_____________________________________________
MELLON BANK, N.A.
Transferor
AFCO CREDIT CORPORATION
Servicer
AFCO ACCEPTANCE CORPORATION
Servicer
PREMIUM FINANCING SPECIALISTS, INC.
Back-Up Servicer
and
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
on behalf of the Series 1996-1 Holders
_____________________________________________
SERIES 1996-1 SUPPLEMENT
Dated as of December 1, 1996
to
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1996
_____________________________________________
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
Series 1996-1
_____________________________________________
TABLE OF CONTENTS
PAGE
EXHIBITS
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EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT B Form of Monthly Payment Instructions and
Notification to Trustee
EXHIBIT C Form of Monthly Series 1996-1 Holders'
Statement
SCHEDULE 1
Schedule to Exhibit B of the Pooling and Servicing Agreement with respect to the
Investor Certificates
Series 1996-1 SUPPLEMENT, dated as of December 1, 1996 (this "Series
Supplement"), by and among MELLON BANK, N.A., a national banking association, as
Transferor, AFCO Credit Corporation, a New York corporation, as Servicer, AFCO
Acceptance Corporation, a California corporation, as Servicer, Premium Financing
Specialists, Inc., a ______________ corporation, as Back-up Servicer, and The
First National Bank of Chicago, a national banking association, as Trustee under
the Pooling and Servicing Agreement dated as of December 1, 1996 by and among
each Servicer, the Back-up Servicer, the Transferor and Trustee (the
"Agreement").
Section 6.9 of the Agreement provides, among other things, that
Transferor and Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the delivery by
Trustee to Transferor for the execution and redelivery to Trustee for
authentication of one or more Series of Certificates.
Pursuant to this Series Supplement, Transferor and the Trust shall
create a new Series of Investor Certificates and shall specify the Principal
Terms thereof.
SECTION 1. Designation. (a) There is hereby created a Series of
Investor Certificates to be issued in two classes pursuant to the Agreement and
this Series Supplement and to be known together as the "Series 1996-1
Certificates." The two classes shall be designated the Class A Floating Rate
Asset Backed Certificates, Series 1996-1 (the "Class A Certificates") and the
Class B Floating Rate Asset Backed Certificates, Series 1996-1 (the "Class B
Certificates"). The Class A Certificates and the Class B Certificates shall be
substantially in the form of Exhibits A-1 and A-2, respectively. In addition,
there is hereby created a third Class which constitutes an uncertificated
interest in the Trust, shall be deemed to be an "Investor Certificate" for all
purposes under the Agreement and this Series Supplement, except as expressly
provided herein, and shall be known as the Collateral Interest, Series 1996-1
and have the rights assigned to the Collateral Interest in this Series
Supplement.
(b) Series 1996-1 shall be included in Group One (as defined below).
Series 1996-1 shall not be subordinated to any other Series.
(c) The Collateral Interest Holder, as holder of an "Investor
Certificate" under the Agreement, shall be entitled to the benefits of the
Agreement and this Series Supplement upon payment by the Collateral Interest
Holder of amounts owing on the Closing Date pursuant to the Loan Agreement.
Notwithstanding the foregoing, except as expressly provided herein, the
provisions of Article VI and Article XII of the Agreement relating to the
registration, authentication, delivery, presentation, cancellation ad surrender
of Registered Certificates shall not be applicable to the Collateral Interest.
SECTION 2. Definitions. If any term or provision contained herein
shall conflict with or be inconsistent with any provision contained in the
Agreement, the terms and provisions of this Series Supplement shall govern.
References to any Article, Section or subsection are references to Articles,
Sections or subsections of the Agreement, except as otherwise expressly
provided. All capitalized terms not otherwise defined herein are defined in the
Agreement, and the interpretive provisions set out in Section 1.2 of the
Agreement apply to this Series Supplement. Each capitalized term defined herein
relates only to the Investor Certificates and no other Series of Certificates
issued by the Trust.
"Accumulation Period" means, solely for the purposes of the definition
of Group One Monthly Principal Payment as such term is defined in each
Supplement relating to Group One, the Controlled Accumulation Period.
"Accumulation Shortfall" initially means zero and thereafter means,
with respect to any Monthly Period during the Controlled Accumulation Period,
the excess, if any, of the Controlled Deposit Amount for the previous Monthly
Period over the amount deposited into the Principal Funding Account pursuant to
subsection 4.11(e)(i) with respect to the Class A Certificates for the previous
Monthly Period.
"Adjusted Investor Interest" means, on any date of determination, an
amount equal to the sum of (a) the Class A Adjusted Investor Interest and (b)
the Class B Investor Interest and (c) the Collateral Interest.
"Aggregate Investor Default Amount" means, as to any Monthly Period,
the sum of the Investor Default Amounts in respect of such Monthly Period.
"Available Investor Principal Collections" means, as to any Monthly
Period, an amount equal to (a) the Investor Principal Collections for such
Monthly Period, minus (b) the amount of Reallocated Principal Collections with
respect to such Monthly Period which pursuant to Section 4.14 are required to
fund the Class A Required Amount and the Class B Required Amount (other than any
portions thereof that are applied pursuant to (x) subsection 4.11(a)(iv) and (y)
subsection 4.13(c) (to the extent such portions pursuant to subsection 4.13(c)
are available to pay the Class B Investor Default Amount), which shall, without
duplication, be included as Available Investor Principal Collections), plus (c)
the amount of Shared Principal Collections with respect to Group One that are
allocated to Series 1996-1 in accordance with subsection 4.15(b).
"Available Reserve Account Amount" means, as to any Transfer Date, the
lesser of (a) the amount on deposit in the Reserve Account on such date (after
taking into account any interest and earnings retained in the Reserve Account
pursuant to subsection 4.17(b) on such date, but before giving effect to any
deposit made or to be made pursuant to subsection 4.13(i) to the Reserve Account
on such date) and (b) the Required Reserve Account Amount.
"Base Rate" means, as to any Monthly Period, the annualized percentage
equivalent of a fraction, the numerator of which is equal to the sum of the
Class A Monthly Interest, the Class B Monthly Interest and the Collateral
Monthly Interest, each for the related Distribution Date, and the Investor
Servicing Fee with respect to such Monthly Period and the denominator of which
is the Investor Interest as of the close of business on the last day of such
Monthly Period.
"Class A Additional Interest" is defined in Section 4.8(a).
"Class A Adjusted Investor Interest" means, on any date of
determination, an amount equal to the Class A Investor Interest minus the
Principal Funding Account Balance on such date of determination.
"Class A Available Funds" means, as to any Monthly Period, an amount
equal to the sum of (a) the Class A Floating Allocation of Finance Charge
Collections allocated to the Investor Certificates for such Monthly Period, (b)
with respect to any Monthly Period during the Controlled Accumulation Period
prior to the payment in full of the Class A Investor Interest, the Principal
Funding Investment Proceeds arising pursuant to subsection 4.16(b), if any, with
respect to the related Transfer Date and (c) amounts, if any, to be withdrawn
from the Reserve Account which will be deposited into the Finance Charge Account
on the related Transfer Date pursuant to subsections 4.17(b) and 4.17(d) (or
which will be required to be deposited in the Finance Charge Account pursuant to
such subsections on the related Transfer Date (before giving effect to any
permitted netting)).
"Class A Carry-Over Amount" is defined in subsection 4.8(d).
"Class A Certificate Rate" means, with respect to the period from and
including the Closing Date to but excluding March 17, 1996, a per annum rate
equal to ___% and with respect to each Interest Period thereafter, a per annum
rate equal to ____% per annum in excess of LIBOR, as determined on the related
LIBOR Determination Date.
"Class A Certificates" is defined in subsection 1(a) of this Series
Supplement.
"Class A Deficiency Amount" is defined in subsection 4.8(a).
"Class A Fixed Allocation" means, for any Monthly Period following the
Revolving Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Class A Investor Interest as
of the close of business on the last day of the Revolving Period and the
denominator of which is equal to the Investor Interest as of the close of
business on the last day of the Revolving Period.
"Class A Floating Allocation" means, for any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the Class A Adjusted Investor Interest as of the close
of business on the last day of the preceding Monthly Period and the denominator
of which is equal to the Adjusted Investor Interest as of the close of business
on such day; provided that, with respect to the First Monthly Period, the Class
A Floating Allocation means the percentage equivalent of a fraction, the
numerator of which is the Class A Initial Investor Interest and the denominator
of which is the Initial Investor Interest.
"Class A Holder" means the Person in whose name a Class A Certificate
is registered in the Certificate Register.
"Class A Initial Investor Interest" means the aggregate initial
principal amount of the Class A Certificates, which is $___________.
"Class A Investor Allocation" means, for any Monthly Period, (a) with
respect to Default Amounts, Finance Charge Collections and Principal Collections
during the Revolving Period, the Class A Floating Allocation, and (b) with
respect to Principal Collections during the Controlled Accumulation Period or
Rapid Amortization Period, the Class A Fixed Allocation.
"Class A Investor Default Amount" means, as to each Transfer Date, an
amount equal to the product of (a) the Aggregate Investor Default Amount for the
related Monthly Period and (b) the Class A Floating Allocation applicable for
the related Monthly Period.
"Class A Investor Interest" means, on any date of determination, an
amount equal to (a) the Class A Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to Class A Holders prior to such
date and minus (c) the excess, if any, of the aggregate amount of Class A
Investor Charge-Offs pursuant to subsection 4.12(a) over Class A Investor
Charge-Offs reimbursed pursuant to subsection 4.13(b) prior to such date of
determination; provided that the Class A Investor Interest may not be reduced
below zero.
"Class A Monthly Interest" is defined in subsection 4.8(a).
"Class A Monthly Principal" is defined in subsection 4.9(a).
"Class A Optimal Interest" is defined in subsection 4.8(a).
"Class A Required Amount" is defined in subsection 4.10(a).
"Class A Scheduled Payment Date" means the December 2001 Distribution
Date.
"Class A Servicing Fee" is defined in subsection 3(a) of this Series
Supplement.
"Class A Shortfall Amount" means, as of any Distribution Date, an
amount, if positive, equal to (x) Class A Available Funds for such Monthly
Period less, if the Originators are not the Servicer, the Class A Servicing Fee
for such Monthly Period minus (y) Class A Optimal Interest for the related
Monthly Interest Period.
"Class B Additional Interest" is defined in subsection 4.8(b).
"Class B Available Funds" means, as to any Monthly Period, an amount
equal to the Class B Floating Allocation of Finance Charge Collections allocated
to the Investor Certificates for such Monthly Period.
"Class B Carry-Over Amount" is defined in subsection 4.8(d).
"Class B Certificate Rate" means, with respect to the period from and
including the Closing Date to but excluding March 15, 1996, a rate per annum
equal to ____% and with respect to each Interest Period thereafter, a per annum
rate equal to ____% per annum in excess of LIBOR, as determined on the related
LIBOR Determination Date.
"Class B Certificates" is defined in subsection 1(a) of this Series
Supplement.
"Class B Deficiency Amount" is defined in subsection 4.8(b).
"Class B Fixed Allocation" means, for any Monthly Period following the
Revolving Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Class B Investor Interest as
of the close of business on the last day of the Revolving Period and the
denominator of which is equal to the Investor Interest as of the close of
business on the last day of the Revolving Period.
"Class B Floating Allocation" means, for any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the Class B Investor Interest as of the close of
business on the last day of the preceding Monthly Period and the denominator of
which is equal to the Adjusted Investor Interest as of the close of business on
such day; provided that, with respect to the first Monthly Period, the Class B
Floating Allocation means the percentage equivalent of a fraction, the numerator
of which is the Class B Initial Investor Interest and the denominator of which
is the Initial Investor Interest.
"Class B Holder" means the Person in whose name a Class B Certificate
is registered in the Certificate Register.
"Class B Initial Investor Interest" means the aggregate initial
principal amount of the Class B Certificates, which is $__________.
"Class B Investor Allocation" means, for any Monthly Period, (a) with
respect to Default Amounts and Finance Charge Collections at any time and
Principal Collections during the Revolving Period, the Class B Floating
Allocation, and (b) with respect to Principal Collections during the Controlled
Accumulation Period or Rapid Amortization Period, the Class B Fixed Allocation.
"Class B Investor Charge-Off" is defied in subsection 4.12(b).
"Class B Investor Default Amount" means, as to each Transfer Date, an
amount equal to the product of (a) the Aggregate Investor Default Amount for the
related Monthly Period and (b)the Class B Floating Allocation applicable for the
related Monthly Period.
"Class B Investor Interest" means, on any date of determination, an
amount equal to (a) the Class B Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to Class B Holders prior to such
date, minus (c) the aggregate amount of Class B Investor Charge-Offs for all
prior Transfer Dates pursuant to subsection 4.12(b), minus (d) the amount of the
Reallocated Class B Principal Collections allocated pursuant to subsection
4.14(a) on all prior Transfer Dates for which the Collateral Interest has not
been reduced, minus (e) an amount equal to the amount by which the Class B
Investor Interest has been reduced on all prior Transfer Dates pursuant to
subsection 4.12(a) and plus (f) the aggregate amount of Excess Spread allocated
and available on all prior Transfer Dates pursuant to subsection 4. 13(d), for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e); provided that the Class B Investor Interest may not be reduced
below zero.
"Class B Monthly Interest" is defined in subsection 4.8(b).
"Class B Monthly Principal" is defined in subsection 4.9(b).
"Class B Optimal Interest" is defined in subsection 4.8(b).
"Class B Required Amount" is defined in subsection 4.10(b).
"Class B Scheduled Payment Date" means the January 2002 Distribution
Date.
"Class B Servicing Fee" is defined in subsection 3(a).
