purchased Receivables," which are to be purchased by the Servicer pursuant to
Section 13.07 or Section 20.02 of the Pooling and Servicing Agreement, and all
security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this _______
day of ______________________, 199___.
----------------------------
EXHIBIT F
FORM OF RECEIVABLE STAMP LANGUAGE
THIS CONTRACT/NOTE IS SUBJECT TO A SECURITY INTEREST
GRANTED TO ______________, AS TRUSTEE, FOR WHICH
UCC-1 FINANCING STATEMENTS HAVE BEEN FILED WITH THE
SECRETARY OF STATE OF CALIFORNIA. AS THE LIEN WILL BE
RELEASED ONLY BY FILINGS IN SUCH OFFICES, PURCHASE
DOCUMENT MUST REFER TO SUCH FILINGS TO DETERMINE
WHETHER THE LIEN HAS BEEN RELEASED.
