Exhibit 4.1
Execution Copy
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FRANKLIN AUTO TRUST 2001-2
AMENDED AND RESTATED TRUST AGREEMENT
between
FRANKLIN RECEIVABLES LLC
and
BANKERS TRUST (DELAWARE)
Owner Trustee
Dated as of December 1, 2001
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Table of Contents
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Page
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ARTICLE I
Definitions
SECTION 1.1 Capitalized Terms...........................................................................1
SECTION 1.2 Other Definitional Provisions...............................................................3
ARTICLE II
Organization
SECTION 2.1 Name........................................................................................4
SECTION 2.2 Office......................................................................................4
SECTION 2.3 Purposes and Powers.........................................................................4
SECTION 2.4 Appointment of Owner Trustee................................................................5
SECTION 2.5 Initial Capital Contribution of Trust Estate................................................5
SECTION 2.6 Declaration of Trust........................................................................6
SECTION 2.7 Liability of the Seller.....................................................................6
SECTION 2.8 Title to Trust Property.....................................................................6
SECTION 2.9 Situs of Trust..............................................................................6
SECTION 2.10 Representations and Warranties of the Seller................................................7
SECTION 2.11 [Reserved]..................................................................................8
SECTION 2.12 Covenants of the Certificateholders.........................................................8
SECTION 2.13 Federal Income Tax Allocations..............................................................9
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership..........................................................................10
SECTION 3.2 The Trust Certificates.....................................................................10
SECTION 3.3 Authentication of Trust Certificates.......................................................10
SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates................................10
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SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates....................................11
SECTION 3.6 Persons Deemed Certificateholders..........................................................12
SECTION 3.7 Access to List of Certificateholders' Names and Addresses..................................12
SECTION 3.8 Maintenance of Office or Agency............................................................12
SECTION 3.9 Appointment of Paying Agent................................................................13
SECTION 3.10 [Reserved].................................................................................13
SECTION 3.11 [Reserved].................................................................................13
SECTION 3.12 [Reserved].................................................................................13
SECTION 3.13 [Reserved].................................................................................13
SECTION 3.14 [Reserved].................................................................................14
SECTION 3.15 [Reserved].................................................................................14
SECTION 3.16 [Reserved].................................................................................14
SECTION 3.17 Trust Certificate Transfer Restrictions....................................................14
ARTICLE IV
Actions by Owner Trustee
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain Matters.........................16
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters...............................17
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy....................................18
SECTION 4.4 Restrictions on Certificateholders' Power..................................................18
SECTION 4.5 Majority Control...........................................................................18
SECTION 4.6 Rights of Security Insurer.................................................................18
SECTION 4.7 Execution of Documents.....................................................................18
ARTICLE V
Application of Trust Funds: Certain Duties
SECTION 5.1 Establishment of Certificate Distribution Account..........................................19
SECTION 5.2 Application of Funds in Certificate Distribution Account...................................20
SECTION 5.3 [Reserved].................................................................................20
SECTION 5.4 Method of Payment..........................................................................20
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SECTION 5.5 No Segregation of Monies; No Interest......................................................21
SECTION 5.6 Accounting and Reports to the Noteholders, Certificateholders, the Internal Revenue Service
and Others.................................................................................21
SECTION 5.7 Signature on Returns; Tax Matters Partner..................................................21
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority..........................................................................22
SECTION 6.2 General Duties.............................................................................22
SECTION 6.3 Action upon Instruction....................................................................22
SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions.........................23
SECTION 6.5 No Action Except under Specified Documents or Instructions.................................24
SECTION 6.6 Restrictions...............................................................................24
SECTION 6.7 Notice of Default Under Indenture..........................................................24
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trusts and Duties............................................................24
SECTION 7.2 Furnishing of Documents....................................................................26
SECTION 7.3 Representations and Warranties.............................................................26
SECTION 7.4 Reliance; Advice of Counsel................................................................26
SECTION 7.5 Not Acting in Individual Capacity..........................................................27
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Receivables.............................27
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes.........................................28
SECTION 7.8 Payments from Owner Trust Estate...........................................................28
SECTION 7.9 Doing Business in Other Jurisdictions......................................................28
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ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses..........................................................28
SECTION 8.2 Indemnification............................................................................29
SECTION 8.3 Payments to the Owner Trustee..............................................................29
SECTION 8.4 Non-recourse Obligations...................................................................29
ARTICLE IX
Dissolution and Termination of Trust
SECTION 9.1 Termination of Trust Agreement.............................................................30
SECTION 9.2 [Reserved].................................................................................31
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee.................................................31
SECTION 10.2 Resignation or Removal of Owner Trustee....................................................31
SECTION 10.3 Successor Owner Trustee....................................................................32
SECTION 10.4 Merger or Consolidation of Owner Trustee...................................................33
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee..............................................33
ARTICLE XI
Miscellaneous
SECTION 11.1 Supplements and Amendments.................................................................34
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders.................................36
SECTION 11.3 Limitations on Rights of Others............................................................36
SECTION 11.4 Notices....................................................................................36
SECTION 11.5 Severability...............................................................................37
SECTION 11.6 Separate Counterparts......................................................................37
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SECTION 11.7 Successors and Assigns.....................................................................37
SECTION 11.8 [Reserved].................................................................................37
SECTION 11.9 No Petition................................................................................37
SECTION 11.10 No Recourse................................................................................38
SECTION 11.11 Headings...................................................................................38
SECTION 11.12 GOVERNING LAW..............................................................................38
SECTION 11.13 [Reserved].................................................................................38
SECTION 11.14 Servicer...................................................................................38
SECTION 11.15 Third Party Beneficiary....................................................................38
EXHIBITS
EXHIBIT A FORM OF TRUST CERTIFICATE
EXHIBIT B FORM OF CERTIFICATE OF TRUST
AMENDED AND RESTATED TRUST AGREEMENT dated as of December 1, 2001
between FRANKLIN RECEIVABLES LLC, as seller, and BANKERS TRUST (DELAWARE), as
Owner Trustee to TRUST AGREEMENT dated as of November 30, 2001 between FRANKLIN
RECEIVABLES LLC, as seller, and BANKERS TRUST (DELAWARE), as Owner Trustee.
ARTICLE I
Definitions
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SECTION 1.1 Capitalized Terms. For all purposes of this Agreement,
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the following terms shall have the meanings set forth below
"Agreement" shall mean this Trust Agreement, as the same may be
amended and supplemented from time to time.
"Basic Documents" shall mean this Agreement, the Sale and Servicing
Agreement, the Indenture, the Purchase Agreement, the Spread Account Agreement,
the Insurance Agreement, the Indemnification Agreement, the Note Depository
Agreement and the other documents and certificates delivered in connection
therewith.
"Benefit Plan" shall have the meaning assigned to such term in
Section 3.17.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code (S) 3801 et seq., as the same may be amended from
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time to time.
"Certificate" means a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A attached hereto.
"Certificate Distribution Account" shall have the meaning assigned
to such term in Section 5.1.
"Certificate of Trust" shall mean the Certificate of Trust in the
form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Paying Agent" shall mean any paying agent or co-paying
agent appointed pursuant to Section 3.9.
"Certificateholder" or "Holder" shall mean the Person in whose name
a Trust Certificate is registered on the Certificate Register.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
E.A. Delle Donne Corporate Center Xxxxxxxxxx Building, 0000 Xxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, XX 00000-0000, with a copy of all notices and other documents
to be also furnished to Bankers Trust Company 0 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust and Agency Group, Structured
Finance, or at such other address as the Owner Trustee may designate by notice
to the Certificateholders and the Seller, or the principal corporate trust
office of any successor Owner Trustee (the address of which the successor owner
trustee will notify the Certificateholders and the Seller).
"Delaware Trustee" shall have the meaning assigned to such term in
Section 10.1.
"ERISA" shall have the meaning assigned to such term in Section
3.17.
"Expenses" shall have the meaning assigned to such term in Section
8.2.
"Holder" or "Certificateholder" shall mean the Person in whose name
a Trust Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such term
in Section 8.2.
"Indenture" shall mean the Indenture between the Trust, as issuer,
and The Bank of New York, as trustee and indenture collateral agent, dated as of
December 1, 2001, as the same may be amended and supplemented from time to time.
"Owner Trust Estate" shall mean all right, title and interest of
the Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and all other property of the Trust from time to
time, including any rights of the Owner Trustee and the Trust pursuant to the
Sale and Servicing Agreement.
"Owner Trustee" shall mean Bankers Trust (Delaware), a Delaware
banking corporation not in its individual capacity but solely as owner trustee
under this Agreement, and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9.
"Percentage Interest" shall mean with respect to any Trust
Certificate, the percentage interest of ownership in the Trust represented
thereby as set forth on the face thereof.
"Record Date" shall mean, with respect to any Distribution Date,
the close of business on the last day of the calendar month preceding such
Distribution Date.
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"Responsible Officer" shall mean, when used with respect to the
Owner Trustee, any officer assigned to the Corporate Trust Office of the Owner
Trustee, including any Vice President, any Assistant Vice President, any
Assistant Treasurer, any Managing Director, any trust officer or any other
officer of the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers or any agent acting under a
power of attorney from the Owner Trustee, having responsibility for the
administration of this Trust Agreement, as the case may be, and also, with
respect to a particular matter relating to the Trust, any other officer of the
Owner Trustee to whom such matter is referred because of such officer's
knowledge of and familiarity with such matter. Any notice given to the address
and in the manner specified in Section 11.4 hereof shall be deemed to be given
to a Responsible Officer.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, Franklin Receivables LLC, as seller, Franklin
Resources, Inc., as representative, and Franklin Capital Corporation, as
servicer, dated as of December 1, 2001, as the same may be amended and
supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State
of Delaware.