"Class B Shortfall Amount" means, as of any Distribution Date, an
amount, if positive, equal to (x) Class B Available Funds for such Monthly
Period less, if the Originators are not the Servicer, the Class B Servicing Fee
for such Monthly Period minus (y) Class B Optimal Interest for the related
Monthly Interest Period.
"Closing Date" means December __, 1996.
"Collateral Allocation" means, for any Monthly Period, (a) with
respect to Default Amounts and Finance Charge Collections at any time and
Principal Collections during the Revolving Period, the Collateral Floating
Allocation, and (b) with respect to Principal Collections during the Controlled
Accumulation Period or Rapid Amortization Period, the Collateral Fixed
Allocation.
"Collateral Available Funds" means, as to any Monthly Period, a amount
equal to the Collateral Floating Allocation of Finance Charge Collections
allocated to the Investor Certificates and deposited in the Finance Charge
Account for such Monthly Period (or required to be deposited in the Finance
Charge Account on the related Transfer Date (before giving effect to any
permitted netting)) with respect to the preceding Monthly Period pursuant to the
third paragraph of subsection 4.3(a) of the Agreement.
"Collateral Charge-Off" is defied in subsection 4.12(c).
"Collateral Default Amount" means, as to any Transfer Date, an amount
equal to the product of (a) the Aggregate Investor Default Amount for the
related Monthly Period and (b) the Collateral Floating Allocation applicable for
the related Monthly Period.
"Collateral Fixed Allocation" means, for any Monthly Period following
the Revolving Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral Interest as
of the close of business on the last day of the Revolving Period and the
denominator of which is equal to the Investor Interest as of the close of
business on the last day of the Revolving Period.
"Collateral Floating Allocation" means, for any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the Collateral Interest as of the close of business on
the last day of the preceding Monthly Period and the denominator of which is
equal to the Adjusted Investor Interest as of the close of business on such day;
provided that, with respect to the first Monthly Period, the Collateral Floating
Allocation means the percentage equivalent of a fraction, the numerator of
which is the Collateral Initial Interest and the denominator of which is the
Initial Investor Interest.
"Collateral Initial Interest" means $__________.
"Collateral Interest" means, on any date of determination, a
fractional undivided interest in the Trust which shall consist of the right to
receive, to the extent necessary to make the required payments to the Collateral
Interest Holder under this Series Supplement, the portion of Collections
allocable thereto under the Agreement and this Series Supplement, and funds on
deposit in the Collection Account allocable thereto pursuant to the Agreement
and this Series Supplement. On any date, for purposes of all calculations in the
Agreement and this Series Supplement, the amount of the Collateral Interest
shall be an amount equal to (a) the Collateral Initial Interest, minus (b) the
aggregate amount of principal payments made to the Collateral Interest Holder
prior to such date, minus (c) the aggregate amount of Collateral Charge-Offs for
all prior Transfer Dates pursuant to subsection 4.12(c), minus (d) the amount of
Reallocated Principal Collections allocated pursuant to subsections 4.14(a) and
(b) on all prior Transfer Dates, minus (e) an amount equal to the amount by
which the Collateral Interest has been reduced on all prior Transfer Dates
pursuant to subsections 4.12(a) and (b), and plus (f) the aggregate amount of
Excess Spread allocated and available on all prior Transfer Dates pursuant to
subsection 4.13(h), for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (c), (d) and (e); provided that the Collateral Interest
may not be reduced below zero.
"Collateral Interest Holder" means the entity so designated in the
Loan Agreement.
"Collateral Interest Servicing Fee" is defined in subsection 3(a) of
this Series Supplement.
"Collateral Monthly Interest" is defined in subsection 4.8(c).
"Collateral Monthly Principal" is defined in subsection 4.9(c).
"Collateral Rate" means, for any Interest Period, the rate specified
in the Loan Agreement.
"Controlled Accumulation Amount" means for any Transfer Date with
respect to the Controlled Accumulation Period prior to the payment in full of
the Class A Investor Interest, $__________; provided that if the Controlled
Accumulation Period Length is modified pursuant to subsection 4.11(i), (i) the
Controlled Accumulation Amount for each Transfer Date with respect to the
Controlled Accumulation Period shall mean the amount determined in accordance
with Section 4.11(i) on the date on which the Controlled Accumulation Period has
most recently been modified and (ii) the sum of the Controlled Accumulation
Amounts for all Transfer Dates with respect to the modified Controlled
Accumulation Period shall not be less than the Class A Investor Interest.
"Controlled Accumulation Date" means _______________.
"Controlled Accumulation Period" means, unless a Pay Out Event shall
have occurred prior thereto, the period commencing at the close of business on
the Controlled Accumulation Date or such later date as is determined in
accordance with subsection 4.11(i) and ending on the first to occur of (a) the
commencement of the Rapid Amortization Period and (b) the Series 1996-1
Termination Date.
"Controlled Accumulation Period Length" is defined in subsection
4.11(i).
"Controlled Deposit Amount" means, with respect to any Transfer Date,
the sum of (a) the Controlled Accumulation Amount for such Transfer Date and (b)
any existing Accumulation Shortfall.
"Covered Amount" means an amount determined as of each Transfer Date
with respect to any Interest Period as the product of (a) (i) a fraction, the
numerator of which is the actual number of days in such Interest Period and the
denominator of which is 360, times (ii) the Class A Certificate Rate for such
Monthly Period, and (b)the Principal Funding Account Balance as of the Record
Date preceding such Transfer Date.
"Credit Enhancement" means (a) with respect to the Class A
Certificates, the subordination of the Class B Certificates and the Collateral
Interest, and (b) with respect to the Class B Certificates, the subordination of
the Collateral Interest.
"Credit Enhancement Provider" means the Collateral Interest Holder.
"Cumulative Series Principal Shortfall" means the sum of the Series
Principal Shortfalls (as such term is defined in each of the related
Supplements) for each Series in Group One.
"Daily Principal Shortfall" means, on any date of determination, the
excess of the Group One Monthly Principal Payment for the Monthly Period
relating to such date over the month to date amount of Principal Collections for
such Monthly Period allocable to investor certificates of all outstanding Series
in Group One, not subject to reallocation, which are on deposit or to be
deposited in the Principal Account on such date.
"Deficiency Amount" means, at any date of determination, the sum of
the Class A Deficiency Amount and the Class B Deficiency Amount.
"Distribution Date" means January 15, 1996 and the fifteenth day of
each calendar month thereafter, or if such fifteenth day is not a Business Day,
the next succeeding Business Day.
"Excess Insurer Concentration Amount" means as of any date of
determination an amount equal to the sum of (i) with respect to each Tier 1
Insurer, the amount, if positive, by which the aggregate amount of the portion
of the Aggregate Receivables relating to the financing of insurance premiums of
such Tier 1 Insurer exceeds 25% of the amount of the Aggregate Receivables as of
such date of determination, (ii) with respect to each Tier 2 Insurer, the
amount, if positive, by which the aggregate amount of the portion of the
Aggregate Receivables relating to the financing of insurance premiums of such
Tier 2 Insurer exceeds 10% of the Aggregate Receivables as of such date of
determination and (iii) with respect to each Tier 3 Insurer, the amount, if
positive, by which the aggregate amount of the portion of Aggregate Receivables
relating to the financing of insurance premiums of any single Tier 3 Insurer
exceeds 5% of the Aggregate Receivables as of such date of determination.
"Excess Principal Funding Investment Proceeds" means, with respect to
each Transfer Date relating to the Controlled Accumulation Period, the amount,
if any, by which the Principal Funding Investment Proceeds for such Transfer
Date exceed the Covered Amount determined on such Transfer Date.
"Excess Spread" means, with respect to any Transfer Date, the sum of
(a) the sum of the amounts, if any, with respect to such Transfer Date specified
pursuant to subsections 4.11(a)(iv), 4.11(b)(iii) and 4.11(c)(ii), plus (b) the
Excess Finance Charge Collections, if any, allocated to the Investor Interest
pursuant to Section 4.5 for that Transfer Date.
"Fixed Investor Percentage" means, with respect to any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is the Investor
Interest as of the close of business on the last day of the Revolving Period and
the denominator of which is the greater of (a) the aggregate amount of Beginning
of Month Principal Receivables for such Monthly Period and (b) the sum of the
numerators used to calculate the Investor Percentages (as such term is defined
in the Agreement) for allocations with respect to Principal Receivables for all
outstanding Series on such date of determination; provided that with respect to
any Monthly Period in which a Reset Date occurs, the denominator determined
pursuant to clause (a) shall be (i) the aggregate amount of Beginning of Month
Principal Receivables for such Monthly Period for the period from and including
the first day of such Monthly Period to but excluding the Reset Date and (ii)
the aggregate amount of Principal Receivables in the Trust as of the beginning
of the day on the Reset Date (after adjusting for the aggregate amount of
Principal Receivables added to or removed from the Trust on the Reset Date, if
applicable), for the period from and including the Reset Date to and including
the last day of such Monthly Period.
"Floating Investor Percentage" means, with respect to any Monthly
Period, the percentage equivalent of a fraction, the numerator of which is the
Adjusted Investor Interest as of the close of business on the last day of the
preceding Monthly Period (or with respect to the Monthly Period, the Initial
Investor Interest) and the denominator of which is the greater of (a) the
aggregate amount of Beginning of Month Principal Receivables, and (b) the sum of
the numerators used to calculate the Investor Percentages (as such term is
deemed in the Agreement) for allocations with respect to Finance Charge
Receivables, Default Amounts or Principal Receivables, as applicable, for all
outstanding Series on such date of determination; provided that with respect to
any Monthly Period in which a Reset Date occurs, the denominator determined
pursuant to clause (a) shall be (i) the aggregate amount of Beginning of Month
Principal Receivables for the period from and including the first day of the
prior Monthly Period to but excluding the Reset Date and (ii) the aggregate
amount of Principal Receivables in the Trust as of the beginning of the day on
the Reset Date (after adjusting for the aggregate amount of Principal
Receivables added to or removed from the Trust on the Reset Date, if
applicable), for the period from and including the Reset Date to and including
the last day of such Monthly Period.
"Group One" means Series 1996-1 and each other Series specified in the
related Supplement to be included in Group One.
"Group One Monthly Principal Payment" means, with respect to any
Monthly Period, for all Series in Group One (including Series 1996-1) which are
in an Amortization Period or Accumulation Period (as such terms are defined in
the related Supplements for all Series in Group One), the sum of (a) the
Controlled Distribution Amount for the related Transfer Date for any Series in
its Controlled Amortization Period (as such terms are defined in the related
Supplements for all Series in Group One), (b) the Controlled Deposit Amount for
the related Transfer Date for any Series in its Accumulation Period, other than
its Rapid Accumulation Period, as applicable (as such terms are defined in the
related Supplements for all Series in Group One), (c) the Investor Interest as
of the end of the prior Monthly Period taking into effect any payments to be
made on the following Distribution Date for any Series in Group One in its
Principal Amortization Period or Rapid Amortization Period (as such terms are
defined in the related Supplements for all Series in Group One), (d) the
Adjusted Investor Interest as of the end of the prior Monthly Period taking into
effect any payments or deposits to be made on the following Transfer Date and
Distribution Date for any Series in Group One in its Rapid Accumulation Period
(as such terms are defined in the related Supplements for all Series in Group
One), (e) the excess of the Collateral Interest as of the Transfer Date
occurring in such Monthly Period over the Required Collateral Interest for the
related Transfer Date, assuming no Accumulation Shortfall and (f) such other
amounts as may be specified in the related Supplements for all Series in Group
One.
"Initial Investor Interest" means $_______________.
"Interest Funding Account" shall have the meaning set forth in
subsection 4.18(a).
"Interest Payment Date" shall mean the 15th day of December, March,
June and September (or, if any such day is not a Business Day, the next
succeeding Business Day), and the Expected Final Payment Date, commencing on the
March 17, 1997 Distribution Date.
"Interest Period" means, with respect to any Payment Date, the period
from and including the previous Payment Date through the day preceding such
Payment Date, except the initial Interest Period will be the period from and
including the Closing Date through the day preceding the initial Payment Date.
"Investment Grade Insurer Percentage" means as of any date of
determination a fraction (expressed as a percentage) the numerator of which is
the aggregate amount of the portion of the Aggregate Receivables relating to the
financing of insurance premiums of the Top Ten Investment Grade Insurers as of
such date of determination and the denominator of which is the portion of the
Aggregate Receivables relating to the financing of insurance premiums of the Top
Ten Insurers as of such date of determination.
"Investor Certificates" means the Class A Certificates, the Class B
Certificates and the Collateral Interest.
"Investor Default Amount" means, with respect to any Receivables in
Defaulted Accounts, an amount equal to the product of (a) the Receivables in
Defaulted Accounts and (b) the Floating Investor Percentage on the day such
Receivable became a Receivable in a Defaulted Account.
"Investor Holder" means (a) with respect to the Class A Certificates,
the holder of record of a Class A Certificate, (b) with respect to the Class B
Certificates, the holder of record of a Class B Certificate and (c) with respect
to the Collateral Interest, the Collateral Interest Holder.
"Investor Interest" means, on any date of determination, a amount
equal to the sum of (a) the Class A Investor Interest, (b) the Class B Investor
Interest and (c) the Collateral Interest, each as of such date.
"Investor Percentage" means, for any Monthly Period, (a) with respect
to Finance Charge Receivables, Finance Charge Collections and Default Amounts at
any time and Principal Receivables and Principal Collections during the
Revolving Period, the Floating Investor Percentage and (b) with respect to
Principal Receivables and Principal Collections during the Controlled
Accumulation Period or the Rapid Amortization Period, the Fixed Investor
Percentage.
"Investor Principal Collections" means, with respect to any Monthly
Period, the sum of (a) the aggregate amount deposited or required to be
deposited on the related Transfer Date (before giving effect to any permitted
netting) into the Principal Account for such Monthly Period pursuant to
subsections 4.7(a)(ii), (iii) and (iv), 4.7(b)(ii), (iii) and (iv), or
4.7(c)(ii), in each case, as applicable to such Monthly Period, (b) the
aggregate amount to be treated as Investor Principal Collections pursuant to
subsections 4.11 (a) (iv), and 4.13(a), (b), (c), (d), (g) and (h) for such
Monthly Period (other than such amount paid from Reallocated Principal
Collections), and (c) the aggregate amount of Unallocated Principal Collections
deposited or required to be deposited on the related Transfer Date (before
giving effect to any permitted netting) into the Principal Account pursuant to
subsection 4.7(d).
"Investor Servicing Fee" is defined in subsection 3(a) of this Series
Supplement.
"LIBOR" means, for any Interest Period, the London interbank offered
rate for three-month United States dollar deposits determined by Trustee for
each Interest Period in accordance with the provisions of Section 4.19.
"LIBOR Determination Date" means March 13, 1996 for the initial
Interest Period and the second London Business Day prior to the commencement of
each subsequent Interest Period.
"Loan Agreement" means the agreement among Transferor, each Servicer,
Trustee, and the Collateral Interest Holder, dated as of December 1, 1996, as
amended or modified from time to time.
"London Business Day" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"Minimum Aggregate Principal Receivables" means, as of any date of
determination, an amount equal to the sum of the numerators used to calculate
the Investor Percentage with respect to the allocation of Principal Collections
for each Series outstanding on such date.
"Minimum Transferor Interest" means as of any date of determination,
an amount equal to __% (a) the amount of Principal Receivables as of such date
of determination plus (b) the amount on deposit in the Excess Funding Account on
the date of determination; provided that Transferor may increase or reduce the
percentage used to determine the Minimum Transferor Interest (but not below __%)
upon (a) 30 day's prior notice to Trustee, each Rating Agency and any Credit
Enhancement Provider, (b) satisfaction of the Rating Agency Condition, and (c)
delivery to Trustee and each such Credit Enhancement Provider of an Officer's
Certificate stating that Transferor reasonably believes that such reduction will
not, based on the facts known to such officer at the time of such certification,
then or thereafter cause a Pay Out Event to occur with respect to any Series.
"Monthly Interest Period" is defined in subsection 4.8(a).
"Monthly Payment Rate" means, in respect of any Monthly Period, a
fraction (expressed as a percentage), the numerator of which shall equal the
aggregate Collections received by the Servicer during such Monthly Period and
the denominator of which shall equal the aggregate amount of Principal
Receivables as of the first day of such Monthly Period.
"Monthly Period" is defined in the Agreement, except that the first
Monthly Period with respect to the Investor Certificates begins on and includes
the Closing Date and ends on and includes December 31, 1996.
"Payment Date" shall mean any Interest Payment Date and any Special
Payment Date.
"Pay Out Commencement Date" means the date on which a Trust Pay Out
Event is deemed to occur pursuant to Section 9.1 of the Agreement or a Series
1996-1 Pay Out Event is deemed to occur pursuant to Section 9 of this Series
Supplement.
"Portfolio Adjusted Yield" means, with respect to any Transfer Date,
the average of the percentages obtained for each of the three preceding Monthly
Periods by subtracting the Base Rate from the Portfolio Yield for such Monthly
Period and deducting 0.50% from the result for each Monthly Period.
"Portfolio Yield" means, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, the numerator of which is an
amount equal to the sum of (a) the Finance Charge Collections deposited or
required to be deposited on the related Transfer Date (before giving effect to
any permitted netting) into the Finance Charge Account and allocable to the
Investor Certificates for such Monthly Period and (b) the Principal Funding
Investment Proceeds deposited or required to be deposited into the Finance
Charge Account on the Transfer Date (before giving effect to any permitted
netting) related to such Monthly Period, and (c) the amount of the Reserve Draw
Amount (up to the Available Reserve Account Amount) plus any amounts of interest
and earnings described in Section 4.17, each deposited or required to be
deposited into the Finance Charge Account on the Transfer Date (before giving
effect to any permitted netting) relating to such Monthly Period, after
subtracting the Aggregate Investor Default Amount for such Monthly Period, and
the denominator of which is the Investor Interest as of the close of business on
the last day of such Monthly Period.
"Principal Account" is defined in subsection 4.16(a).
"Principal Funding Account" is defined in subsection 4.16(a).
"Principal Funding Account Balance" means, with respect to any date of
determination, the principal amount, if any, on deposit in the Principal Funding
Account on such date of determination.
"Principal Funding Investment Proceeds" means, with respect to each
Transfer Date, the investment earnings on funds in the Principal Funding Account
(net of investment expenses ad losses) for the period from and including the
immediately preceding Transfer Date to but excluding such Transfer Date.
"Principal Funding Investment Shortfall" means, with respect to each
Transfer Date relating to the Controlled Accumulation Period, the amount, if
any, by which the Principal Funding Investment Proceeds for such Transfer Date
are less than the Covered Amount determined as of such Transfer Date.
"Rapid Amortization Period" means the period commencing on the Pay Out
Commencement Date and ending on the earlier to occur of (a) the Series 1996-1
Termination Date and (b) the termination of the Trust pursuant to Section 12.1.
"Rating Agency" means Moody's and Standard & Poor's.
"Rating Agency Condition" means the notification in writing by each
Rating Agency to Transferor, Servicer and Trustee that an action will not result
in any Rating Agency reducing or withdrawing its then existing rating of the
Class A Certificates or the Class B Certificates.
"Reallocated Class B Principal Collections" means, with respect to any
Transfer Date, Principal Collections applied in accordance with subsection
4.14(a) in an amount not to exceed the product of (a) the Class B Investor
Allocation for the Monthly Period relating to such Transfer Date and (b) the
Investor Percentage for the Monthly Period relating to such Transfer Date and
(c) the amount of Principal Collections for the Monthly Period relating to such
Transfer Date; provided that such amount shall not exceed the Class B Investor
Interest after giving effect to any Class B Investor Charge-Offs for such
Transfer Date.
"Reallocated Collateral Principal Collections" means, with respect to
any Transfer Date, Principal Collections applied in accordance with subsections
4.14(a) and (b) in an amount not to exceed the product of (a) the Collateral
Allocation for the Monthly Period relating to such Transfer Date and (b) the
Investor Percentage for the Monthly Period relating to such Transfer Date and
(c) the amount of Principal Collections for the Monthly Period relating to such
Transfer Date; provided that such amount shall not exceed the Collateral
Interest after giving effect to any Collateral Charge-Offs for such Transfer
Date.
"Reallocated Principal Collections" means the sum of (a) Reallocated
Class B Principal Collections and (b) Reallocated Collateral Principal
Collections.
"Reference Banks" means four major banks in the London interbank
market selected by Servicer.
"Required Collateral Interest" means (a) initially, $_____________ and
(b) on any Transfer Date thereafter, ____% of the Adjusted Investor Interest on
such Transfer Date, after taking into account deposits into the Principal
Funding Account on such Transfer Date and payments to be made on the related
Distribution Date, and the Collateral Interest on the prior Transfer Date, after
any adjustments to be made on such date, but not less than $15,000,000; provided
that (x) if either (i) there is a reduction in the Collateral Interest pursuant
to clause (c), (d) or (e) of the definition of such term or (ii) a Pay Out Event
with respect to the Investor Certificates has occurred, the Required Collateral
Interest for any Transfer Date shall (subject to clauses (y) and (z) equal the
Required Collateral Interest for the Transfer Date immediately preceding such
reduction or Pay Out Event, (y) in no event shall the required Collateral
Interest exceed the sum of the outstanding principal amounts of (i) the Class A
Certificates and (ii) the Class B Certificates, each as of the last day of the
Monthly Period preceding such Transfer Date after taking into account the
payments to be made on the related Distribution Date and (z) the Required
Collateral Interest may be reduced at Transferor's option at any time to a
lesser amount if Transferor, Servicer, the Collateral Interest Holder and
Trustee have been provided evidence that the Rating Agency Condition has been
satisfied.
"Required Investment Grade Insurer Percentage" means 90%.
"Required Reserve Account Amount" means, with respect to any Transfer
Date on or after the Reserve Account Funding Date, an amount equal to (a) 0.50%
of the outstanding principal balance of the Class A Certificates or (b) any
other amount designated by Transferor; provided that if such designation is of a
lesser amount, Transferor shall (i) provide Servicer, the Collateral Interest
Holder and Trustee with evidence that the Rating Agency Condition has been
satisfied and (ii) deliver to Trustee a certificate of an authorized officer to
the effect that, based on the facts known to such officer at such time, in the
reasonable belief of Transferor, such designation will not cause a Pay Out Event
or an event that, after the giving of notice or the lapse of time, would cause a
Pay Out Event to occur with respect to Series 1996-1.
"Reserve Account" is defined in subsection 4.17(a).
"Reserve Account Funding Date" means the Transfer Date which occurs
not later than the earliest of[: (a)] the Transfer Date with respect to the
Monthly Period which commences 3 months prior to the commencement of the
Controlled Accumulation Period; (b) the first Transfer Date for which the
Portfolio Adjusted Yield is less than ____%, but in such event the Reserve
Account Funding Date shall not be required to occur earlier than the Transfer
Date with respect to the Monthly Period which commences 12 months prior to the
commencement of the Controlled Accumulation Period; (c) the first Transfer Date
for which the Portfolio Adjusted Yield is less than ____%, but in such event the
Reserve Account Funding Date shall not be required to occur earlier than the
Transfer Date with respect to the Monthly Period which commences 6 months prior
to the commencement of the Controlled Accumulation Period; and (d) the first
Transfer Date for which the Portfolio Adjusted Yield is less than ____%, but in
such event the Reserve Account Funding Date shall not be required to occur
earlier than the Transfer Date with respect to the Monthly Period which
commences 4 months prior to the commencement of the Controlled Accumulation
Period].
"Reserve Account Surplus" means, as of any Transfer Date following the
Reserve Account Funding Date, the amount, if any, by which the amount on deposit
in the Reserve Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" is defined in subsection 4.17(c).
"Reset Date" means each of (a) a Removal Date on which, if any Series
has been paid in full, Principal Receivables in an aggregate amount
approximately equal to the initial investor interest of such Series are removed
from the Trust and (b) a date on which there is an increase in the Investor
Interest under any Variable Interest issued by the Trust.
"Revolving Period" means the period from and including the Closing
Date to, but not including, the earlier of (a) the day the Controlled
Accumulation Period commences and (b) the Pay Out Commencement Date.
"Series 1996-1" means the Series of the Mellon Bank Premium Finance
Loan Master Trust represented by the Investor Certificates.
"Series 1996-1 Certificates" means the Class A Certificates and the
Class B Certificates.
"Series 1996-1 Holders" means the holder of record of a Series 1996-1
Certificate.
"Series 1996-1 Pay Out Event" is defined in Section 9 of this Series
Supplement.
"Series 1996-1 Termination Date" means the earliest to occur of (a)
the Distribution Date on which the Investor Interest is paid in full, (b) the
______________ ____ Distribution Date and (c) the Trust Termination Date.
"Series Finance Charge Shortfall" means, with respect to any Transfer
Date, an amount equal to the excess, if any, of (a) the sum of the amounts
specified in clauses (a) through (j) of Section 4.13 for that Transfer Date over
(b) the sum of the amounts, if any, with respect to such Transfer Date specified
pursuant to subsections 4.11(a)(vi), 4.11(b)(iv) and 4.11 (c)(iii).
"Series Principal Shortfall" means, with respect to any Transfer Date,
the excess, if any, of (a)(i) with respect to any Transfer Date relating to the
Controlled Accumulation Period, the sum of (A) the Controlled Deposit Amount for
such Transfer Date, (B) on the Transfer Date after the Transfer Date on which
the Class A Adjusted Investor Interest is reduced to zero, the Class B Invested
Amount and (C) the excess, if any, of the Collateral Interest for such Transfer
Date over the Required Collateral Interest for such Transfer Date, (ii) with
respect to any Transfer Date during the Rapid Amortization Period, the Adjusted
Investor Interest and (iii) with respect to any Transfer Date relating to the
Revolving Period, the amount specified in clause (a)(i)(C) above over (b) the
Investor Principal Collections minus the Reallocated Principal Collections
(other than any portions thereof that are applied pursuant to (x) subsection
4.11(a)(iv) and (y) subsection 4.13(c) (to the extent such portions pursuant to
subsection 4.13(c) are available to pay the Class B Investor Default Amount))
for such Transfer Date.
"Series Servicing Fee Percentage" means 0.50%.
"Shared Principal Collections" means, as the context requires, either
(a) the amount allocated to the Investor Certificates which may be applied to
the Series Principal Shortfall with respect to other outstanding Series in Group
One or (b) the amounts allocated to the investor certificates of other Series in
Group One which the applicable Supplements for such Series specify are to be
treated as "Shared Principal Collections" and which may be applied to cover the
Series Principal Shortfall with respect to the Investor Certificates.
"Shortfall Amount" is defined in subsection 4.8(d).
"Special Payment Date" shall mean each Distribution Date with respect
to the Rapid Amortization Period.
"Telerate Page 3750" means the display page currently so designated on
the Dow Xxxxx Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Tier 1 Insurer" means as of any date of determination, an
insurance carrier which has a then current (i) claims-paying ability rating from
Standard & Poor's of at least A-, but below AAA and (ii) insurance financial
strength rating from Moody's of at least A3, but below Aaa.
"Tier 2 Insurer" means as of any date of determination, an insurance
carrier which has a then current (i) claims-paying ability rating from Standard
& Poor's of at least BBB-, but below A- and (ii) insurance financial strength
rating from Moody's of at least Baa3, but below A3.