"Security Insurer" shall mean MBIA Insurance Corporation, or its
successor in interest.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall mean Franklin Receivables LLC as the Seller of the
Receivables and each successor to Franklin Receivables LLC (in the same
capacity), to the extent permitted hereunder.
"Seller Indemnification Cap" shall have the meaning assigned to
such term in Section 8.2.
"Treasury Regulations" shall mean regulations, including proposed
or temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" shall mean a Certificate.
SECTION 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture.
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(b) All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto, accounting terms
not defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles as in effect on the
date of this Agreement or any such certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall
control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
ARTICLE II
Organization
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SECTION 2.1 Name. The Trust created hereby shall be known as
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"Franklin Auto Trust 2001-2" in which name the Owner Trustee may engage in the
transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Trust and xxx and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care of the
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Owner Trustee at the Corporate Trust Office, or at the office of the Delaware
Trustee, if one exists, or at such other address as the Owner Trustee may
designate by written notice to the Certificateholders, the Security Insurer and
the Seller.
SECTION 2.3 Purposes and Powers. (a) The purpose of the Trust is,
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and the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture
and the Trust Certificates pursuant to this Agreement, and to sell
the Notes and the Certificates;
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(ii) with the proceeds of the sale of the Notes, to pay
the organizational, start-up and transactional expenses of the
Trust and to pay the balance to the Seller pursuant to the Sale and
Servicing Agreement;
(iii) to acquire, receive and accept from time to time the
Owner Trust Estate, to assign, grant, transfer, pledge, mortgage
and convey the Owner Trust Estate (other than the Certificate
Distribution Account) to the Indenture Collateral Agent pursuant to
the Indenture for the benefit of the Security Insurer and the
Trustee on behalf of the Noteholders and to hold, manage and
distribute to the Certificateholders pursuant to the terms of the
Sale and Servicing Agreement any portion of the Owner Trust Estate
released from the Lien of, and remitted to the Trust pursuant to,
the Indenture;
(iv) to enter into and perform its obligations under the
Basic Documents to which it is a party;
(v) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vi) subject to compliance with the Basic Documents to
which the Trust is a party, to engage in such other activities as
may be required in connection with conservation of the Owner Trust
Estate and the making of distributions to the Certificateholders
and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4 Appointment of Owner Trustee. The Seller hereby
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appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate. The
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Seller hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $200. The Owner Trustee hereby
acknowledges receipt in trust from the Seller, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Seller shall
pay organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
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that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for
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the use and benefit of the Certificateholders, subject to the obligations of the
Trust under the Basic Documents to which the Trust is a party. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Business Trust Statute and that this Agreement constitute the governing
instrument of such business trust. It is the intention of the parties hereto
that, solely for federal income tax purposes and, to the extent permitted by
law, for purposes of applicable state income or franchise tax, the Trust shall
be disregarded as an entity apart from its owner, the Seller, in the event that
the Seller is the sole Certificateholder for federal income tax purposes, or
treated as a partnership if there is more than one Certificateholder for federal
income tax purposes. The parties agree that, unless otherwise required by
appropriate tax authorities, the Trust will file or cause to be filed annual or
other necessary returns, reports and other forms consistent with the
characterization of the Trust as a division of the Seller, or as a partnership,
as the case may be, for such tax purposes. Effective as of the date hereof, the
Owner Trustee shall have all rights, powers and duties set forth herein and to
the extent not inconsistent herewith, in the Business Trust Statute with respect
to accomplishing the purposes of the Trust. The Owner Trustee shall file the
Certificate of Trust with the Secretary of State.
SECTION 2.7 Liability of the Seller. (a) The Seller shall pay
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organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
(b) No Holder, other than to the extent set forth in clause
(a), shall have any personal liability for any liability or obligation of the
Trust.
SECTION 2.8 Title to Trust Property. (a) Legal title to all the
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Owner Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to
any part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided Percentage Interest
therein only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title or interest by any Certificateholder of
its ownership interest in the Owner Trust Estate shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Owner Trust Estate.
SECTION 2.9 Situs of Trust. The Trust will be located in the
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State of Delaware. All bank accounts maintained by the Owner Trustee on behalf
of the Trust shall be located in the State of Delaware or the State of New York.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York. The Trust
shall not have any employees in any state other than Delaware; provided,
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however, that nothing herein shall restrict or prohibit the Owner Trustee, in
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its individual capacity, the Servicer or any agent of the Trust from having
employees within or without the
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State of Delaware. The only office of the Trust will be at the Corporate Trust
Office in Delaware.
SECTION 2.10 Representations and Warranties of the Seller. The
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Seller hereby represents and warrants to the Owner Trustee that:
(a) Organization and Good Standing. The Seller is duly
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organized and validly existing as a Delaware limited liability company with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(b) Due Qualification. The Seller is duly qualified to do
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business as a limited liability company in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of its property, the conduct of its
business and the performance of its obligations under this Agreement
and the Basic Documents requires such qualification.
(c) Power and Authority. The Seller has the power and
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authority to execute and deliver this 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 Trust and
the Seller has duly authorized such sale and assignment and deposit to
the Trust by all necessary action; and the execution, delivery and
performance of this Agreement has been duly authorized by the Seller
by all necessary action.
(d) No Violation. The consummation of the transactions
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contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time)
a default under, the certificate of formation or limited liability
company agreement of the Seller, or any material 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 Basic
Documents); 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.
(e) No Consent Required. No consent, license, approval or
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authorization or registration or declaration with, any Person or with
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement and the
Basic Documents, except for such as have been obtained, effected or
made.
(f) No Proceedings. There are no proceedings or
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investigations pending or, to its knowledge threatened against it
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having
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jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the
issuance of the Certificates or the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic Documents,
(C) seeking any determination or ruling that might materially and adversely
affect its performance of its obligations under, or the validity or
enforceability of, this Agreement or any of the Basic Documents, or (D)
seeking to adversely affect the federal income tax or other federal, state
or local tax attributes of the Certificates.
SECTION 2.11 [Reserved]
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SECTION 2.12 Covenants of the Certificateholders. Each
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Certificateholder by becoming a holder of a Certificate agrees:
(a) to be bound by the terms and conditions of the Certificates
of which such Certificateholder is the beneficial owner and of this Agreement,
including any supplements or amendments hereto and to perform the obligations of
a Certificateholder as set forth therein or herein, in all respects as if it
were a signatory hereto. This undertaking is made for the benefit of the Trust,
the Owner Trustee, the Security Insurer and all other Certificateholders present
and future;
(b) to hereby appoint the Seller so long as it is a
Certificateholder as such Certificateholder's agent and attorney-in-fact to sign
any federal income tax information return filed on behalf of the Trust and agree
that, if requested by the Trust, it will sign such federal income tax
information return in its capacity as holder of an interest in the Trust. Each
Certificateholder also hereby agrees that in its tax returns it will not take
any position inconsistent with those taken in any tax returns filed by the
Trust;
(c) if such Certificateholder is other than an individual or
other entity holding its Certificate through a broker who reports securities
sales on Form 1099-B, to notify the Owner Trustee in writing of any transfer by
it of a Certificate in a taxable sale or exchange, within 30 days of the date of
the transfer; and
(d) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for the Trust to be
adjudicated as bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Trust or a substantial part of its property, or cause or permit
the Trust to make any assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
SECTION 2.13 Federal Income Tax Matters.
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(a) Treatment of Notes as Indebtedness. The Seller, the Owner
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Trustee and the Certificateholder intend and agree to treat, and to take no
action inconsistent with the treatment of, the Notes as indebtedness for federal
income tax purposes and for purposes of applicable state or local income taxes,
franchise taxes, and any other taxes imposed upon or measured by net income.
(b) Allocations. Net income of the Trust for any month as
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determined for Federal income tax purposes (and each item of income, gain, loss,
credit and deduction entering into the computation thereof) shall be allocated:
(i) for so long as all of the Trust Certificates
are owned by the Seller, the Trust shall be disregarded as an entity
separate from the Seller such that net income of the Trust for any
month as determined solely for federal income tax purposes (and each
item of income, gain, loss, credit and deduction entering into the
computation thereof) shall be allocated to the Seller and treated in
the same manner as if the Trust were a division or branch of the
Seller; and
(ii) in the event that the Seller transfers (as
such term is defined for federal income tax purposes) any Trust
Certificates and there is more than one owner of Trust Certificates
for federal income tax purposes, net income of the Trust for any month
as determined solely for federal income tax purposes (and each item of
income, gain, loss, credit and deduction entering into the computation
thereof) shall be allocated pro rata to the Certificateholders based
on their Percentage Interests.
(c) Tax Treatment. Notwithstanding the above, if any Class of
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Notes is deemed for federal income tax purposes (or for purposes of any state,
local, or other income tax, franchise tax or other tax imposed upon or measured
by net income) to represent an equity interest in the Issuer, it is the intent
and agreement of the parties hereto that the Issuer shall, to the extent
permitted by law, be treated for purposes of any such tax which treats Notes in
such manner as a partnership among the affected Class of Noteholders and the
Certificateholder. In the event such a partnership is deemed to exist, the net
income of the Issuer for any month as determined for federal income tax purposes
(and each item of income, gain, loss and deduction entering into the computation
thereof) shall be allocated in such manner as to cause to the greatest extent
possible the Certificateholder and each Noteholder to recognize net taxable
income or loss at such time, and in such amounts, as each such person would have
recognized such income or loss if such Notes had not been recharacterized as an
equity interest in the Issuer.
ARTICLE III
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Trust Certificates and Transfer of Interests
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SECTION 3.1 Initial Ownership. Upon the formation of the Trust by
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the contribution by the Seller pursuant to Section 2.5 and until the issuance of
the Trust Certificates, the Seller shall be the sole beneficiary of the Trust.