"Tier 3 Insurer" means as of any date of determination, an insurer
that did not have (i) a claims-paying ability rating of at least investment
grade (i.e., in one of the top four generic rating categories, irrespective of
any plus or minus) from Standard & Poor's and (ii) an insurance financial
strength rating of at least investment grade (i.e., in one of the top four
generic rating categories, irrespective of any plus or minus) from Xxxxx'x.
"Top 10 Insurer" means as of any date of determination any of the
insurance carriers listed one through ten on the most recent Insurer Schedule
delivered to the Rating Agencies by the Originators or the Transferor.
"Top 10 Investment Grade Insurer" means as of any date of
determination any Top 10 Insurer which is an Investment Grade Insurer.
"Unallocated Principal Collections" is deemed in subsection 4.7(d).
SECTION 3. Servicing Compensation. The share of the Servicing Fee
allocable to Series 1996-1 with respect to any Transfer Date (the "Investor
Servicing Fee") shall be equal to one-twelfth of the product of (i) the Series
Servicing Fee Percentage and (ii) the Adjusted Investor Interest as of the last
day of the Monthly Period preceding such Transfer Date; provided that with
respect to the first Transfer Date, the Investor Servicing Fee shall equal
$____________. The share of the Investor Servicing Fee allocable to the Class A
Investor Interest with respect to any Transfer Date (the "Class A Servicing
Fee") shall equal one-twelfth of the product of (i) the Class A Floating
Allocation, (ii) Series Servicing Fee Percentage and (iii) the Adjusted Investor
Interest as of the last day of the Monthly Period preceding such Transfer Date;
provided that with respect to the first Transfer Date, the Class A Servicing Fee
shall equal $____________. The share of the Investor Servicing Fee allocable to
the Class B Investor Interest with respect to any Transfer Date (the "Class B
Servicing Fee") shall equal one-twelfth of the product of (i) the Class B
Floating Allocation, (ii) the Series Servicing Fee Percentage Rate and (iii) the
Adjusted Investor Interest as of the last day of the Monthly Period preceding
such Transfer Date; provided that with respect to the first Transfer Date, the
Class B Servicing Fee shall equal $____________. The share of the Investor
Servicing Fee allocable to the Collateral Interest with respect to any Transfer
Date (the "Collateral Interest Servicing Fee") shall equal one-twelfth of the
product of (i) the Collateral Floating Allocation, (ii) the Series Servicing Fee
Percentage and (iii) the Adjusted Investor Interest as of the last day of the
Monthly Period preceding such Transfer Date; provided that with respect to the
first Transfer Date, the Collateral Interest Servicing Fee shall equal
$_____________. Except as specifically provided above, the Servicing Fee shall
be paid by the cash flows from the Trust allocated to Transferor or the
certificateholders of other Series (as provided in the related Supplements) and
in no event shall the Trust, Trustee or the Investor Holders be liable therefor.
The Class A Servicing Fee shall be payable to Servicer solely to the extent
amounts are available for distribution in respect thereof pursuant to
subsections 4.11(a) (ii) and 4.13(a). The Class B Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to subsections 4.11(b)(ii) and 4.13(c). The Collateral Interest
Servicing Fee shall be payable solely to the extent amounts are available for
distribution in respect thereof pursuant to subsection 4.13(f) or if applicable
subsection 4.11(c)(i).
SECTION 4. Reassignment and Transfer Terms. The Investor Certificates
shall be subject to retransfer to Transferor at its option, in accordance with
subsection 12.2(a), on any Distribution Date on or after the Distribution Date
on which the Investor Interest is reduced to an amount less than or equal to 5%
of the Initial Investor Interest. The deposit required in connection with any
such repurchase shall include the amount, if any, on deposit in the Principal
Funding Account and will be equal to the sum of (a) the Investor Interest and
(b) accrued and unpaid interest on the Investor Certificates through the day
preceding the Distribution Date on which the repurchase occurs.
SECTION 5. Delivery and Payment for the Investor Certificates.
Transferor shall execute and deliver the Series 1996-1 Certificates to Trustee
for authentication in accordance with Section 6.1. The Trustee shall deliver
such Certificates when authenticated in accordance with Section 6.2.
SECTION 6. Depository; Form of Delivery of Investor Certificates. (a)
The Class A Certificates and the Class B Certificates shall be delivered as
Book-Entry Certificates as provided in Sections 6.1 and 6.10.
(b) The Depository for Series 1996-1 shall be The Depository Trust
Company, and the Class A Certificates and Class B Certificates shall be
initially registered in the name of Cede & Co., its nominee.
SECTION 7. Article IV of Agreement. Sections 4.1 through 4.5 shall
read in their entirety as provided in the Agreement. Article IV (except for
Sections 4.1 through 4.5 thereof) shall be read in its entirety as follows and
shall be applicable only to the Investor Certificates:
ARTICLE IV RIGHTS OF HOLDERS AND ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.6 Rights of Holders and the Collateral Interest Holder. The
Investor Certificates shall represent undivided interests in the Trust,
consisting of the right to receive, to the extent necessary to make the required
payments with respect to such Investor Certificates at the times and in the
amounts specified in this Agreement, (a) the applicable Investor Percentage of
Collections received with respect to the Receivables and (b) funds on deposit in
the Collection Account, the Finance Charge Account, the Principal Account, the
Principal Funding Account, the Reserve Account and the Distribution Account. The
Collateral Interest shall be subordinate to the Class A Certificates and the
Class B Certificates to the extent described herein. The Class B Certificates
shall be subordinate to the Class A Certificates to the extent described herein.
Transferor shall not have any interest in the Collection Account, the Finance
Charge Account, the Principal Account, the Principal Funding Account, the
Reserve Account or the Distribution Account, except as specifically provided in
this Article IV.
SECTION 4.7 Allocations. (a) Allocations During the Revolving Period.
During the Revolving Period, Servicer shall, prior to the close of business on
the day any Collections are deposited in the Collection Account, allocate to the
Investor Holders or Transferor and pay or deposit from the Collection Account
the following amounts as set forth below (subject to Section 4.3):
(i) Deposit into the Finance Charge Account an amount equal
to the product of (A) the Investor Percentage on the Date of
Processing of such Collections and (B) the Finance Charge Collections
on such Date of Processing to be applied in accordance with Section
4.11.
(ii) Deposit into the Principal Account an amount equal to
the product of (A) the Collateral Allocation on the Date of Processing
of such Collections, (B) the Investor Percentage on the Date of
Processing of such Collections and (C) the aggregate amount of
Principal Collections on such Date of Processing to be applied first
in accordance with Section 4.14 and then in accordance with Section
4.11(e).
(iii) Deposit into the Principal Account an amount equal to
the product of (A) the Class B Investor Allocation on the Date of
Processing of such Collections, (B) the Investor Percentage on the
Date of Processing of such Collections and (C) the aggregate amount of
Principal Collections on such Date of Processing to be applied first
in accordance with Section 4.14 and then in accordance with Section
4.11(e).
(iv) (A) Deposit into the Principal Account an amount equal
to the product of (1) the Class A Investor Allocation on the Date of
Processing of such Collections, (2) the Investor Percentage on the
Date of Processing of such Collections and (3) the aggregate amount of
Principal Collections Receivables on such Date of Processing; provided
that the amount deposited into the Principal Account pursuant to this
subsection 4.7(a)(iv)(A) shall not exceed the Daily Principal
Shortfall, and (B) pay to Transferor an amount equal to the excess, if
any, identified in the proviso to clause (A) above; provided that the
amount to be paid to Transferor pursuant to this subsection
4.7(a)(iv)(B) with respect to any Date of Processing shall be paid to
Transferor only to the extent that the Transferor Interest on such
Date of Processing is greater than zero (after giving effect to the
inclusion in the Trust of all Receivables created on or prior to such
Date of Processing and the application of payments referred to in
subsection 4.3(b)) and otherwise shall be deposited into the Excess
Funding Account in accordance with subsection 4.7(d).
(b) Allocations During the Controlled Accumulation Period. During the
Controlled Accumulation Period, Servicer shall, prior to the close of business
on the day any Collections are deposited in the Collection Account, allocate to
the Investor Holders or Transferor and pay or deposit from the Collection
Account the following amounts as set forth below (subject to Section 4.3):
(i) Deposit into the Finance Charge Account an amount equal
to the product of (A) the Investor Percentage on the Date of
Processing of such Collections and (B) the aggregate amount of
Collections processed in respect of Finance Charge Receivables on such
Date of Processing to be applied in accordance with Section 4.11.
(ii) Deposit into the Principal Account an amount equal to
the product of (A) the Collateral Allocation on the Date of Processing
of such Collections, (B) the Investor Percentage on the Date of
Processing of such Collections and (C) the aggregate amount of
Principal Collections on such Date of Processing to be applied first
in accordance with Section 4.14 and then in accordance with subsection
4.11(e).
(iii) Deposit into the Principal Account an amount equal to
the product of (A) the Class B Investor Allocation on the Date of
Processing of such Collections, (B) the Investor Percentage on the
Date of Processing of such Collections and (C) the aggregate amount of
Principal Collections on such Date of Processing to be applied first
in accordance with Section 4.14 and then in accordance with subsection
4.11(e).
(iv) (A) Deposit into the Principal Account an amount equal
to the product of (1) the Class A Investor Allocation on the Date of
Processing of such Collections, (2) the Investor Percentage on the
Date of Processing of such Collections and (3) the aggregate amount of
Principal Collections on such Date of Processing; provided that the
amount deposited into the Principal Account pursuant to this
subsection 4.7(b)(iv)(A) shall not exceed the Daily Principal
Shortfall, and (B) pay to Transferor an amount equal to the excess
identified in the proviso to clause (A) above, if any; provided that
the amount to be paid to Transferor pursuant to this subsection
4.7(b)(iv)(B) with respect to any Date of Processing shall be paid to
Transferor only to the extent that the Transferor Interest on such
Date of Processing is greater than zero (after giving effect to the
inclusion in the Trust of all Receivables created on or prior to such
Date of Processing and the application of payments referred to in
subsection 4.3(b)) and otherwise shall be deposited into the Excess
Funding Account in accordance with subsection 4.7(d).
(c) Allocations During the Rapid Amortization Period. During the Rapid
Amortization Period, Servicer shall, prior to the close of business on the day
any Collections are deposited in the Collection Account, allocate to the
Investor Holders and pay or deposit from the Collection Account the following
amounts as set forth below (subject to Section 4.3):
(i) Deposit into the Finance Charge Account an amount equal
to the product of (A) the Investor Percentage on the Date of
Processing of such Collections and (B) the aggregate amount of
Collections processed in respect of Finance Charge Receivables on such
Date of Processing to be applied in accordance with Section 4.11.
(ii) (A) Deposit into the Principal Account an amount equal
to the product of (1) the Investor Percentage on the Date of
Processing of such Collections and (2) the aggregate amount of
Principal Collections on such Date of Processing; provided that the
aggregate amount deposited into the Principal Account pursuant to this
subsection 4.7(c)(ii)(A) shall not exceed the sum of the Investor
Interest as of the close of business on the last day of the prior
Monthly Period (after taking into account any payments to be made on
the Distribution Date relating to such prior Monthly Period and
deposits and any adjustments to be made to the Investor Interest to be
made on the Transfer Date relating to such Monthly Period) and any
Reallocated Principal Collections relating to the Monthly Period in
which such deposit is made and (B) pay to Transferor an amount equal
to the excess, if any, identified in the proviso to clause (A) above;
provided that the amount to be paid to Transferor pursuant to this
subsection 4.7(c)(ii)(B) with respect to any Date of Processing shall
be paid to Transferor only to the extent that the Transferor Interest
on such Date of Processing is greater than zero (after giving effect
to the inclusion in the Trust of all Receivables created on or prior
to such Date of Processing and the application of payments referred to
in subsection 4.3(b)) and otherwise shall be deposited into the Excess
Funding Account in accordance with subsection 4.7(d).
(d) Excess Funding Account. Any Principal Collections or Finance
Charge Collections not allocated and paid to Transferor because of the
limitations contained in subsections 4.7(a)(iv)(B), 4.7(b)(iv) and 4.7(c)(ii)(B)
and any amounts allocable to the Investor Certificates deposited in the
Principal Account pursuant to subsection 2.4(d)(iii) ("Unallocated Principal
Collections") shall be held in the Excess Funding Account and, prior to the
commencement of the Controlled Accumulation Period or the Rapid Amortization
Period shall be paid to Transferor when, and only to the extent that, the
Transferor Interest is greater than zero. For each Transfer Date with respect to
the Controlled Accumulation Period or the Rapid Amortization Period, any such
Unallocated Principal Collections held in the Excess Funding Account on such
Transfer Date shall be included in the Investor Principal Collections which to
the extent available shall be distributed as Available Investor Principal
Collections to be applied pursuant to Section 4.11 on such Transfer Date.
With respect to the Investor Certificates, and notwithstanding
anything in the Agreement or this Series Supplement to the contrary, if at any
time Servicer is required to make daily deposits from the Collection Account
into the Finance Charge Account or the Principal Account pursuant to subsections
4.7(a), 4.7(b) and 4.7(c) with respect to any Monthly Period:
(i) on or after the related Determination Date, Servicer may
withdraw from the Finance Charge Account and the Principal Account any
portion of the principal balance held in each such account in excess
of the aggregate amount that will be required to be distributed to
Investor Holders or (if Transferor is not Servicer) Servicer or
deposited in the Principal Funding Account from that account (directly
or after deposit into the Distribution Account) on the related
Distribution Date and transfer such funds to Transferor (except that
any such excess amount held in the Principal Account, and any portion
of such excess amount held in the Finance Charge Account that would
have been treated as a portion of Investor Principal Collections on
the related Transfer Date, shall be transferred to Transferor only to
the extent that the Transferor Interest on the date of transfer is
greater than zero (after giving effect to the inclusion in the Trust
of all Receivables created on or prior to such date and the
application of payments referred to in subsection 4.3(b) and otherwise
shall be deposited into the Excess Funding Account in accordance with
subsection 4.7(d)); and
(ii) on any date, Servicer may withdraw from the Collection
Account, the Finance Charge Account or the Principal Account any
amounts inadvertently deposited in the such account that should not
have been so deposited.
The foregoing supersedes clause (i)(x) of the fourth grammatical paragraph of
subsection 4.3(a) for purposes of the Investor Certificates.
SECTION 4.8 Determination of Monthly Interest. (a) The amount of
monthly interest distributable from the Finance Charge Account with respect to
the Class A Certificates on any Transfer Date (the "Class A Monthly Interest")
shall equal the lesser of (x) Class A Available Funds for such Monthly Period
less, if the Originators are not the Servicer, the Class A Servicing Fee for
such Monthly period and (y) the product of (i)(A) a fraction, the numerator of
which is the actual number of days in the period (the "Monthly Interest Period")
from (and including) the immediately preceding Distribution Date (or in the case
of the first Distribution Date, the Closing Date) to (but excluding) the related
Distribution Date and the denominator of which is 360, times (B) the Class A
Certificate Rate, times (ii) the outstanding principal balance of the Class A
Certificates determined as of the Record Date preceding the related Transfer
Date (the "Class A Optimal Interest"); provided that in addition to Class A
Monthly Interest an amount equal to the amount of any unpaid Class A Deficiency
Amounts, as defined below, plus an amount equal to the product of (A)(1) a
fraction, the numerator of which is the actual number of days in the related
Monthly Interest Period and the denominator of which is 360, times (2) the sum
of the Class A Certificate Rate in effect with respect to the related Monthly
Period, plus 2% per annum, and (B) any Class A Deficiency Amount from the prior
Transfer Date, as defined below (or the portion thereof which has not
theretofore been paid to Class A Holders) (the "Class A Additional Interest")
shall also be distributable from the Finance Charge Account with respect to the
Class A Certificates on any Transfer Date, and on such Transfer Date Trustee
shall deposit such funds, to the extent available, into the Distribution
Account. The "Class A Deficiency Amount" for any Transfer Date shall equal the
excess, if any, of the aggregate amount accrued pursuant to this subsection
4.8(a) for the prior Monthly Interest Period over the amount actually deposited
or available to be deposited into the Interest Funding Account for payment to
the Class A Holders on the applicable Payment Date.
(b) The amount of monthly interest distributable from the Finance
Charge Account with respect to the Class B Certificates on any Transfer Date
(the "Class B Monthly Interest") shall equal the lesser of (x) Class B Available
Funds for such Monthly Period less, if the Originators are not the Servicer, the
Class B Servicing Fee for such Monthly Period and (y) the product of (i)(A) a
fraction, the numerator of which is the actual number of days in the period from
(and including) the immediately preceding Distribution Date (or in the case of
the first Distribution Date, the Closing Date) to (but excluding) the related
Distribution Date and the denominator of which is 360, times (B) the Class B
Certificate Rate, times (ii) the outstanding principal balance of the Class B
Certificates determined as of the Record Date preceding the related Transfer
Date (the "Class B Monthly Interest"); provided that in addition to the Class B
Monthly Interest an amount equal to the amount of any unpaid Class B Deficiency
Amounts, as defined below, plus an amount equal to the product of (A)(1) a
fraction, the numerator of which is the actual number of days in the related
Monthly Interest Period and the denominator of which is 360, times (2) the
outstanding principal balance of the Class B Certificates determined as of the
Record Date preceding the related Transfer Date (the "Class B Optimal
Interest"); provided that in addition to Class B Monthly Interest an amount
equal to the amount of any unpaid Class A Deficiency Amounts, as defined below,
plus an amount equal to the product of (A) (1) a fraction, the numerator of
which is the actual number of days in the related Monthly Interest Period and
the denominator of which is 360 times (2) the Monthly sum of the Class B
Certificate Rate in effect with respect to the related Monthly Period, plus 2%
per annum, and (B) any Class B Deficiency Amount from the prior Transfer Date,
as defined below (or the portion thereof which has not theretofore been paid to
Class B Holders) (the "Class B Additional Interest") shall also be distributable
from the Finance Charge Account with respect to the Class B Certificates on any
Transfer Date, and on such Transfer Date Trustee shall deposit such funds, to
the extent available, into the Distribution Account. The "Class B Deficiency
Amount" for any Transfer Date shall equal the excess, if any, of the aggregate
amount accrued pursuant to this subsection 4.8(b) as of the prior Monthly
Interest Period over the amount actually deposited or available to be deposited
into the Interest Funding Account for payment to the Class B Holders on the
applicable Payment Date.
(c) The amount of monthly interest distributable from the Finance
Charge Account with respect to the Collateral Interest on any Transfer Date
shall equal the product of (i)(A) a fraction, the numerator of which is the
actual number of days in the period from (and including) the immediately
preceding Distribution Date (or in the case of the first Distribution Date, the
Closing Date) to (but excluding) the related Distribution Date and the
denominator of which is 360, times (B) the Collateral Rate in effect with
respect to the related Interest Period, times (ii) the Collateral Interest
determined as of the Record Date preceding such Transfer Date (the "Collateral
Monthly Interest"); provided that for the purposes of determining Collateral
Monthly Interest only, the Collateral Rate shall not exceed a per annum rate of
1% in excess of LIBOR as determined on the related LIBOR Determination Date.
(d) In the event a Class A Shortfall Amount or Class B Shortfall
amount is not paid on any Distribution Date, interest shall accrue on such
Shortfall Amount at the applicable Class A or Class B LIBOR Rate plus 2% (such
Shortfall Amount plus interest thereon, compounded monthly, a "Class A
Carry-Over Amount" or "Class B Carry-Over Amount", respectively) and shall be
payable on the next succeeding Distribution Date.
SECTION 4.9 Determination of Monthly Principal. (a) The amount of
monthly principal distributable from the Principal Account with respect to the
Class A Certificates on each Transfer Date ("Class A Monthly Principal"),
beginning with the Transfer Date in the month following the month in which the
Controlled Accumulation Period or, if earlier, the Rapid Amortization Period,
begins, shall be equal to the least of (i) the Available Investor Principal
Collections on deposit in the Principal Account with respect to such Transfer
Date, (ii) for each Transfer Date with respect to the Controlled Accumulation
Period prior to the Class A Scheduled Payment Date, the Controlled Deposit
Amount for such Transfer Date and (iii) the Class A Adjusted Investor Interest
on such Transfer Date prior to any deposit into the Principal Funding Account to
be made on such day.
(b) The amount of monthly principal distributable from the Principal
Account with respect to the Class B Certificates on each Transfer Date (the
"Class B Monthly Principal") for the Controlled Accumulation Period, beginning
with the Transfer Date after the one on which the Class A Adjusted Investor
Interest is reduced to zero (and for the Rapid Amortization Period beginning
with the Transfer Date on which the Class A Investor Interest is reduced to
zero, after giving effect to payments to be made on the related Distribution
Date), shall be an amount equal to the lesser of (i) the excess, if any, of (A)
the Available Investor Principal Collections on such Transfer Date over (B) any
Class A Monthly Principal on such Transfer Date and (ii) the Class B Investor
Interest (after taking into account any adjustments to be made on such Transfer
Date pursuant to Sections 4.12 and 4.14) on such Transfer Date.
(c) The amount of monthly principal (the "Collateral Monthly
Principal") distributable from the Principal Account with respect to the
Collateral Interest on each Transfer Date shall be (i) during the Revolving
Period following any reduction of the Required Collateral Interest pursuant to
clause (z) of the proviso in the definition thereof an amount equal to the
lesser of (A) the excess, if any, of the Collateral Interest (after taking into
account any adjustments to be made on such Transfer Date pursuant to Sections
4.12 and 4.14) over the Required Collateral Interest on such Transfer Date, and
(B) the Available Investor Principal Collections on such Transfer Date or (ii)
during the Controlled Accumulation Period or Rapid Amortization Period an amount
equal to the lesser of (A) the excess, if any, of the Collateral Interest (after
taking into account any adjustments to be made on such Transfer Date pursuant to
Sections 4.12 and 4.14) over the Required Collateral Interest on such Transfer
Date, and (B) the excess, if any, of (1) the Available Investor Principal
Collections on such Transfer Date over (2) the sum of the Class A Monthly
Principal and the Class B Monthly Principal for such Transfer Date.
SECTION 4.10 Coverage of Required Amount. (a) On or before each
Transfer Date, Servicer shall determine the amount (the "Class A Required
Amount"), if any, by which the sum of (i) the Class A Monthly Interest for such
Transfer Date, plus (ii) the Class A Deficiency Amount, if any, for such
Transfer Date, plus (iii) the Class A Additional Interest, if any, for such
Transfer Date, plus (iv) the Class A Servicing Fee for the prior Monthly Period
plus (v) the Class A Servicing Fee, if any, due but not paid on any prior
Transfer Date, plus (vi) the Class A Investor Default Amount, if any, for such
Transfer Date, exceeds the Class A Available Funds deposited or available to be
deposited for the related Monthly Period.
(b) On or before each Transfer Date, Servicer shall also determine the
amount (the "Class B Required Amount"), if any, equal to the sum of (i) the
amount, if any, by which the sum of (A) the Class B Monthly Interest for such
Transfer Date, plus (B) the Class B Deficiency Amount, if any, for such Transfer
Date plus (C) the Class B Additional Interest, if any, for such Transfer Date,
plus (D) the Class B Servicing Fee for the prior Monthly Period plus (E) the
Class B Servicing Fee, if any, due but not paid on any prior Transfer Date,
exceeds the Class B Available Funds deposited or available to be deposited for
the related Monthly Period plus (ii) the Class B Investor Default Amount, if
any, for the prior Monthly Period.
(c) If the sum of the Class A Required Amount and the Class B Required
Amount for such Transfer Date is greater than zero, Servicer shall give written
notice to Trustee of such positive Class A Required Amount or Class B Required
Amount on or before such Transfer Date. In addition:
(i) If the Class A Required Amount for such Transfer Date is
greater than zero, all or a portion of the Excess Spread with respect
to such Transfer Date in an amount equal to the Class A Required
Amount, to the extent available, for such Transfer Date shall be
distributed from the Finance Charge Account on such Transfer Date
pursuant to subsection 4.13(a). If the Class A Required Amount for
such Transfer Date exceeds the amount of Excess Spread with respect to
such Transfer Date, the Principal Collections allocable to the
Collateral Interest and the Class B Certificates with respect to the
prior Monthly Period shall be applied as specified in Section 4.14.
(ii) If the Class B Required Amount for such Transfer Date
is greater than zero, all or a portion of the Excess Spread with
respect to such Transfer Date in an amount equal to the Class B
Required Amount, to the extent available, for such Transfer Date shall
be distributed from the Finance Charge Account on such Transfer Date
pursuant to subsection 4.13(c). If the Class B Required Amount for
such Transfer Date exceeds the amount of Excess Spread available to
fund the Class B Required Amount pursuant to subsection 4.13(c), the
Principal Collections allocable to the Collateral Interest (after
application to the Class A Required Amount) shall be applied as
specified in Section 4.14;
provided that the sum of any payments pursuant to this paragraph shall not
exceed the sum of the Class A Required Amount and the Class B Required Amount.
SECTION 4.11 Monthly Payments. On or before each Transfer Date,
Servicer shall instruct Trustee in writing (which writing shall be substantially
in the form of Exhibit B) to withdraw, and Trustee, acting in accordance with
such instructions, shall withdraw on such Transfer Date or the related
Distribution Date, as applicable, to the extent of available funds, the amounts
required to be withdrawn from the Finance Charge Account, the Principal Account
and the Principal Funding Account as follows:
(a) An amount equal to the Class A Available Funds for the related
Monthly Period will be distributed or deposited on each Transfer Date, to the
extent available, in the following priority:
(i) an amount equal to Class A Monthly Interest, plus any
Class A Deficiency Amount, plus any Class A Additional Interest (in
each case for such Transfer Date) shall be deposited by Servicer or
Trustee into the Interest Funding Account for payment to Class A
Holders on the applicable Payment Date;
(ii) an amount equal to the Class A Servicing Fee for such
Transfer Date, plus any Class A Servicing Fee due but not paid to
Servicer on any prior Transfer Date shall be distributed to Servicer;
(iii) an amount equal to the Class A Investor Default
Amount, if any, for the preceding Monthly Period shall be treated as a
portion of Investor Principal Collections and deposited into the
Principal Account on such Transfer Date; and
(iv) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth in
Section 4.13.
If the Back-up Servicer is the Servicer, the amounts described in
clause (ii) of this subsection 4.11(a) shall be paid prior to the amounts
described in clause (i) of this subsection 4.11(a).
(b) An amount equal to the Class B Available Funds for the related
Monthly Period will be distributed or deposited on each Transfer Date, to the
extent available, in the following priority:
(i) an amount equal to the Class B Monthly Interest, plus
any Class B Deficiency Amount, plus any Class B Additional Interest
(in each case for such Transfer Date) shall be deposited by Servicer
or Trustee into the Interest Funding Account for payment to the Class
B Holders on the applicable Payment Date;
(ii) an amount equal to the Class B Servicing Fee for such
Transfer Date, plus any Class B Servicing Fee due but not paid to
Servicer on any prior Transfer Date for such Transfer Date shall be
distributed to Servicer; and
(iii) the balance, if any, shall constitute Excess Spread
and shall be allocated and distributed or deposited as set forth in
Section 4.13.