SECTION 3.2 The Trust Certificates. The Trust Certificates shall
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be initially issued to the Seller as a single Certificate in a Percentage
Interest of 100%. The Trust Certificate shall be divisible into denominations of
a single class representing minimum Percentage Interests of not less than 5%.
The Trust Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of an authorized officer of the Owner Trustee, and the Owner
Trustee shall have the power and authority and it is hereby authorized and
empowered, in the name and on behalf of the Trust to authorize, execute, issue
and deliver the Trust Certificates. Trust 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 this Agreement, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the authentication and delivery of such Trust Certificates or did not hold
such offices at the date of authentication and delivery of such Trust
Certificates. A transferee of a Trust Certificate shall become a
Certificateholder, and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder, upon due registration of such
Trust Certificate in such transferee's name pursuant to Section 3.4.
SECTION 3.3 Authentication of Trust Certificates. Concurrently
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with the initial sale of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Trust Certificates in an
aggregate Percentage Interest equal to 100% 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 or any vice president,
without further corporate action by the Seller, in authorized denominations. No
Trust Certificate shall entitle its holder to any benefit under this Agreement,
or shall be valid for any purpose, unless there shall appear on such Trust
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A, executed by the Owner Trustee or Bankers Trust Company as the
Owner Trustee's authentication agent, by manual signature; such authentication
shall constitute conclusive evidence that such Trust Certificate shall have been
duly authenticated and delivered hereunder. All Trust Certificates shall be
dated the date of their authentication.
SECTION 3.4 Registration of Transfer and Exchange of Trust
----------------------------------------------
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
------------
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of the Trust Certificates and of
transfers and exchanges of the Trust Certificates as herein provided. Bankers
Trust Company shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust
Certificate at the office or agency maintained pursuant to Section 3.8, and,
upon satisfaction of the conditions set forth below, the Owner Trustee shall
execute, authenticate and deliver, (or shall cause Bankers Trust
10
Company as its authenticating agent to authenticate and deliver), in the name of
the designated transferee or transferees, one or more new Trust Certificates in
authorized denominations of a like Percentage Interest dated the date of
authentication by the Owner Trustee or any authenticating agent. At the option
of a Holder, the Trust Certificates may be exchanged for other Trust
Certificates of the same class in authorized denominations of a like Percentage
Interest upon surrender of the Trust Certificates to be exchanged at the office
or agency maintained pursuant to Section 3.8.
Every Trust Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Certificate Registrar, which requirements include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended. Each Trust
Certificate surrendered for registration of transfer or exchange shall be
canceled and subsequently disposed of by the Owner Trustee in accordance with
its customary practice. In addition, each such Certificateholder shall comply
with Section 2.12(c)
No service charge shall be made for any registration of transfer
or exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may, but shall not be obligated to, 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 Trust Certificates.
Notwithstanding the foregoing, the Owner Trustee need not make
and the Certificate Registrar need not register, transfers or exchanges of,
Trust Certificates for a period of 15 days preceding the due date for any
payment with respect to any Trust Certificates.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust
------------------------------------------
Certificates. If (a) any mutilated Trust 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 Trust Certificate and
(b) there shall be delivered to the Certificate Registrar, the Owner Trustee and
(unless an Insurer Default shall have occurred and be continuing) the Security
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 Trust Certificate shall
have been acquired by a protected purchaser, the Owner Trustee on behalf of the
Trust shall execute and the Owner Trustee or Bankers Trust Company, as the Owner
Trustee's authenticating agent, shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Trust Certificate, a
new Trust Certificate of like Percentage Interest. In connection with the
issuance of any new Trust Certificate under this Section, the Owner Trustee or
the Certificate Registrar may, but shall not be obligated to, require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Trust Certificate issued
pursuant to this Section shall constitute conclusive evidence of an ownership
interest in the Trust,
11
as if originally issued, whether or not the lost, stolen or destroyed
Trust Certificate shall be found at any time.
SECTION 3.6 Persons Deemed Certificateholders. Every person by
---------------------------------
virtue of becoming a Certificateholder in accordance with this Agreement shall
be deemed to be bound by the terms of this Agreement. Prior to due presentation
of a Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar and the Security Insurer and any agent of the Owner
Trustee, the Certificate Registrar and the Security Insurer, may treat the
Person in whose name any Trust Certificate shall be registered in the
Certificate Register as the Holder of such Trust Certificate for the purpose of
receiving distributions pursuant to Section 5.2 and for all other purposes
whatsoever, and none of the Seller, the Servicer, the Owner Trustee, the
Certificate Registrar or the Security Insurer nor any agent of the Owner
Trustee, the Certificate Registrar, or the Security Insurer shall be bound by
any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
---------
Servicer, the Seller or (unless an Insurer Default shall have occurred and be
continuing) the Security Insurer and the Representative within 15 days after
receipt by the Owner Trustee of a request therefore from the Servicer or the
Representative in writing, a list, in such form as the Servicer may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Holders of Trust Certificates or one or
more Holders of Trust Certificates evidencing not less than a Percentage
Interest of 25% apply in writing to the Owner Trustee, and such application
states that the applicants desire to communicate with other Certificateholders
with respect to their rights under this Agreement or under the Trust
Certificates and such application is accompanied by a copy of the communication
that such applicants propose to transmit, then the Owner Trustee shall, within
five Business Days after the receipt of such application, afford such applicants
access during normal business hours to the current list of Certificateholders.
Each Holder, by receiving and holding a Trust Certificate, shall be deemed to
have agreed not to hold any of the Seller, the Servicer, the Representative, the
Owner Trustee or the Security Insurer or any agent thereof accountable by reason
of the disclosure of its name and address, regardless of the source from which
such information was derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee
-------------------------------
shall maintain in the Borough of Manhattan, the City of New York, an office or
offices or agency or agencies where Trust Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Trust Certificates and the Basic Documents
may be served. The Owner Trustee initially designates Bankers Trust Company, 0
Xxxxxx Xxxxxx-00xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its principal corporate
trust office for such purposes. The Owner Trustee shall give prompt written
notice to the Seller, the Certificateholders and (unless an Insurer Default
shall have occurred and be continuing) the Security Insurer of any change in the
location of the Certificate Register or any such office or agency.
SECTION 3.9 Appointment of Paying Agent. The Paying Agent shall
---------------------------
make distributions to the Certificateholders from the Certificate Distribution
Account pursuant to
12
Section 5.2 and shall report the amounts of such distributions to the Owner
Trustee in writing, unless the Paying Agent is the Owner Trustee. Any Paying
Agent shall have the revocable power to withdraw funds from the Certificate
Distribution Account for the purpose of making the distributions referred to
above. The Owner Trustee may revoke such power and remove the Paying Agent if
the Owner Trustee determines in its sole discretion that the Paying Agent shall
have failed to perform its obligations under this Agreement in any material
respect. The Paying Agent shall initially be Bankers Trust Company and any
co-Paying Agent chosen by the Owner Trustee, and acceptable to the Servicer and
the Security Insurer. The Paying Agent shall be permitted to resign upon 30
days' written notice to the Owner Trustee and the Servicer. In the event that
the Owner Trustee shall no longer be the Paying Agent, the Owner Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4, 7.8, 8.1 and 8.2 shall apply to the Owner Trustee also
in its role as Paying Agent, for so long as the Owner Trustee shall act as
Paying Agent and, to the extent applicable, to any other Paying Agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include any
co-Paying Agent unless the context requires otherwise.
SECTION 3.10 [Reserved]
SECTION 3.11 [Reserved]
SECTION 3.12 [Reserved]
SECTION 3.13 [Reserved]
SECTION 3.14 [Reserved]
SECTION 3.15 [Reserved]
SECTION 3.16 [Reserved]
SECTION 3.17 Trust Certificate Transfer Restrictions. (a) The
---------------------------------------
Trust Certificates may not be acquired by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title 1 of ERISA, (ii) a plan described in Section 4975(e) (1) of the Code or
(iii) any entity whose underlying assets include plan assets by reason of such
plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding a Trust Certificate, the Holder thereof shall be deemed to have
represented and warranted that it is not a
13
Benefit Plan. The Owner Trustee shall have no duty to determine whether the
Trust Certificates are owned by a Benefit Plan.
(b) With the exception of the transfer to the Seller hereunder
and any transfer to FCC Receivables Corp., the Trust Certificates may not be
offered or sold except to Qualified Institutional Buyers in reliance on the
exemption from the registration requirements of the Securities Act provided by
Rule 144A thereunder.
Each purchaser of the Trust Certificates will be deemed to have
represented and agreed as follows:
(i) It is a Qualified Institutional Buyer as defined in Rule
144A promulgated under the Securities Act and is acquiring the Trust
Certificates for its own institutional account or for the account of a
Qualified Institutional Buyer.
(ii) It understands that the Trust Certificates will be offered
in a transaction not involving any public offering within the meaning
of the Securities Act, and that, if in the future it decides to
resell, pledge or otherwise transfer any Trust Certificates, such
Trust Certificates may be resold, pledged or transferred only (a) to
the Issuer (upon redemption), (b) to a person who the seller
reasonably believes is a Qualified Institutional Buyer that purchases
for its own account or for the account of a Qualified Institutional
Buyer to whom notice is given that the resale, pledge or transfer is
being made in reliance on Rule 144A or (c) pursuant to an effective
registration statement under the Securities Act.
(iii) It understands that the Trust Certificates will bear a
legend substantially to the following effect:
THE TRUST CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE
SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING ANY TRUST CERTIFICATE, AGREES
FOR THE BENEFIT OF THE ISSUER THAT SUCH TRUST CERTIFICATE IS BEING ACQUIRED
FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD,
PLEDGED OR TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION THEREOF OR
OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (3) IN A TRANSACTION COMPLYING WITH THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE
14
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION.
NO INTEREST IN THIS TRUST CERTIFICATE MAY BE ACQUIRED BY OR FOR THE ACCOUNT
OF (i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA"))
THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN
DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (INCLUDING, WITHOUT LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS AND
XXXXX PLANS), OR (iii) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY. BY ACCEPTING AND
HOLDING THIS CERTIFICATE, THE HOLDER HEREOF AND THE CERTIFICATE OWNER SHALL
EACH BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT A BENEFIT
PLAN.
(c) As a condition to the registration of any transfer of a Trust
Certificate, the prospective transferee of such Trust Certificate shall
represent to the Owner Trustee and the Certificate Registrar the following:
(i) It has neither acquired nor will it transfer the Trust
Certificate or cause the Trust Certificate to be marketed on or
through an "established securities market" within the meaning of
Section 7704(b)(1) of the Code, including, without limitation, an
over-the- counter-market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations.
(ii) It either (A) is not, and will not become, a partnership, S
corporation or grantor trust for U.S. federal income tax purposes, or
(B) is such an entity, but none of the direct or indirect beneficial
owners of any of the interests in such transferee have allowed or
caused, or will allow or cause, fifty percent (50%) or more of the
value of such interests to be attributable to such transferee's
ownership of the Trust Certificate.
(iii) It understands that tax counsel to the Trust has provided
an opinion substantially to the effect that the Trust will not be a
publicly traded partnership taxable as a corporation for U.S. federal
income tax purposes and that the validity of such opinion is dependent
in part on the accuracy of the representations in paragraphs (i) and
(ii) above.
ARTICLE IV
Actions by Owner Trustee
------------------------
15
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain
----------------------------------------------------------
Matters. With respect to the following matters, the Owner Trustee shall not take
-------
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholders and the Security Insurer in
writing of the proposed action and neither the Certificateholders (in accordance
with Section 4.5) nor (so long as an Insurer Default shall not have occurred)
the Security Insurer shall have notified the Owner Trustee in writing prior to
the 30th day after such notice is given that it has withheld consent or provided
alternative direction (provided that no consent or direction of the
Certificateholders pursuant to this Section 4.1 shall be effective without the
consent of the Security Insurer):
(a) the initiation of any material claim or lawsuit by the Trust
except claims or lawsuits brought in connection with the collection of the
Receivables and the compromise of any material action, claim or lawsuit brought
by or against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Receivables);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute or unless such amendment would not materially and
adversely affect the interests of the Certificateholders);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder or the Security Insurer is
required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder or the Security Insurer is not
required and such amendment materially and adversely affects the interest of the
Certificateholders or the Security Insurer;
(e) the amendment, change or modification of the Sale and
Servicing Agreement, except to cure any ambiguity or defect or to amend or
supplement any provision in a manner that would not materially and adversely
affect the interests of the Certificateholders;
(f) the consent to the calling, or waiver of any default of any
Basic Document;
(g) the consent to the assignment by the Indenture Trustee or the
Servicer of their respective obligations under any Basic Document;
(h) except as provided in this Agreement dissolve, terminate or
liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity,
or convey or transfer all or substantially all of the Trust's assets to any
other entity;
16
(j) cause the Trust to incur, assume or guaranty any indebtedness
other than as set forth in this Agreement or the other Basic Documents;
(k) perform any act that to the actual knowledge of a Responsible
Officer of the Owner Trustee conflicts with any of the Basic Documents;
(l) perform any act which would make it impossible to carry on the
ordinary business of the Trust as described in this Agreement;
(m) confess a judgment against the Trust;
(n) cause the Trust to lend any funds to any entity;
(o) change the Trust's purpose and powers from those enumerated in
this Agreement; or
(p) possess Trust assets or assign the Trust's right to property for
other than a Trust purpose.
The Servicer shall notify the Certificateholders and the Security Insurer in
writing of any appointment of a successor Note Registrar, Certificate Paying
Agent or Certificate Registrar within five Business Days thereof.
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters.
------------------------------------------------------------
The Owner Trustee shall not have the power, except upon the direction of the
Controlling Party in accordance with the Basic Documents to (a) remove the
Servicer under the Sale and Servicing Agreement pursuant to Section 8.1 thereof
or (b) except as expressly provided in the Basic Documents, sell the Receivables
after the termination of the Indenture. The Owner Trustee shall take the actions
referred to in the preceding sentence only upon written instructions signed by
the Certificateholders or the Controlling Party, as the case may be, and the
furnishing of indemnification satisfactory to the Owner Trustee by the
Certificateholders.
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy. The
-------------------------------------------------------
Owner Trustee shall not have the power to, and shall not, commence a voluntary
proceeding in bankruptcy relating to the Trust without the prior written consent
of the Security Insurer (unless an Insurer Default shall have occurred and be
continuing) and the delivery to the Owner Trustee by each Certificateholder of a
certificate certifying that it reasonably believes that the Trust is insolvent.
SECTION 4.4 Restrictions on Certificateholders' and Security Insurer's
----------------------------------------------------------
Power. Neither the Certificateholders nor the Security Insurer shall direct the
-----
Owner Trustee to take or refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the Basic Documents or would be contrary to
Section 2.3 nor shall the Owner Trustee be obligated to determine if a
17
Certificateholder's or the Security Insurer's direction violates this Section
4.4 or to follow any such direction, if given.
SECTION 4.5 Majority Control. Except as otherwise specifically provided
----------------
herein, any action that may be taken by the Certificateholders under this
Agreement may be taken by the Holders of Trust Certificates evidencing not less
than a majority of the Percentage Interests. Except as otherwise specifically
provided herein, any written notice of the Certificateholders delivered pursuant
to this Agreement shall be effective if signed by Holders of Certificates
evidencing not less than a majority of the Percentage Interests at the time of
the delivery of such notice.
SECTION 4.6 Rights of Security Insurer. Notwithstanding anything to the
--------------------------
contrary in the Basic Documents, (a) the Owner Trustee shall provide prompt
written notice to the Security Insurer of any action, proceeding or
investigation that to the actual knowledge of the Owner Trustee could adversely
affect the Trust or the Owner Trust Estate or the rights or obligations of the
Security Insurer under any of the Basic Documents or under the Policy, (b) if no
Insurer Default shall have occurred and be continuing, and none of the Seller,
Franklin Capital Corporation or Franklin Resources, Inc. shall be actively
defending any action, proceeding or investigation brought against the Trust or
the Owner Trust Estate that could materially adversely affect the Trust or the
Owner Trust Estate or the rights or obligations of the Security Insurer under
any of the Basic Documents or under the Policy, then the Owner Trustee shall,
upon written notice from the Security Insurer, allow the Security Insurer to
institute, assume or control the defense of such action, proceeding or
investigation and (c) without the prior written consent of the Security Insurer
(so long as no Insurer Default shall have occurred and be continuing), the Owner
Trustee shall not (i) initiate any investigation, claim, suit or proceeding by
the Trust or compromise any claim, suit or proceeding brought by or against the
Trust, other than with respect to the enforcement of any Receivable or any
rights of the Trust thereunder, (ii) authorize the merger or consolidation of
the Trust with or into any other business trust or other entity (other than in
accordance with Section 3.10 of the Indenture) or (iii) amend the Certificate of
Trust.
SECTION 4.7 Execution of Documents. Notwithstanding anything herein to the
----------------------
contrary, the Owner Trustee is authorized, empowered and directed, on behalf of
the Trust, to execute, deliver, issue and authenticate the Certificates, to
execute, deliver and issue the Notes and to execute and deliver each Basic
Document to which the Trust or the Owner Trustee is or is to be a party and any
other document, instrument, certificate or other writing that may be necessary,
convenient or incidental thereto. Any such execution, delivery, issuance and
authentication is hereby ratified and confirmed in all respects and does not and
will be deemed not to conflict with, constitute or result in a breach or
violation of, or a default under, any provision of or any duty under this Trust
Agreement.
18
ARTICLE V
Application of Trust Funds: Certain Duties
------------------------------------------
SECTION 5.1 Establishment of Certificate Distribution Account. (a) The
-------------------------------------------------
Owner Trustee, for the benefit of the Certificateholders and the Security
Insurer, shall establish and maintain in the name of the Trust an Eligible
Deposit Account (the "Certificate Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Certificateholders and the Security Insurer.
(b) The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account and
in all proceeds thereof. If, at any time, the Certificate Distribution Account
ceases to be an Eligible Deposit Account, the Owner Trustee shall within 30
calendar days establish a new Certificate Distribution Account as an Eligible
Deposit Account and shall transfer or cause to be transferred any cash and/or
any investments to such new Certificate Distribution Account.
(c) All amounts held in the Certificate Distribution Account shall, to the
extent permitted by applicable laws, rules and regulations, be invested, by the
Owner Trustee at the Servicer's written direction (which may be by standing
instructions), in Eligible Investments that mature not later than one Business
Day prior to the Distribution Date for the Monthly Period to which such amounts
relate. Investments in Eligible Investments shall be made in the name of the
Trust, and such investments shall not be sold or disposed of prior to their
maturity. Subject to the other provisions hereof, the Owner Trustee 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 Owner Trustee. All Investment Earnings on funds in the
Certificate Distribution Account shall be distributed on the next Distribution
Date pursuant to Section 5.6 of the Sale and Servicing Agreement. The Owner
Trustee shall not be liable, either individually or in its capacity as Owner
Trustee, for any losses arising from investments made in Eligible Investments.
SECTION 5.2 Application of Funds in Certificate Distribution Account. (a)
--------------------------------------------------------
On each Distribution Date, the Owner Trustee will cause the Paying Agent to,
based on the information contained in the Servicer's Certificate delivered on
the related Determination Date pursuant to Section 4.9 of the Sale and Servicing
Agreement, distribute pro rata to Certificateholders based on their Percentage
Interests, to the extent of the funds available, amounts deposited in the
Certificate Distribution Account pursuant to Sections 5.6(a) of the Sale and
Servicing Agreement on such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall cause the Paying
Agent to send to each Certificateholder the statement provided to the Owner
Trustee and the Paying Agent by the Servicer pursuant to Section 5.8 of the Sale
and Servicing Agreement on such Distribution Date.