If the Back-up Servicer is Servicer, the amounts described in clause
(ii) of this subsection 4.11(b) shall be paid prior to the amounts described in
clause (i) of this subsection 4.11(b).
(c) An amount equal to the Collateral Available Funds for the related
Monthly Period will be distributed or deposited on each Transfer Date, to the
extent available, in the following priority:
(i) if the Originators are no longer Servicer, an amount
equal to the Collateral Interest Servicing Fee for such Transfer Date,
plus any Collateral Interest Servicing Fee due but not paid to
Servicer on any prior Transfer Date shall be distributed to Servicer;
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth in
Section 4.13.
(d) During the Revolving Period, an amount equal to the Available
Investor Principal Collections for the related Monthly Period will be
distributed on each Transfer Date, to the extent available, in the following
priority:
(i) an amount equal to the Collateral Monthly Principal for
such Transfer Date shall be distributed to the Collateral Interest
Holder in accordance with the Loan Agreement;
(ii) an amount equal to the lesser of (A) the product of (1)
a fraction, the numerator of which is equal to the Available Invest
Principal Collections remaining after the application specified in
subsection 4.11(d)(i) and the denominator of which is equal to the sum
of the available investor principal Collections available for sharing
as specified in the related Series Supplement for each Series in Group
One and (2) the Cumulative Series Principal Shortfall and (B) such
remaining Available Investor Principal Collections, shall remain in
the Principal Account to be treated as Shared Principal Collections
and applied to Series in Group One other than this Series 1996-1; and
(iii) an amount equal to the excess, if any, of (A) the
Available Investor Principal Collections for such Transfer Date over
(B) the applications specified in subsections 4.11(d)(i) and (ii)
above shall be paid to Transferor; provided that the amount to be paid
to Transferor pursuant to this subsection 4.11(d)(iii) with respect to
such Transfer Date shall be paid to Transferor only to the extent that
the Transferor Interest on such Transfer Date is greater than zero
(after giving effect to the inclusion in the Trust of all Receivables
created on or prior to such Transfer Date and the application of
payments referred to in subsection 4.3(b)) and otherwise shall be
deposited into the Excess Funding Account in accordance with
subsection 4.7(d).
(e) During the Controlled Accumulation Period or the Rapid
Amortization Period, an amount equal to the Available Investor Principal
Collections for the related Monthly Period will be distributed on each Transfer
Date, to the extent available, in the following priority:
(i) an amount equal to the Class A Monthly Principal for
such Transfer Date, shall be (A) during the Controlled Accumulation
Period, deposited into the Principal Funding Account, and (B) during
the Rapid Amortization Period, deposited into the Distribution
Account;
(ii) after giving effect to the distribution referred to in
clause (i), an amount equal to the Class B Monthly Principal, shall be
deposited into the Distribution Account;
(iii) for each Transfer Date (other than the Transfer Date
immediately preceding the Series 1996-1 Termination Date, in which
case on the Series 1996-1 Termination Date) after giving effect to the
distribution referred to in clauses (i) and (ii), an amount equal to
Collateral Monthly Principal shall be distributed to the Collateral
Interest Holder in accordance with the Loan Agreement;
(iv) an amount equal to the lesser of (A) the product of (1)
a fraction, the numerator of which is equal to the Available Investor
Principal Collections remaining after the application specified in
subsections 4.11(e)(i), (ii) and (iii) and the denominator of which is
equal to the sum of the available investor principal Collections
available for sharing as specified in the related Supplement for each
Series in Group One and (2) the Cumulative Series Principal Shortfall
and (B) such remaining Available Investor Principal Collections, shall
remain in the Principal Account to be treated as Shared Principal
Collections and applied to Series in Group One other than this Series
1996-1; and
(v) an amount equal to the excess, if any, of (A) the
Available Investor Principal Collections over (B) the applications
specified in subsections 4.11(e)(i) through (iv) shall be paid to
Transferor; provided that the amount to be paid to Transferor pursuant
to this subsection 4.11(e)(v) with respect to such Transfer Date shall
be paid to Transferor only to the extent that the Transferor Interest
on such Transfer Date is greater than zero (after giving effect to the
inclusion in the Trust of all Receivables created on or prior to such
Transfer Date and the application of payments referred to in
subsection 4.3(b)) and otherwise shall be deposited into the Excess
Funding Account in accordance with subsection 4.7(d).
(f) On the earlier to occur of (i) the first Transfer Date with
respect to the Rapid Amortization Period and (ii) the Transfer Date immediately
preceding the Class A Scheduled Payment Date, Trustee, acting in accordance with
instructions from Servicer, shall withdraw from the Principal Funding Account
and deposit in the Distribution Account the amount on deposit in the Principal
Funding Account.
(g) On each Payment Date, Trustee shall pay in accordance with Section
5.1 to the Class A Holders from the Interest Funding Account, the amount
deposited into the Interest Funding Account pursuant to subsection 4.11(a)(i) on
the preceding Transfer Date and (b) to the Class B Holders from the Interest
Funding Account, the amount deposited into the Interest Funding Account pursuant
to subsection 4.11(b)(i) on the preceding Transfer Date.
(h) On the earlier to occur of (i) the first Special Payment Date with
respect to the Rapid Amortization Period and (ii) the Class A Scheduled Payment
Date and on each Payment Date thereafter, Trustee, acting in accordance with
instructions from Servicer, shall pay in accordance with Section 5.1 from the
Distribution Account the amount so deposited into the Distribution Account
pursuant to subsections 4.11(e) and (f) on the related Transfer Date in the
following priority:
(i) an amount equal to the lesser of such amount on deposit
in the Distribution Account and the Class A Investor Interest shall be
paid to the Class A Holders; and
(ii) for each Special Payment Date with respect to the Rapid
Amortization Period and on the Class B Scheduled Payment Date, after
giving effect to the distributions referred to in clause (i) above, an
amount equal to the lesser of such amount on deposit in the
Distribution Account and the Class B Investor Interest shall be paid
to the Class B Holders.
(i) The Controlled Accumulation Period is scheduled to commence at the
close of business on the Controlled Accumulation Date; provided that if the
Controlled Accumulation Period Length (determined as described below) on any
Determination Date on or after the _____________ Determination Date is less than
12 months, upon written notice to Trustee, Transferor and each Rating Agency,
Servicer, at its option, may elect to modify the date on which the Controlled
Accumulation Period actually commences to the first day of the month that is a
number of months prior to the month in which the Class A Scheduled Payment Date
occurs at least equal to the Controlled Accumulation Period Length (so that, as
a result of such election, the number of Monthly Periods in the Controlled
Accumulation Period will at least equal the Controlled Accumulation Period
Length); provided that (i) the length of the Controlled Accumulation Period will
not be less than one month; (ii) such determination of the Controlled
Accumulation Period Length shall be made on each Determination Date on and after
the _____________ Determination Date but prior to the commencement of the
Controlled Accumulation Period, and any election to shorten the Controlled
Accumulation Period shall be subject to the subsequent lengthening of the
Controlled Accumulation Period to the Controlled Accumulation Period Length
determined on any subsequent Determination Date, but the Controlled Accumulation
Period shall in no event commence prior to the Controlled Accumulation Date, and
(iii) notwithstanding any other provision of this Series Supplement to the
contrary, no election to postpone the commencement of the Controlled
Accumulation Period shall be made after a Pay Out Event shall have occurred and
be continuing with respect to any other Series. The "Controlled Accumulation
Period Length" will mean a number of months such that the amount available for
distribution of principal on the Class A Certificates on the Class A Scheduled
Payment Date is expected to equal or exceed the Class A Investor Interest,
assuming for this purpose that (1) the payment rate with respect to Principal
Collections remains constant at the lowest level of such payment rate during the
twelve preceding Monthly Periods (or such lower payment rate as Servicer may
select), (2) the total amount of Principal Receivables in the Trust (and the
principal amount on deposit in the Excess Funding Account, if any) remains
constant at the level on such date of determination, (3) no Pay Out Event with
respect to any Series will subsequently occur and (4) no additional Series
(other than any Series being issued on such date of determination) will be
subsequently issued. Any notice by Servicer electing to modify the commencement
of the Controlled Accumulation Period pursuant to this clause (i) shall specify
(i) the Controlled Accumulation Period Length, (ii) the commencement date of the
Controlled Accumulation Period and (iii) the Controlled Accumulation Amount with
respect to each Monthly Period during the Controlled Accumulation Period.
SECTION 4.12 Investor Charge-Offs. (a) On or before each Transfer
Date, Servicer shall calculate the Class A Investor Default Amount. If on any
Transfer Date, the Class A Investor Default Amount for the prior Monthly Period
exceeds the sum of the amount allocated with respect thereto pursuant to
subsection 4.11(a)(iii), subsection 4.13(a) and Section 4.14 with respect to
such Monthly Period, the Collateral Interest (after giving effect to reductions
for any Collateral Charge-Offs and any Reallocated Principal Collections on such
Transfer Date) will be reduced by the amount of such excess, but not by more
than the lesser of the Class A Investor Default Amount and the Collateral
Interest (after giving effect to reductions for any Collateral Charge-Offs and
any Reallocated Principal Collections on such Transfer Date) for such Transfer
Date. If such reduction would cause the Collateral Interest to be a negative
number, the Collateral Interest will be reduced to zero, and the Class B
Investor Interest (after giving effect to reductions for any Class B Investor
Charge-Offs and any Reallocated Class B Principal Collections on such Transfer
Date) will be reduced by the amount by which the Collateral Interest would have
been reduced below zero. If such reduction would cause the Class B Investor
Interest to be a negative number, the Class B Investor Interest will be reduced
to zero, and the Class A Investor Interest will be reduced by the amount by
which the Class B Investor Interest would have been reduced below zero, but not
by more than the Class A Investor Default Amount for such Transfer Date (a
"Class A Investor Charge-Off"). If the Class A Investor Interest has been
reduced by the amount of any Class A Investor Charge-Offs, it will be reimbursed
on any Transfer Date (but not by an amount in excess of the aggregate Class A
Investor Charge-Offs) by the amount of Excess Spread allocated and available for
such purpose pursuant to subsection 4.13(b).
(b) On or before each Transfer Date, Servicer shall calculate the
Class B Investor Default Amount. If on any Transfer Date, the Class B Investor
Default Amount for the prior Monthly Period exceeds the amount of Excess Spread
and Reallocated Collateral Principal Collections which are allocated and
available to fund such amount pursuant to subsection 4.13(c) and Section 4.14,
the Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and any Reallocated Principal Collections on such Transfer Date and
any adjustments with respect thereto as described in Section 4.12(a)) will be
reduced by the amount of such excess but not by more than the lesser of the
Class B Investor Default Amount and the Collateral Interest (after giving effect
to reductions for any Collateral Charge-Offs and any Reallocated Principal
Collections on such Transfer Date and any adjustments with respect thereto as
described in subsection 4.12(a)) for such Transfer Date. If such reduction would
cause the Collateral Interest to be a negative number, the Collateral Interest
shall be reduced to zero and the Class B Investor Interest shall be reduced by
the amount by which the Collateral Interest would have been reduced below zero,
but not by more than the Class B Investor Default Amount for such Transfer Date
(a "Class B Investor Charge-Off"). The Class B Investor Interest will also be
reduced by the amount of Reallocated Class B Principal Collections in excess of
the Collateral Interest pursuant to Section 4.14 and the amount of any portion
of the Class B Investor Interest allocated to the Class A Certificates to avoid
a reduction in the Class A Investor Interest pursuant to subsection 4.12(a). The
Class B Investor Interest will thereafter be reimbursed (but not to an amount in
excess of the unpaid principal balance of the Class B Certificates) on any
Transfer Date by the amount of Excess Spread allocated and available for that
purpose as described under subsection 4.13(d).
(c) On or before each Transfer Date, Servicer shall calculate the
Collateral Default Amount. If on any Transfer Date, the Collateral Default
Amount for the prior Monthly Period exceeds the amount of Excess Spread which is
allocated and available to fund such amount pursuant to subsection 4.13(g), the
Collateral Interest will be reduced by the amount of such excess but not by more
than the lesser of the Collateral Default Amount and the Collateral Interest for
such Transfer Date (a "Collateral Charge-Off"). The Collateral Interest will
also be reduced by the amount of Reallocated Principal Collections pursuant to
Section 4.14 and the amount of any portion of the Collateral Interest allocated
to the Class A Certificates or the Class B Certificates to avoid a reduction in
the Class A Investor Interest, pursuant to subsection 4.12(a), or the Class B
Investor Interest, pursuant to subsection 4.12(b), respectively. The Collateral
Interest will thereafter be reimbursed on any Transfer Date by the amount of the
Excess Spread allocated and available for that purpose as described under
subsection 4.13(h).