19
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the amount otherwise distributable to the Certificateholder in accordance with
this Section. The Owner Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificateholders sufficient funds for
the payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee or any Certificateholder from contesting any
such tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Certificateholder shall be treated as
cash distributed to such Certificateholder at the time it is withheld by the
Trust and remitted to the appropriate taxing authority. If there is a reasonable
possibility that withholding tax is payable with respect to a distribution (such
as a distribution to a non-US Certificateholder), the Owner Trustee may in it
sole discretion withhold such amounts in accordance with this clause (c). In the
event that a Holder wishes to apply for a refund of any such withholding tax,
the Owner Trustee shall reasonably cooperate with such Certificateholder in
making such claim so long as such Certificateholder agrees to reimburse the
Owner Trustee for any reasonable out-of-pocket expenses incurred. The Servicer
shall facilitate compliance with this Section 5.2(c) by performance of its
duties under the Sale and Servicing Agreement.
SECTION 5.3 [Reserved]
SECTION 5.4 Method of Payment. Subject to Section 9.1(c),
-----------------
distributions required to be made to Certificateholders on any Distribution Date
in accordance with Section 5.2(b) shall be made to each Certificateholder of
record on the preceding Record Date either by wire transfer, in immediately
available funds, to the account of such Holder at a bank or other entity, if (i)
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five Business Days prior to such
Distribution Date or (ii) such Certificateholder is the Seller, or as set forth
in any written notice from the Seller to the Owner Trustee, an Affiliate
thereof, or, if not, by check mailed to such Certificateholder at the address of
such holder appearing in the Certificate Register. Notwithstanding the
foregoing, the final distribution in respect of any Trust Certificate (whether
on the Final Scheduled Distribution Date or otherwise) will be payable only upon
presentation and surrender of such Trust Certificate at the office or agency
maintained for that purpose by the Owner Trustee pursuant to Section 3.8.
SECTION 5.5 No Segregation of Monies; No Interest. Subject to Sections
-------------------------------------
5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law. The Owner
Trustee shall not be liable for any interest thereon.
SECTION 5.6 Accounting and Reports to the Noteholders,
------------------------------------------
Certificateholders, the Internal Revenue Service and Others. In accordance with
-----------------------------------------------------------
Sections 10.1(b)(iii) and 10.1(c) of the Sale and Servicing Agreement, the
Servicer shall (a) maintain (or cause to be maintained) the books of the Trust
on a year ended September 30 based on the accrual method of accounting, (b)
deliver (or cause to be delivered) to each Certificateholder, as may be required
by the Code and applicable Treasury Regulations, such information as may be
required (including, if applicable,
20
Schedule K-1) to enable each Certificateholder to prepare its Federal and state
income tax returns, (c) prepare or cause to be prepared, and file or cause to be
filed, all tax returns, if any, relating to the Trust (including, if applicable,
a partnership information return, Form 1065), to make such elections as may from
time to time be required or appropriate under any applicable state or Federal
statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a division or branch of its 100% owner, or as a partnership,
as the case may be, for Federal income tax purposes and (d) collect or cause to
be collected any withholding tax as described in and in accordance with Section
5.2(c) with respect to income or distributions to the Certificateholders. The
Servicer shall make all elections pursuant to this Section as directed by the
Seller. The Owner Trustee shall, on behalf of the Trust and upon written
direction of the Servicer, sign all tax information returns furnished to it in
execution form by the Servicer, and filed pursuant to this Section 5.6 and any
other returns as may be required by law and so furnished to it by the Servicer,
and in doing so shall rely entirely upon, and shall have no liability for
information provided by, or calculations provided by, the Servicer. In the event
the Trust is characterized as a partnership for federal income tax purposes, the
Servicer shall cause the Trust to elect under Section 1278 of the Code to
include in income currently any market discount that accrues with respect to the
Receivables, and the Trust shall not make the election provided under Section
754 of the Code. None of the parties hereto shall make the election provided in
Treasury Regulations Section 301.7701-3(c) to have the Trust classified as an
association taxable as a corporation.
SECTION 5.7 Signature on Returns; Tax Matters Partner. (a)
-----------------------------------------
Notwithstanding the provisions of Section 5.6, the Owner Trustee shall sign on
behalf of the Trust the tax returns of the Trust, if any, furnished to it in
execution form by the Servicer, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents shall be
signed by the Seller so long as it is a Certificateholder, in its capacity as
"tax matters partner."
(b) In the event the Trust is characterized as a partnership for
federal income tax purposes, and the Seller is a Certificateholder, the Seller
shall be the "tax matters partner" of the Trust pursuant to the Code.
ARTICLE VI
Authority and Duties of Owner Trustee
-------------------------------------
SECTION 6.1 General Authority. The Owner Trustee is authorized
-----------------
and directed to execute and deliver the Basic Documents to which the Trust is
named as a party and each certificate or other document presented in connection
therewith attached as an exhibit to or contemplated by the Basic Documents to
which the Trust is named as a party and any amendment thereto, in each case, in
such form as the Seller shall approve as evidenced conclusively by the Owner
Trustee's execution thereof, and on behalf of the Trust, to direct the Trustee
to authenticate and deliver Class A-1 Notes in the aggregate principal amount of
$55,000,000, Class A-2 Notes in the aggregate principal amount of $74,500,000,
Class A-3 Notes in the aggregate
21
principal amount of $91,000,000 and Class A-4 Notes in the aggregate principal
amount of $79,500,000. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Basic Documents. The Owner Trustee is further authorized
from time to time to take such action as the Servicer recommends to it in
writing with respect to the Basic Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner Trustee
--------------
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Basic Documents to which the Trust is a
party and to administer the Trust in the interest of the Certificateholders,
subject to the Basic Documents and in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed to
have discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Servicer has agreed in the Sale and Servicing
Agreement, or the Seller has agreed hereunder or thereunder, to perform any act
or to discharge any duty of the Owner Trustee hereunder or of the Trust under
any Basic Document, and the Owner Trustee shall not be liable for the default or
failure of the Servicer or the Seller to carry out its obligations hereunder or
thereunder.
SECTION 6.3 Action upon Instruction. (a) Subject to Article IV, the
-----------------------
Security Insurer (so long as an Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if an Insurer Default shall have occurred
and be continuing) (the "Instructing Party") shall have the exclusive right to
direct the actions of the Owner Trustee in the management of the Trust. Such
direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Basic Document, the Owner Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within 10 days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Certificateholders and the Security Insurer, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous
22
as to its application, or is, or appears to be, in conflict with any other
applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or particular set of facts, the
Owner Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Instructing Party requesting instruction and, to the
extent that the Owner Trustee acts or refrains from acting in good faith in
accordance with any such instruction received, the Owner Trustee shall not be
liable, on account of such action or inaction, to any Person. If the Owner
Trustee shall not have received appropriate instruction within 10 days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent with
this Agreement or the Basic Documents, as it shall deem to be in the best
interests of the Certificateholders and the Security Insurer, and shall have no
liability to any Person for such action or inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement or in
-----------------------------------------------------
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
------------
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation or termination statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Basic
Document. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any Liens
on any part of the Owner Trust Estate that result from actions by, or claims
against, the Owner Trustee (solely in its individual capacity) and that are not
related to the ownership or the administration of the Owner Trust Estate.
SECTION 6.5 No Action Except under Specified Documents or
---------------------------------------------
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
------------
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents
or (iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any action
------------
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) take any action (including, without limitation, participating in the
establishment of a market or the inclusion of the Trust's interests thereon,
within the meaning of Treasury Regulation Section 1.7704-1(d)(1)) that, to the
actual knowledge of the Owner Trustee, would result in the Trust's becoming
taxable as a corporation for Federal income tax purposes. The Certificateholder
shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
23
SECTION 6.7 Notice of Default Under Indenture. Within 10 business days
---------------------------------
of receipt of a written notice of Default under the Indenture by a Responsible
Officer of the Owner Trustee, the Owner Trustee shall provide a copy of such
notice to each Certificateholder.
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties. The Owner Trustee
-------------------------------
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee in its individual capacity also agrees to disburse all moneys actually
received by it constituting part of the Owner Trust Estate upon the terms of the
Basic Documents and this Agreement. The Owner Trustee in its individual capacity
shall not be answerable or accountable hereunder or under any Basic Document
under any circumstances, except (i) for its own willful misconduct, bad faith or
negligence (ii) in the case of the breach of any representation or warranty
contained in Section 7.3 expressly made by the Owner Trustee, in its individual
capacity, (iii) for liabilities arising from the failure of the Owner Trustee to
perform obligations expressly undertaken by it in the last sentence of Section
6.4 hereof, (iv) for any investments issued by the Owner Trustee or any branch
or affiliate thereof in its commercial capacity or (v) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by the Owner Trustee in its individual capacity. In particular, but not
by way of limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the Servicer, the Seller, the Controlling Party, the Security Insurer or any
Certificateholder;
(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Basic Document if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes or the Certificates;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due execution hereof
by the Seller or for the
24
form, character, genuineness, sufficiency, value or validity of any of the Owner
Trust Estate or for or in respect of the validity or sufficiency of the Basic
Documents, other than the certificate of authentication on the Trust
Certificates, and the Owner Trustee shall in no event assume or incur any
liability, duty or obligation to the Seller, the Servicer, the Representative,
the Security Insurer, the Trustee, the Indenture Collateral Agent, any
Noteholder or to any Certificateholder, other than as expressly provided for
herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Representative, the Security Insurer, the Trustee, the
Servicer, the Certificateholders or the Seller under any of the Basic Documents
or otherwise and the Owner Trustee shall have no obligation or liability to
insure compliance by the Representative, the Security Insurer, the Servicer, the
Certificateholders or the Seller with any agreement to which it is a party or to
perform the obligations of the Trust under this Agreement or the Basic Documents
that are required to be performed by the Trustee under the Indenture, the
Servicer under the Sale and Servicing Agreement or the Seller under this
Agreement; and
(g) the Owner Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of any of the Certificateholders, unless such Certificateholders have
offered to the Owner Trustee security or indemnity satisfactory to it against
the costs, expenses and liabilities that may be incurred by the Owner Trustee
therein or thereby. The right of the Owner Trustee to perform any discretionary
act enumerated in this Agreement or in any Basic Document shall not be construed
as a duty, and, the Owner Trustee shall not be answerable for other than its
negligence, bad faith or willful misconduct in the performance of any such act.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish to the
-----------------------
Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee in its
------------------------------
individual capacity hereby represents and warrants to the Seller, the Security
Insurer, the Representative, and for the benefit of the Certificateholders,
that:
(a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware and having an
office within the State of Delaware. It has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
25
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene any
federal or Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or by-laws.
SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall incur
---------------------------
no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper reasonably believed by it to be genuine and believed by it to
be signed by the proper party or parties. The Owner Trustee may accept a duly
certified copy of a resolution of the board of directors or other governing body
of any corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof conclusively
rely on a certificate, signed by the president or any vice president or by the
treasurer, secretary or other authorized officers of the relevant party, as to
such fact or matter, and such certificate shall constitute full protection to
the Owner Trustee for any action reasonably taken or omitted to be taken by it
in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any Basic Document herein.
SECTION 7.5 Not Acting in Individual Capacity. Except as provided herein or
---------------------------------
in any other Basic Document, in accepting the trusts hereby created Bankers
Trust (Delaware) acts solely as Owner Trustee hereunder and not in its
individual capacity and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this Agreement or any Basic
Document shall look only to the Owner Trust Estate for payment or satisfaction
thereof.
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Receivables.
--------------------------------------------------------------
The recitals contained herein and in the Trust Certificates (other than the
signature and countersignature of the Owner Trustee on the Trust Certificates)
shall be taken as the statements of the Seller and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Basic Document or of the Trust Certificates (other than the signature and
countersignature of the Owner Trustee on the Trust Certificates) or the Notes,
or of any Receivable or related documents. The Owner Trustee shall at no time
have any responsibility or liability for or with
26
respect to the legality, validity and enforceability of any Receivable, or the
perfection and priority of any security interest created by any Receivable in
any Financed Vehicle or the maintenance of any such perfection and priority, or
for or with respect to the sufficiency of the Owner Trust Estate or its ability
to generate the payments to be distributed to the Certificateholders under this
Agreement or the Noteholders under the Indenture, 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 warranty or
representation made under any Basic Document or in any related document or the
accuracy of any such warranty or representation or any action of the Trustee or
the Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes. The
--------------------------------------------------
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Seller, the Trustee
and the Servicer in banking transactions with the same rights as it would have
if it were not Owner Trustee.
SECTION 7.8 Payments from Owner Trust Estate. All payments to be made
--------------------------------
by the Owner Trustee under this Agreement or any of the Basic Documents to which
the Trust or the Owner Trustee is a party shall be made only from the income and
proceeds of the Owner Trust Estate and only to the extent that the Trust shall
have received income or proceeds from the Owner Trust Estate to make such
payments in accordance with the terms hereof. Bankers Trust (Delaware), or any
successor thereto, in its individual capacity, shall not be liable for any
amounts payable under this Agreement or any of the Basic Documents to which the
Trust or the Owner Trustee is a party.
SECTION 7.9 Doing Business in Other Jurisdictions. Notwithstanding
-------------------------------------
anything contained to the contrary, neither Bankers Trust (Delaware) or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware, unless
the Certificateholder shall have given the Owner Trustee an indemnity therefor
reasonably satisfactory to it; (ii) result in any fee, tax or other governmental
charge under the laws of the State of Delaware becoming payable by Bankers Trust
(Delaware) (or any successor thereto, unless the Certificateholder shall have
given the Owner Trustee an indemnity therefor reasonably satisfactory to it); or
(iii) subject Bankers Trust (Delaware) (or any successor thereto) to personal
jurisdiction in any jurisdiction other than the State of Delaware for causes of
action arising from acts unrelated to the consummation of the transactions by
Bankers Trust (Delaware) (or any successor thereto) or the Owner Trustee, as the
case may be, contemplated hereby.
27
ARTICLE VIII
Compensation of Owner Trustee
-----------------------------
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall
---------------------------------
receive from Franklin Capital Corporation as compensation for its services
hereunder such fees as have been separately agreed upon before the date hereof
between Franklin Capital Corporation and the Owner Trustee, and the Owner
Trustee shall be entitled to be reimbursed by Franklin Capital Corporation for
its other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel
as the Owner Trustee may employ.
SECTION 8.2 Indemnification. The Seller shall be liable as primary
---------------
obligor for, and shall indemnify the Owner Trustee, the Certificate Registrar,
the Paying Agent and their successors, assigns, agents and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits of
any kind and nature whatsoever, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) related thereto
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Seller shall not be liable
for or required to indemnify the Owner Trustee from and against Expenses arising
or resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement.
Notwithstanding anything set forth in this Section 8.2, the Seller shall only be
required to indemnify the parties listed in this Section 8.2 to the extent of
any Available Funds remaining following distributions made pursuant to clauses
(i) through (ix) of Section 5.6(a) of the Sale and Servicing Agreement (the
"Seller Indemnification Cap"); provided, however, that if the aggregate amount
of indemnification for which the Seller would otherwise be required to indemnify
the parties listed in this Section 8.2 exceeds the Seller Indemnification Cap,
the Servicer shall indemnify the parties listed in this Section 8.2 for the
difference. In addition, the indemnification provided herein shall not
constitute a claim against the Seller (provided, however, that, as set forth in
this paragraph, the Indemnified Parties shall be entitled to receive
indemnification from the Seller in an amount not to exceed the Seller
Indemnification Cap).
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the
-----------------------------
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
SECTION 8.4 Non-recourse Obligations. Notwithstanding anything in this
------------------------
Agreement or any Basic Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for the Trust that all obligations
of the Trust to the Owner Trustee
28
individually or as Owner Trustee for the Trust shall be recourse to the Owner
Trust Estate only and specifically shall not be recourse to the assets of any
Certificateholder.
ARTICLE IX
Dissolution and Termination of Trust
------------------------------------
SECTION 9.1 Termination of Trust Agreement. (a) This Agreement and the
------------------------------
Trust shall terminate and be of no further force or effect upon the latest of
(i) the maturity or other liquidation of the last Receivable (including the
purchase by the Servicer at its option of the corpus of the Trust as described
in Section 9.1 of the Sale and Servicing Agreement) and the subsequent
distribution of amounts in respect of such Receivables as provided in the Basic
Documents or (ii) the payment to the Certificateholders of all amounts required
to be paid to them pursuant to this Agreement and the payment to the Security
Insurer of all amounts payable or reimbursable to it, provided, however, that in
-------- -------
no event shall the trust created by this Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
living on the date of this Agreement of Xxxx Xxxxxxx of the Commonwealth of
Massachusetts; and provided, further, that the rights to indemnification under
-------- -------
Section 8.2 shall survive the termination of the Trust. The Servicer shall
promptly notify the Owner Trustee and the Security Insurer of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder, or Holder, shall not
(x) operate to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's or Holder's legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding up of all or any part of the Trust or Owner Trust Estate nor (z)
otherwise affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (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 the Certificateholders shall surrender their Trust
Certificates to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to the
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Servicer given pursuant to Section 9.1(c) of the Sale and
Servicing Agreement, stating (i) the Distribution Date upon or with respect to
which final payment of the Trust Certificates shall be made upon presentation
and surrender of the Trust Certificates at the office of the Paying Agent
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Trust
Certificates at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Paying Agent (if other than the Owner Trustee) at the
time such notice is given to the Certificateholders. Upon presentation and
surrender of the Trust Certificates, the Paying Agent shall cause to be
distributed to the Certificateholders amounts distributable on such Distribution
Date pursuant to Section 5.2.
29
In the event that all of the Certificateholders shall not have
surrendered their Trust Certificates for cancellation within six months after
the date specified in the above mentioned written notice, the Owner Trustee
shall give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Trust Certificates shall not have been surrendered for cancellation, the
Owner Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid by the
Seller from the funds and other assets that shall remain subject to this
Agreement. Any funds remaining in the Trust after exhaustion of such remedies
shall be distributed, subject to applicable escheat laws, by the Owner Trustee
to the Seller. The Certificateholders shall thereafter look solely to the Seller
as general unsecured creditors.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Seller.
(e) Upon dissolution and completion of the winding up of the
Trust, including the payment or making reasonable provision for payment of all
obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Statute, the Owner Trustee shall cause the Certificate of Trust to be
canceled by filing a certificate of cancellation with the Secretary of State in
accordance with the provisions of Section 3810 of the Business Trust Statute and
thereupon the Trust and this Agreement shall terminate. The Servicer shall act
as the liquidator of the Trust and shall be responsible for directing the Owner
Trustee to take all required actions in connection with the winding up of the
Trust.
SECTION 9.2 [Reserved]
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
------------------------------------------------------
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
------------------------------------------
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; and (iii) having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by Federal or State
authorities. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2. In addition, at all
times the Owner Trustee or a co-trustee shall be a person that satisfies the
requirements of Section 3807(a) of the Business Trustee Statute (the "Delaware
Trustee").