SECTION 4.13 Excess Spread. On or before each Transfer Date, Servicer
shall instruct Trustee in writing (which writing shall be substantially in the
form of Exhibit B) to apply, and Trustee, acting in accordance with such
instructions shall apply, Excess Spread with respect to the related Monthly
Period, to make the following distributions on each Transfer Date in the
following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Transfer Date will be used to fund the Class A Required Amount
and be applied in accordance with, and in the priority set forth in, subsection
4.11(a);
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated as a
portion of Investor Principal Collections and deposited into the Principal
Account on such Transfer Date;
(c) an amount equal to the Class B Required Amount, if any, with
respect to such Transfer Date will be used to fund the Class B Required Amount
and be applied first in accordance with, and in the priority set forth in,
subsection 4.11(b) and then any remaining amount available to pay the Class B
Investor Default Amount shall be treated as a portion of Investor Principal
Collections and deposited into the Principal Account on such Transfer Date;
(d) an amount equal to the aggregate amount by which the Class B
Investor Interest has been reduced below the initial Class B Investor Interest
for reasons other than the payment of principal to the Class B Holders (but not
in excess of the aggregate amount of such reductions which have not been
previously reimbursed) will be treated as a portion of Investor Principal
Collections and deposited into the Principal Account on such Transfer Date;
(e) an amount equal to the Collateral Monthly Interest plus the amount
of any past due Collateral Monthly Interest for such Transfer Date will be paid
to the Collateral Interest Holder in accordance with the Loan Agreement;
(f) if the Originators are Servicer, an amount equal to the aggregate
amount of accrued but unpaid Collateral Interest Servicing Fees will be paid to
Servicer;
(g) an amount equal to the Collateral Default Amount, if any, for the
prior Monthly Period will be treated as a portion of Investor Principal
Collections and deposited into the Principal Account on such Transfer Date;
(h) an amount equal to the aggregate amount by which the Collateral
Interest has been reduced below the Required Collateral Interest for reasons
other than the payment of principal to the Collateral Interest Holder (but not
in excess of the aggregate amount of such reductions which have not been
previously reimbursed) will be treated as a portion of Investor Principal
Collections and deposited into the Principal Account on such Transfer Date;
(i) on each Transfer Date from and after the Reserve Account Funding
Date, but prior to the date on which the Reserve Account terminates as described
in subsection 4.17(f), an amount up to the excess, if any, of the Required
Reserve Account Amount over the Available Reserve Account Amount shall be
deposited into the Reserve Account;
(j) an amount equal to the sum of (x) any Class A Shortfall Amount for
the current Distribution Date and (y) any accrued and unpaid Class A Carry-Over
Amount from a prior Distribution Date shall be deposited by Servicer or Trustee
in the Interest Funding Account for payment to the Class A Holders on the
applicable Payment Date;
(k) an amount equal to the sum of (x) any Class B Shortfall Amount for
the current Distribution Date and (y) any accrued and unpaid Class B Carry-Over
Amount from a prior Distribution Date shall be deposited by Servicer or Trustee
into the Interest Funding Account for payment to the Class B Holders on the
applicable Payment Date;
(l) an amount equal to all other amounts due under the Loan Agreement
(to the extent payable from "Available Principal Funds," as defined therein)
shall be distributed in accordance with the Loan Agreement; and
(m) the balance, if any, after giving effect to the payments made
pursuant to clauses (a) through (l) shall constitute "Excess Finance Charge
Collections" to be applied with respect to other Series in accordance with
Section 4.5 of the Agreement.
SECTION 4.14 Reallocated Principal Collections. On or before each
Transfer Date, Servicer shall instruct Trustee in writing (which writing shall
be substantially in the form of Exhibit B) to, and Trustee in accordance with
such instructions shall, withdraw from the Principal Account and apply
Reallocated Principal Collections (applying all Reallocated Collateral Principal
Collections in accordance with subsections 4.14(a) and (b) prior to applying any
Reallocated Class B Principal Collections in accordance with subsection 4.14(a)
for any amounts still owing after the application of Reallocated Collateral
Principal Collections) with respect to such Transfer Date, to make the following
distributions on each Transfer Date in the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A Required
Amount, if any, with respect to such Transfer Date over (ii) the amount of
Excess Spread with respect to the related Monthly Period, shall be applied
pursuant to subsections 4.11(a)(i), (ii), and (iii) and
(b) an amount equal to the excess, if any, of (i) the Class B Required
Amount, if any, with respect to such Transfer Date over (ii) the amount of
Excess Spread allocated and available to the Class B Certificates pursuant to
subsection 4.13(c) on such Transfer Date shall be applied first pursuant to
subsections 4.11(b)(i) and (ii) and then pursuant to subsection 4.13(c).
On each Transfer Date, the Collateral Interest shall be reduced by the
amount of Reallocated Collateral Principal Collections and by the amount of
Reallocated Class B Principal Collections for such Transfer Date. If such
reduction would cause the Collateral Interest (after giving effect to any
Collateral Charge-Offs for such Transfer Date) to be a negative number, the
Collateral Interest (after giving effect to any Collateral Charge-Offs for such
Transfer Date) shall be reduced to zero and the Class B Investor Interest shall
be reduced by the amount by which the Collateral Interest would have been
reduced below zero. If the reallocation of Reallocated Principal Collections
would cause the Class B Investor Interest (after giving effect to any Class B
Investor Charge-Offs for such Transfer Date) to be a negative number on any
Transfer Date, Reallocated Principal Collections shall be reallocated on such
Transfer Date in an aggregate amount not to exceed the amount which would cause
the Class B Investor Interest (after giving effect to any Class B Investor
Charge-Offs for such Transfer Date) to be reduced to zero.
SECTION 4.15 Shared Principal Collections. (a) The portion of Shared
Principal Collections on deposit in the Principal Account equal to the amount of
Shared Principal Collections allocable to Series 1996-1 on any Transfer Date
shall be applied as Available Investor Principal Collections pursuant to Section
4.11 and pursuant to such Section 4.11 shall be deposited in the Distribution
Account or distributed in accordance with the Loan Agreement.
(b) Shared Principal Collections allocable to Series 1996-1 with
respect to any Transfer Date means an amount equal to the Series Principal
Shortfall, if any, with respect to Series 1996-1 for such Transfer Date;
provided that if the aggregate amount of Shared Principal Collections for all
Series for such Transfer Date is less than the Cumulative Series Principal
Shortfall for such Transfer Date, then Shared Principal Collections allocable to
Series 1996-1 on such Transfer Date shall equal the product of (i) Shared
Principal Collections for all Series for such Transfer Date and (ii) a fraction,
the numerator of which is the Series Principal Shortfall with respect to Series
1996-1 for such Transfer Date and the denominator of which is the aggregate
amount of Cumulative Series Principal Shortfall for all Series for such Transfer
Date.
(c) Solely for the purpose of determining the amount of Available
Investor Principal Collections to be treated as Shared Principal Collections on
any Transfer Date allocable to other Series in Group One, on each Determination
Date, Servicer shall determine the Class A Required Amount, Class B Required
Amount, Excess Spread and Reallocated Principal Collections as of such
Determination Date for the following Transfer Date.
SECTION 4.16 Principal Account and Principal Funding Account. (a) The
Trustee shall establish and maintain in the name of the Trust, on behalf of the
Trust, for the benefit of the Investor Holders, two segregated trust accounts
(the "Principal Account" and the "Principal Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Investor Holders or establish and maintain the Principal Account
and the Principal Funding Account with a Qualified Institution. The Trustee
shall possess all right, title and interest in all funds on deposit from time to
time in the Principal Account and the Principal Funding Account and in all
proceeds thereof. The Principal Account and the Principal Funding Account shall
be under the sole dominion and control of Trustee for the benefit of the
Investor Holders. If at any time a Qualified Institution holding the Principal
Account and the Principal Funding Account ceases to be a Qualified Institution,
Transferor shall notify Trustee, and Trustee upon being notified (or Servicer on
its behalf) shall, within 10 Business Days, establish a new Principal Account
and a new Principal Funding Account meeting the conditions specified above, and
shall transfer any cash or any investments to such new Principal Account and
Principal Funding Account. The Trustee, at the direction of Servicer, shall (i)
make withdrawals from the Principal Account and the Principal Funding Account
from time to time, in the amounts and for the purposes set forth in this Series
Supplement, and (ii) on each Transfer Date (from and after the commencement of
the Controlled Accumulation Period) prior to termination of the Principal
Funding Account make a deposit into the Principal Funding Account in the amount
specified in, and otherwise in accordance with, subsection 4.11(e).
(b) Funds on deposit in the Principal Account and the Principal
Funding Account shall be invested pursuant to the written direction of Servicer
by Trustee in Permitted Investments. Funds on deposit in the Principal Funding
Account on any Transfer Date, after giving effect to any withdrawals from the
Principal Funding Account on such Transfer Date, shall be invested in such
investments that will mature so that such funds will be available for withdrawal
on or prior to the following Transfer Date. The Trustee shall maintain for the
benefit of the Investor Holders possession of the negotiable instruments or
securities, if any, evidencing such Permitted Investments. No Permitted
Investment shall be disposed of prior to its maturity.
On the Transfer Date occurring in the month following the commencement
of the Controlled Accumulation Period and on each Transfer Date thereafter with
respect to the Controlled Accumulation Period, Trustee, acting at Servicer's
direction given on or before such Transfer Date, shall transfer from the
Principal Funding Account to the Finance Charge Account the Principal Funding
Investment Proceeds on deposit in the Principal Funding Account, but not in
excess of the Covered Amount, for application as Class A Available Funds applied
pursuant to subsection 4.11(a)(i).
Any Excess Principal Funding Investment Proceeds shall be paid to
Transferor on each Transfer Date. An amount equal to any Principal Funding
Investment Shortfall will be deposited in the Finance Charge Account on each
Transfer Date from the Reserve Account to the extent funds are available
pursuant to subsection 4.17(d). Principal Funding Investment Proceeds (including
reinvested interest) shall not be considered part of the amounts on deposit in
the Principal Funding Account for purposes of this Series Supplement.
SECTION 4.17 Reserve Account. (a) The Trustee shall establish and
maintain in the name of the Trust, on behalf of the Trust, for the benefit of
the Investor Holders, a segregated trust account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Investor Holders or establish and maintain the
Reserve Account with a Qualified Institution. The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Reserve Account and in all proceeds thereof. The Reserve Account shall be under
the sole dominion and control of Trustee for the benefit of the Investor
Holders. If at any time a Qualified Institution holding the Reserve Account
ceases to be a Qualified Institution, Transferor shall notify Trustee, and
Trustee upon being notified (or Servicer on its behalf) shall, within 10
Business Days, establish a new Reserve Account meeting the conditions specified
above, and shall transfer any cash or any investments to such new Reserve
Account. The Trustee, at the direction of Servicer, shall (i) make withdrawals
from the Reserve Account from time to time in an amount up to the Available
Reserve Account Amount at such time, for the purposes set forth in this Series
Supplement, and (ii) on each Transfer Date (from and after the Reserve Account
Funding Date) prior to termination of the Reserve Account make a deposit into
the Reserve Account in the amount specified in, and otherwise in accordance
with, subsection 4.13(i).
(b) Funds on deposit in the Reserve Account shall be invested by
Trustee in Permitted Investments pursuant to the written direction of Servicer.
Funds on deposit in the Reserve Account on any Transfer Date, after giving
effect to any withdrawals from the Reserve Account on such Transfer Date, shall
be invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Transfer Date. The Trustee
shall maintain for the benefit of the Investor Holders possession of the
negotiable instruments or securities, if any, evidencing such Permitted
Investments. No Permitted Investment shall be disposed of prior to its maturity.
On each Transfer Date, all interest and earnings (net of losses and investment
expenses) accrued since the preceding Transfer Date on funds on deposit in the
Reserve Account shall be retained in the Reserve Account (to the extent that the
Available Reserve Account Amount is less than the Required Reserve Account
Amount) and the balance, if any, shall be deposited into the Finance Charge
Account and included in Class A Available Funds for such Transfer Date. For
purposes of determining the availability of funds or the balance in the Reserve
Account for any reason under this Series Supplement, except as otherwise
provided in the preceding sentence, investment earnings on such funds shall be
deemed not to be available or on deposit.
(c) On or before each Transfer Date with respect to the Controlled
Accumulation Period prior to the payment in full of the Class A Investor
Interest and on or before the first Transfer Date with respect to the Rapid
Amortization Period, Servicer shall calculate the "Reserve Draw Amount" which
shall be equal to the Principal Funding Investment Shortfall with respect to
each Transfer Date with respect to the Controlled Accumulation Period or the
first Transfer Date with respect to the Rapid Amortization Period less, in each
case, the amount of funds deposited into the Finance Charge Account on such
Transfer Date pursuant to subsection 4.17(b).
(d) If the Reserve Draw Amount for any Transfer Date is greater than
zero, the Reserve Draw Amount, up to the Available Reserve Account Amount, shall
be withdrawn from the Reserve Account on such Transfer Date by Trustee (acting
in accordance with the instructions of Servicer), deposited into the Finance
Charge Account and included in Class A Available Funds for such Transfer Date.
(e) If the Reserve Account Surplus on any Transfer Date, after giving
effect to all deposits to and withdrawals from the Reserve Account with respect
to such Transfer Date, is greater than zero, Trustee, acting in accordance with
the instructions of Servicer, shall withdraw from the Reserve Account, and pay
in accordance with the Loan Agreement, an amount equal to such Reserve Account
Surplus.
(f) Upon the earliest to occur of (i) the termination of the Trust
pursuant to Article XII, (ii) the first Transfer Date relating to the Rapid
Amortization Period and (iii) the Transfer Date immediately preceding the Class
A Scheduled Payment Date, Trustee, acting in accordance with the instructions of
Servicer, after the prior payment of all amounts owing to the Series 1996-1
Holders that are payable from the Reserve Account as provided herein, shall
withdraw from the Reserve Account and pay in accordance with the Loan Agreement,
all amounts, if any, on deposit in the Reserve Account and the Reserve Account
shall be deemed to have terminated for purposes of this Series Supplement.
SECTION 4.18 Interest Funding Account. (a) The Trustee shall establish
and maintain in the name of the Trust, on behalf of the Trust, for the benefit
of the Investor Holders, two segregated trust account ( the "Interest Funding
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Investor Holders or establish and
maintain the Interest Funding Account with a Qualified Institution. The Trustee
shall possess all right, title and interest in all funds on deposit from time to
time in the Interest Funding Account and in all proceeds thereof. The Interest
Funding Account shall be under the sole dominion and control of Trustee for the
benefit of the Investor Holders. If at any time a Qualified Institution holding
the Interest Funding Account ceases to be a Qualified Institution, Transferor
shall notify Trustee, and Trustee upon being notified (or Servicer on its
behalf) shall, within 10 Business Days, establish a new Interest Funding Account
meeting the conditions specified above, and shall transfer any cash or any
investments to such Interest Funding Account. The Trustee, at the direction of
Servicer, shall make withdrawals from the Interest Funding Account from time to
time, in the amounts and for the purposes set forth in this Series Supplement.