30
SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner
---------------------------------------
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer and the Security Insurer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor Owner Trustee acceptable to the Security Insurer (so long as an
Insurer Default shall not have occurred) by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Owner Trustee
and one copy to the successor Owner Trustee, provided that the Servicer shall
have received written confirmation from each of the Rating Agencies that the
proposed appointment will not result in an increased capital charge to the
Security Insurer by either of the Rating Agencies. If no successor Owner Trustee
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Owner Trustee or the
Security Insurer (so long as an Insurer Default shall not have occurred) may
petition any court of competent jurisdiction for the appointment of a successor
Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer with the consent of the Security Insurer, or the
Security Insurer (in each case, so long as an Insurer Default shall not have
occurred) may remove the Owner Trustee. If the Servicer shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the Servicer
shall promptly appoint a successor Owner Trustee acceptable to the Security
Insurer by written instrument, in triplicate, one copy of which instrument shall
be delivered to the outgoing Owner Trustee so removed, one copy to the Security
Insurer and one copy to the successor Owner Trustee and shall pay all fees owed
to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Servicer shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
-----------------------
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Servicer, the Security Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement and the Servicer and the predecessor
Owner Trustee shall execute and deliver such instruments and do
31
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Owner Trustee all such rights, powers, duties
and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Servicer shall mail notice thereof to all
Certificateholders, the Security Insurer, the Trustee, the Noteholders and the
Rating Agencies. If the Servicer shall fail to mail such notice within 10 days
after acceptance of appointment by the successor Owner Trustee, the successor
Owner Trustee shall cause such notice to be mailed at the expense of the
Servicer.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation
----------------------------------------
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder; provided,
--------
however, that such corporation shall be eligible pursuant to Section 10.1,
-------
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
and provided further that the Owner Trustee shall mail notice of such merger,
sale, conversion or consolidation to the Rating Agencies.
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Vehicle may at the time be located,
the Servicer and the Owner Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Owner Trustee and the Security Insurer (so long as an Insurer Default shall
not have occurred) to act as co-trustee, jointly with the Owner Trustee, or
separate trustee or separate trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person, in such capacity, such title to the Owner
Trust Estate, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Servicer and
the Owner Trustee may consider necessary or desirable. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee subject, unless an Insurer Default shall
have occurred and be continuing, to the approval of the Security Insurer (which
approval shall not be unreasonably withheld) alone shall have the power to make
such appointment. No co-trustee or separate trustee under this Agreement shall
be required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
32
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the 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
Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Servicer and the Owner Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer and the Security Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
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
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI
Miscellaneous
-------------
SECTION 11.1 Supplements and Amendments. (a) This Agreement may be
--------------------------
amended by the Seller and the Owner Trustee, with the prior written consent of
the Security Insurer (so long as an Insurer Default shall not have occurred and
be continuing) and with prior written notice to the Rating Agencies, without the
consent of any of the Noteholders or the Certificateholders (i) to cure any
ambiguity, to correct any defect or in
33
this Agreement which may be inconsistent with any other provision 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, adversely affect in any material
-------- -------
respect the interests of any Noteholder; provided further that such action shall
-------- -------
not adversely affect in any material respect the interests of any
Certificateholder without the consent of the Holders of Certificates evidencing
not less than a majority in Percentage Interest; and provided further that if an
-------- -------
Insurer Default has occurred and is continuing and the Security Insurer has not
consented to such action, such action shall not materially and adversely affect
the interest of the Security Insurer. An amendment shall be deemed not to
adversely affect the interests of any Noteholder in any material respect if
either each Rating Agency confirms in writing that such amendment will not
result in a reduction or withdrawal of such rating or none of Rating Agencies,
within 10 days' after receipt of notice of such amendment, shall have notified
the Seller, the Servicer or the Issuer in writing that such amendment will
result in a reduction or withdrawal of the then current rating of the Notes.
(b) This Agreement may also be amended from time to time, with
the prior written consent of the Security Insurer (so long as an Insurer Default
shall not have occurred and be continuing), by the Seller and the Owner Trustee,
with prior written notice to the Rating Agencies, with the consent of the
Holders of Notes evidencing not less than a majority of the Outstanding Amount
of the Notes and, to the extent the Certificates are affected thereby, the
consent of the Holders of Certificates evidencing not less than a majority in
Percentage Interest for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that subject to the express rights of the Security Insurer
-------- -------
under the Basic Documents, no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made for
the benefit of the Noteholders or the Certificateholders, (ii) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the Percentage
Interest required to consent to any such amendment, without the consent of the
Holders of all the outstanding Notes and Holders of all outstanding Certificates
or (iii) if an Insurer Default shall have occurred and be continuing, and the
Security Insurer has not consented to such action, such action shall not
adversely affect in any material respect the interests of the Security Insurer.
Promptly after the execution of any such amendment or consent, the
Servicer shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Trustee and each of the Rating
Agencies.
(c) It shall not be necessary for the consent of the
Certificateholders, the Noteholders or the Trustee pursuant to this Section to
approve the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of the Certificateholders
provided for in this Agreement or in any other Basic Document) and of
34
evidencing the authorization of the execution thereof by the Certificateholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe.
(d) Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the filing of such amendment
with the Secretary of State.
(e) Prior to the execution of any amendment to this Agreement
or the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise. The Servicer shall furnish copies of any such amendments
to this Agreement to each Rating Agency and the Security Insurer.
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders.
----------------------------------------------------------
The Certificateholders shall not have legal title to any part of the Owner Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided beneficial ownership interest therein only in
accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholders to and in
their ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for Section 2.7,
-------------------------------
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Security Insurer, the Seller, the Certificateholders, the Servicer
and, to the extent expressly provided herein, the Trustee and the Noteholders,
and nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly specified or
-------
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed certified mail, return receipt requested and shall be deemed to have
been duly given upon receipt, if to the Owner Trustee, addressed to the
Corporate Trust Office; if to the Seller, addressed to 00 Xxxx 000 Xxxxx, Xxxxx
000, Xxxx Xxxx Xxxx, XX 00000, Attention Xxxxxx X. Xxxxxx, Xx., with a copy to
Franklin Resources, Inc., Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxxxx Xxxx; if to the Security Insurer, addressed to MBIA
Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Insured
Portfolio Management SF; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party.
35
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5 Severability. Any provision of this Agreement that
------------
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be
---------------------
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.7 Successors and Assigns. This Agreement shall inure
----------------------
to the benefit of, the Representative, the Security Insurer, the Owner Trustee
and its successors, each Certificateholder and its successors and permitted
assigns and be binding upon the parties hereto and their respective successors
and permitted assigns. Any request, notice, direction, consent, waiver or other
instrument or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder. Except as otherwise provided in this
Agreement, no other Person shall have any right or obligation hereunder. Without
limiting the generality of the foregoing, all covenants and agreements in this
Agreement which confer rights upon the Security Insurer shall be for the benefit
of and run directly to the Security Insurer, and the Security Insurer shall be
entitled to rely on and enforce such covenants, subject, however, to the
limitations on such rights provided in this Agreement and the Basic Documents.
The Security Insurer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Note Policy) upon
delivery of a written notice to the Owner Trustee.
SECTION 11.8 [Reserved]
SECTION 11.9 No Petition. The Owner Trustee (not in its
-----------
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Trust Certificate, and the
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the Seller,
or join in any institution against the Seller of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, this Agreement or any of the Basic Documents.
SECTION 11.10 No Recourse. Each Certificateholder by accepting a
-----------
a Trust Certificate acknowledges that such Certificateholder's Trust
Certificates represent beneficial ownership interests in the Trust only and do
not represent interests in or obligations of the Seller, the Servicer, the Owner
Trustee, the Trustee, the Security Insurer or any Affiliate thereof and no
36
recourse by such Certificateholder may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Trust Certificates or the Basic Documents.
SECTION 11.11 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 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13 [Reserved]
--------
SECTION 11.14 Servicer. The Servicer is authorized to prepare, or
--------
cause to be prepared, execute and deliver on behalf of the Trust all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Trust or the Owner Trustee to prepare, file or deliver
pursuant to the Basic Documents. Upon written request, the Owner Trustee shall
execute and deliver to the Servicer a limited power of attorney appointing the
Servicer the Trust's agent and attorney-in-fact to prepare, or cause to be
prepared, execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.
SECTION 11.15. Third Party Beneficiary. The Security Insurer shall be
-----------------------
a third party beneficiary hereof and, except as expressly limited by the terms
hereof, so long as no Insurer Default constituting a failure to pay under the
Note Policy shall have occurred and be continuing, shall be entitled to enforce
the provisions hereof as if a party hereto.
37
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized as of
the day and year first above written.
BANKERS TRUST (DELAWARE),
as Owner Trustee
By: /s/ Xxxxx Barstock
--------------------------------
Name: Xxxxx Barstock
Title: Vice President
FRANKLIN RECEIVABLES LLC,
as Seller
By: FRANKLIN CAPITAL CORPORATION
its managing member
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: President and CEO
Acknowledged and agreed as to
Sections 8.1 and 8.2:
FRANKLIN CAPITAL CORPORATION
By: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: President and CEO
38
EXHIBIT A
No. 1 100% Percentage Interest
SEE REVERSE FOR CERTAIN DEFINITIONS
THE TRUST CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING ANY TRUST
CERTIFICATE, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH TRUST CERTIFICATE IS
BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY
BE RESOLD, PLEDGED OR TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION
THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, OR (3) IN A TRANSACTION COMPLYING WITH THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
NO INTEREST IN THIS TRUST CERTIFICATE MAY BE ACQUIRED BY OR FOR
THE ACCOUNT OF (1) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (2) A PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (INCLUDING, WITHOUT
LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS AND XXXXX PLANS), OR (3) ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF SUCH PLAN'S INVESTMENT
IN THE ENTITY (EACH A "BENEFIT PLAN"). BY ACCEPTING AND HOLDING THIS
CERTIFICATE, THE HOLDER HEREOF AND THE CERTIFICATE OWNER SHALL EACH BE DEEMED TO
HAVE REPRESENTED AND WARRANTED THAT IT IS NOT A BENEFIT PLAN.
A-1
FRANKLIN AUTO TRUST 2001-2
ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Trust, as defined below, the property of which includes a pool of motor vehicle
retail installment sale contracts secured by new and used automobiles and light
trucks, and sold to the Trust by Franklin Receivables LLC.
(This Trust Certificate does not represent an interest in or obligation of
Franklin Receivables LLC or any of its Affiliates, except to the extent
described below.)
THIS CERTIFIES THAT FRANKLIN RECEIVABLES LLC is the registered
owner of 100% Percentage Interest nonassessable, fully-paid, beneficial
ownership interest in Franklin Auto Trust 2001-2 (the "Trust") formed by
Franklin Receivables LLC, a limited liability company (the "Seller").
The Trust was created pursuant to an Amended and Restated Trust
Agreement dated as of December 1, 2001 (the "Trust Agreement"), between the
Seller and Bankers Trust (Delaware), not in its individual capacity but solely
as owner trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them in
the Trust Agreement.
This Certificate is one of the duly authorized Trust Certificates
designated as "Asset Backed Certificates" (herein called the "Trust
Certificates"). Under the Indenture dated as of December 1, 2001, between the
Trust and The Bank of New York as trustee and indenture collateral agent, the
Trust also issued four classes of Notes designated as "Class A-1 2.10375% Asset
Backed Notes" (the "Class A-1 Notes"), "Class A-2 2.79% Asset Backed Notes" (the
"Class A-2 Notes"), "Class A-3 3.77% Asset Backed Notes" (the "Class A-3 Notes")
and "Class A-4 4.55% Asset Backed Notes" (the "Class A-4 Notes" and together
with the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, the
"Notes"). This Trust Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
holder of this Trust Certificate by virtue of the acceptance hereof assents and
by which such holder is bound. The property of the Trust includes a pool of
prime, non-prime and sub-prime motor vehicle retail installment sale contracts
secured by new and used automobiles and light trucks, (the "Receivables"), all
monies received on the Receivables on or after December 1, 2001, security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, proceeds from claims on certain insurance policies and certain
other rights under the Trust Agreement and the Sale and Servicing Agreement.
Under the Trust Agreement, there will be distributed on the
20/th/ day of each month or, if such 20/th/ day is not a Business Day, the next
Business Day (the "Distribution Date"), commencing in January 2002 to the Person
in whose name this Trust Certificate is registered at the close of business on
the last day of the calendar month immediately preceding the
A-2
Distribution Date (the "Record Date") such Certificateholder's
Percentage Interest in the amount to be distributed to Certificateholders on
such Distribution Date.
A-3
The holder of this Trust Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.
It is the intent of the Seller, the Owner Trustee, and the
Certificateholders that, for purposes of Federal income taxes, and to the extent
permitted by law, for purposes of applicable state income or franchise tax, the
Trust will be disregarded as an entity apart from its owner if there is only one
owner for Federal income tax purposes, or, if there is more than one owner for
Federal income tax purposes, will be treated as a partnership the partners of
which are the Certificateholders, provided however, that if any Class of Notes
is deemed for federal income tax purposes (or for purposes of any state, local
or other income tax, franchise tax or other tax imposed upon or measured by net
income) to represent an equity interest in the Trust, it is the intent and
agreement of the parties hereto that the Trust shall, to the extent permitted by
law, be treated for purposes of any such tax which treats Notes in such manner
as a partnership among the affected Class of Noteholders and the
Certificateholder. The Certificateholders by acceptance of a Trust Certificate,
agree to treat, and to take no action inconsistent with the treatment of, the
Trust and the Trust Certificates for such tax purposes as just described.
Each Certificateholder, by its acceptance of a Trust Certificate,
represents that (i) it has neither acquired nor will it transfer the Trust
Certificate or cause the Trust Certificate to be marketed on or through an
"established securities market" within the meaning of Section 7704(b)(1) of the
Code, including, without limitation, an over-the-counter-market or an
interdealer quotation system that regularly disseminates firm buy or sell
quotations; (ii) it either (A) is not, and will not become, a partnership, S
corporation or grantor trust for U.S. federal income tax purposes, or (B) is
such an entity, but none of the direct or indirect beneficial owners of any of
the interests in such transferee have allowed or caused, or will allow or cause,
fifty percent (50%) or more of the value of such interests to be attributable to
such transferee's ownership of the Trust Certificate; and (iii) it understands
that tax counsel to the Trust has provided an opinion substantially to the
effect that the Trust will not be treated as a publicly traded partnership
taxable as a corporation for U.S. federal income tax purposes and that the
validity of such opinion is dependent in part on the accuracy of the
representations in paragraphs (i) and (ii) above.
Each Certificateholder, by its acceptance of a Trust Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Trust or the Seller, or join in any institution against the Trust or
the Seller of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Trust Certificates, the Notes, the Trust Agreement or any of the Basic
Documents.
Distributions on this Trust Certificate will be made as provided
in the Trust Agreement by the Owner Trustee by wire transfer or check mailed to
the Certificateholder of record in the Trust Certificate Register without the
presentation or surrender of this Trust Certificate or the making of any
notation hereon. Except as otherwise provided in the Trust
A-4
Agreement and notwithstanding the above, the final distribution on this Trust
Certificate will be made after due notice by the Owner Trustee of the pendency
of such distribution and only upon presentation and surrender of this Trust
Certificate at the office or agency maintained for the purpose by the Owner
Trustee in the Borough of Manhattan, the City of New York.
Reference is hereby made to the further provisions of this
Trust 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 Owner Trustee, by manual
signature, this Trust Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
THIS TRUST CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
A-5
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Trust Certificate to be duly
executed.
Date: December 13, 2001
FRANKLIN AUTO TRUST 2001-2
By: BANKERS TRUST (DELAWARE),
solely as Owner Trustee and not in its individual
capacity
By: ________________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates of Franklin Auto Trust
2001-2 referred to in the within-mentioned Trust Agreement.
Date: December 13, 2001
BANKERS TRUST (DELAWARE),
solely as Owner Trustee and not in its individual capacity
By: ________________________________
Authorized Signatory
OR
BANKERS TRUST (DELAWARE)
solely as Owner Trustee and not in its individual capacity
By: Bankers Trust Company, as Authenticating Agent
By: ________________________________
Authorized Signatory
A-6
(Reverse of Trust Certificate)
The Trust Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Owner Trustee or any of their
respective Affiliates and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated herein or in the
Trust Agreement, the Indenture or the Basic Documents. In addition, this Trust
Certificate is not guaranteed by any governmental agency or instrumentality and
is limited in right of payment to certain collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth
herein and in the Sale and Servicing Agreement. The Trust Certificates are
limited in right of payment to certain collections and recoveries respecting the
Receivables, all as more specifically set forth in the Sale and Servicing
Agreement. A copy of each of the Sale and Servicing Agreement and the Trust
Agreement may be examined during normal business hours at the principal office
of the Seller, and at such other places, if any, designated by the Seller, by
any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller and the rights of the Certificateholders under the
Trust Agreement at any time by the Seller and the Owner Trustee with the prior
written consent of the Security Insurer (so long as an Insurer Default shall not
have occurred and be continuing) and with the consent of the holders of the
Notes and the Trust Certificates evidencing not less than a majority of the
outstanding principal balance of the Notes and a majority in Percentage Interest
of the Certificates. Any such consent by the holder of this Trust Certificate
shall be conclusive and binding on such holder and on all future holders of this
Trust Certificate and of any Trust Certificate issued upon the transfer hereof
or in exchange hereof or in lieu hereof whether or not notation of such consent
is made upon this Trust Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
holders of any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Trust Certificate is
registerable in the Certificate Register upon surrender of this Trust
Certificate for registration of transfer at the offices or agencies of the
Certificate Registrar maintained by the Owner Trustee in the Borough of
Manhattan, the City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Owner 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 Trust Certificates in authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is Bankers Trust Company.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, Trust Certificates are exchangeable for new Trust
Certificates in authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same.
A-7
No service charge will be made for any such registration of transfer or
exchange, but the Owner Trustee or the Certificate Registrar may require payment
of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the person in whose name
this Trust Certificate is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Trust
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
Trust Agreement and the Sale and Servicing Agreement and the disposition of all
property held as part of the Owner Trust Estate. The Servicer may at its option
purchase the corpus of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable, subject to certain restrictions, only as of the last
day of any Monthly Period as of which the Pool Balance is 10% or less of the
Original Pool Balance.
A-8
ASSIGNMENT
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constitutes and appoints _______________________________________________
attorney to transfer said Trust Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
________________________________*
Signature Guaranteed:
*
--------------------------
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Trust Certificate in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
A-9
EXHIBIT B
FORM OF
CERTIFICATE OF TRUST OF
FRANKLIN AUTO TRUST 2001-2
--------------------------
THIS Certificate of Trust of Franklin Auto Trust 2001-2 (the
"Trust"), is being duly executed and filed on behalf of the Trust by the
undersigned, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. Code, (S) 3801 et seq.) (the "Act").
--------- -- ----
1. Name. The name of the business trust formed by this
----
Certificate of Trust is FRANKLIN AUTO TRUST 2001-2.
2. Delaware Trustee. The name and business address of the
----------------
trustee of the Trust in the State of Delaware is Bankers Trust (Delaware),
_________________.
3. Effective Date. This Certificate of Trust shall be
--------------
effective upon filing.
IN WITNESS WHEREOF, the undersigned, has duly executed this
Certificate of Trust in accordance with Section 3811(a)(1) of the Act.
BANKERS TRUST (DELAWARE),
not in its individual capacity but
solely as trustee of the Trust
By: ____________________________________
Name: Xxxxxxxxx X. Xxxxx
Title: Assistant Vice President
B-1