(b) Funds on deposit in the Interest Funding Account shall be invested
pursuant to the written direction of Servicer by Trustee in Permitted
Investments. Funds on deposit in the Interest Funding Account on any Transfer
Date, after giving effect to any withdrawals from the Interest Funding Account
on such Transfer Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Transfer Date. The Trustee shall maintain for the benefit of the Investor
Holders possession of the negotiable instruments or securities, if any,
evidencing such Permitted Investments. No Permitted Investment shall be disposed
of prior to its maturity.
(c) On each Distribution Date, the Servicer shall direct the Trustee
in writing to withdraw from the Interest Funding Account and pay to the
Transferor all interest and other investment income (net of losses and
investment expenses) on funds on deposit in the Interest Funding Account.
(d) Reinvested interest and other investment income on funds deposited
in the Interest Funding Account shall not be considered to be principal amounts
on deposit therein for purposes of this Supplement.
SECTION 4.19 Determination of LIBOR. (a) On each LIBOR Determination
Date, Trustee will determine LIBOR on the basis of the rate for deposits in
United States dollars for a period equal to the relevant Interest Period
(commencing on the first day of such Interest Period) which appears on Telerate
Page 3750 as of 11:00 a.m., London time, on such date. If such rate does not
appear on Telerate Page 3750, the rate for that LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 am., London time, on
that day to prime banks in the London interbank market for a period equal to the
relevant Interest Period (commencing on the first day of such Interest Period).
The Trustee will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that LIBOR Determination Date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that LIBOR Determination Date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by Servicer, at approximately
11:00 a.m., New York City time, on that day for loans in United States dollars
to leading European banks for a period equal to the relevant Interest Period
(commencing on the first day of such Interest Period).
(b) The Class A Certificate Rate and Class B Certificate Rate
applicable to the then current and the immediately preceding Interest Periods
may be obtained by any Investor Holder by telephoning Trustee at its Corporate
Trust Office at _____________.
(c) On each LIBOR Determination Date prior to 12:00 noon New York City
time, Trustee shall send to Servicer by facsimile, notification of LIBOR for the
following Interest Period.
SECTION 4.20 Transferor's or Servicer's Failure to Make a Deposit or
Payment. If Servicer or Transferor fails to make, or give instructions to make,
any payment or deposit (other than as required by subsection 2.4(d) and (e) and
12.2(a) or Section 10.2 and 12.1) required to be made or given by Servicer or
Transferor, respectively, at the time specified in the Agreement (including
applicable grace periods), Trustee shall make such payment or deposit from the
applicable Investor Account without instruction from Servicer or Transferor. The
Trustee shall be required to make any such payment, deposit or withdrawal
hereunder only to the extent that Trustee has sufficient information to allow it
to determine the amount thereof; provided that Trustee shall in all cases be
deemed to have sufficient information to determine the amount of interest
payable to the Series 1996-1 Holders on each Distribution Date. The Servicer
shall, upon request of Trustee, promptly provide Trustee with all information
necessary to allow Trustee to make such payment, deposit or withdrawal. Such
funds or the proceeds of such withdrawal shall be applied by Trustee in the
manner in which such payment or deposit should have been made by Transferor or
Servicer, as the case may be.
SECTION 4.21 Quarterly Deposits into the Accounts. With respect to any
Collection Periods related to Payment Date, as long as the conditions contained
in Section 4.3(a) of the Agreement are satisfied, the Servicer need not deposit
Collections into the Collection Account, the Excess Funding Account, the Finance
Charge Account or the Principal Funding Account [or make payments to the
Transferor] on or before the second Business Day following the Date of
Processing of such Collections, but may make such deposits, payments and
withdrawals on the Transfer Date immediately prior to each Payment Date. On any
date, including a date on which deposits are being made pursuant to this Section
4.21, any amounts required to be calculated under this Article IV shall be
calculated on a monthly basis.
SECTION 8. Article V of the Agreement. Article V of the Agreement
shall read in its entirety as follows and shall be applicable only to the
Investor Holders:
ARTICLE V DISTRIBUTIONS AND REPORTS TO INVESTOR HOLDERS
SECTION 5.1 Distributions. (a) On each Payment Date, Trustee shall
distribute (in accordance with the certificate delivered on or before the
related Transfer Date by Servicer to Trustee pursuant to subsection 3.4(b)) to
each Class A Holder of record on the immediately preceding Record Date (other
than as provided in subsection 2.4(e) or Section 12.3 respecting a final
distribution) such Holder's pro rata share (based on the aggregate Undivided
Interests represented by Class A Certificates held by such Holder) of amounts on
deposit in the Interest Funding Account as are payable to the Class A Holders
pursuant to Section 4.11(a)(i) and 4.11(g) by check mailed to each Class A
Holder (at such Holder's address as it appears in the Certificate Register),
except that with respect to Class A Certificates registered in the name of the
nominee of a Clearing Agency, such distribution shall be made in immediately
available funds.
(b) On any Special Payment Date and on the Class A Scheduled Payment
Date, Trustee shall distribute (in accordance with the certificate delivered on
or before the related Transfer Date by Servicer to Trustee pursuant to
subsection 3.4(b)) to each Class A Holder of record on the immediately preceding
Record Date (other than as provided in subsection 2.4(e) or Section 12.3
respecting a final distribution) such Holder's pro rata share (based on the
aggregate Undivided Interests represented by Class A Certificates held by such
Holder) of amounts on deposit in the Distribution Account as are payable to the
Class A Holders pursuant to Section 4.11(e), 4.11(f) and 4.11(h)(i) by check
mailed to each Class A Holder (at such Holder's address as it appears in the
Certificate Register), except that with respect to Class A Certificates
registered in the name of the nominee of a Clearing Agency, such distribution
shall be made in immediately available funds.
(c) On each Payment Date, Trustee shall distribute (in accordance with
the certificate delivered on or before the related Transfer Date by Servicer to
Trustee pursuant to subsection 3.4(b) to each Class B Holder of record on the
immediately preceding Record Date (other than as provided in subsection 2.4(e)
or Section 12.3 respecting a final distribution) such Holder's pro rata share
(based on the aggregate Undivided Interests represented by Class B Certificates
held by such Holder) of amounts on deposit in the Interest Funding Account as
are payable to the Class B Holders pursuant to Section 4.11(b)(i) and 4.11(g) by
check mailed to each Class B Holder (at such Holder's address as it appears in
the Certificate Register), except that with respect to Class B Certificates
registered in the name of the nominee of a Clearing Agency, such distribution
shall be made in immediately available funds.
(d) On any Special Payment Date and on the Class B Scheduled Payment
Date, Trustee shall distribute (in accordance with the certificate delivered on
or before the related Transfer Date by Servicer to Trustee pursuant to
subsection 3.4(b)) to each Class B Holder of record on the immediately preceding
Record Date (other than as provided in subsection 2.4(e) or Section 12.3
respecting a final distribution) such Holder's pro rata share (based on the
aggregate Undivided Interests represented by Class B Certificates held by such
Holder) of amounts on deposit in the Distribution Account as are payable to the
Class B Holders pursuant to Section 4.11(e), 4.11(f) and 4.11(h)(ii) by check
mailed to each Class B Holder (at such Holder's address as it appears in the
Certificate Register), except that with respect to Class B Certificates
registered in the name of the nominee of a Clearing Agency, such distribution
shall be made in immediately available funds.
SECTION 5.2 Monthly Series 1996-1 Holders' Statement. (a) On or before
each Distribution Date, Trustee shall forward to each Series 1996-1 Holder, each
Rating Agency and the Collateral Interest Holder a statement substantially in
the form of Exhibit C prepared by Servicer and delivered to Trustee.
(b) Annual Holders' Tax Statement. On or before January 31 of each
calendar year, beginning with calendar year 1996, Trustee shall distribute to
each Person who at any time during the preceding calendar year was a Series
1996-1 Holder, a statement prepared by Servicer containing the following
information:
(i) the amount of the current distribution allocable to
Class A Monthly Principal, Class B Monthly Principal and Collateral
Monthly Principal, respectively; and
(ii) the amount of the current distribution allocable to
Class A Monthly Interest, Class A Deficiency Amounts, Class A
Additional Interest, Class B Monthly Interest, Class B Deficiency
Amounts, Class B Additional Interest and Collateral Monthly Interest,
and any accrued and unpaid Collateral Monthly Interest, respectively.
Such information shall be aggregated for such calendar year or the applicable
portion thereof during which such Person was a Series 1996-1 Holder, together
with such other customary information (consistent with the treatment of the
Certificates as debt) as Trustee or Servicer deems necessary or desirable to
enable the Series 1996-1 Holders to prepare their tax returns. Such obligations
of Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by Trustee pursuant to
any requirements of the Internal Revenue Code.
SECTION 9. Series 1996-1 Pay Out Events. If any one of the following
events shall occur with respect to the Investor Certificates:
(a) failure on the part of Transferor (i) to make any payment or
deposit required by the terms of (A) the Agreement or (B) this Series
Supplement, on or before the date occurring five days after the date such
payment or deposit is required to be made herein or (ii) duly to observe or
perform in any material respect any covenants or agreements of Transferor set
forth in the Agreement or this Series Supplement (including the covenant of
Transferor contained in Section 11 of this Series Supplement), which failure has
a material adverse effect on the Series 1996-1 Holders (which determination
shall be made without reference to whether any funds are available under the
Collateral Interest) and which continues unremedied for a period of 60 days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to Transferor by Trustee, or to Transferor and
Trustee by the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 50% of the Investor Interest of this Series 1996-1,
and continues to affect materially and adversely the interests of the Series
1996-1 Holders (which determination shall be made without reference to whether
any funds are available under the Collateral Interest) for such period;
(b) any representation or warranty made by Transferor in the Agreement
or this Series Supplement, or any information contained in a Receivable Schedule
required to be delivered by Transferor pursuant to Section 2.1, (i) shall prove
to have been incorrect in any material respect when made or when delivered,
which continues to be incorrect in any material respect for a period of 60 days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to Transferor by Trustee, or to Transferor and
Trustee by the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 50% of the Investor Interest of this Series 1996-1,
and (ii) as a result of which the interests of the Series 1996-1 Holders are
materially and adversely affected (which determination shall be made without
reference to whether any funds are available under the Collateral Interest) and
continue to be materially and adversely affected for such period; provided that
a Series 1996-1 Pay Cut Event pursuant to this subsection 9(b) shall not be
deemed to have occurred hereunder if Transferor has accepted reassignment of the
related Receivable, or all of such Receivables, if applicable, during such
period in accordance with the provisions of the Agreement;
(c) the average Portfolio Yield for any three consecutive Monthly
Periods is reduced to a rate which is less than the average Base Rate for such
period;
(d) during any period of 5 consecutive days, the Transferor Interest
averaged over such period is less than the Minimum Transferor Interest for the
same period or (ii) if on any Record Date the sum of (x) the aggregate amount of
Principal Receivables as of the first day of the Monthly Period in which such
Record Date falls and (y) the principal amount on deposit in the Excess Funding
Account is less than the Minimum Aggregate Principal Receivables;
(e) an Originator shall fail to convey Additional Receivables to
Transferor as required by the Receivables Purchase Agreement or Transferor shall
fail to convey Additional Receivables to the Trust, as required by Section
2.1(b);
(f) any Servicer Default shall occur which would have a material
adverse effect on the Series 1996-1 Holders;
(g) the Class A Investor Interest shall not be paid in full on the
Class A Scheduled Payment Date or the Class B Investor Interest shall not be
paid in full on the Class B Scheduled Payment Date;
(h) the Monthly Payment Rate is less than 12% for three consecutive
Monthly Periods;
(i) any of Transferor, Trustee or the Trust becomes required to be
licensed under the Licensing Laws of a Permitted State and such entity fails to
become so licensed within the period specified in the Agreement;
(j) during any period of six consecutive Determination Dates there
exists an Excess Insurer Concentration Amount; or
(k) during any period of six consecutive Determination Dates the
Investment Grade Insurer Percentage as of such Determination Date is less than
the Required Investment Grade Insurer Percentage;
then, in the case of any event described in subsection 9(a), (b) or
(f) hereof, after the applicable grace period set forth in such subsections,
either Trustee or Holders of Series 1996-1 Certificates (including, for this
purpose, the Collateral Interest Holder) evidencing Undivided Interests
aggregating not less than 50% of the Investor Interest of this Series 1996-1 by
notice then given in writing to Transferor and Servicer (and to Trustee if given
by the Holders) may declare that a pay out event (a "Series 1996-1 Pay Out
Event") has occurred as of the date of such notice, and in the case of any event
described in subsection 9(c), (d), (e), (h), (i) or (j) hereof, a Series 1996-1
Pay Out Event shall occur without any notice or other action on the part of
Trustee or the Investor Holders immediately upon the occurrence of such event.
The Series 1996-1 Pay Out Events described in subsection 9(h), (j) and (k) may
be amended by the Transferor at any time without the consent of any Person if
the Rating Agency Condition has been satisfied with respect to such amendment.
SECTION 10. Series 1996-1 Termination. The right of the Investor
Holders to receive payments from the Trust will terminate on the first Business
Day following the Series 1996-1 Termination Date.
SECTION 14. Counterparts. This Series Supplement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 15. Governing Law. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 16. Additional Notices. Transferor shall notify the Collateral
Interest Holder promptly after becoming aware of any Lien on any Receivable
other than the conveyances under the Agreement. Transferor shall notify the
Collateral Interest Holder of any merger, consolidation, assumption or transfer
referred to in Section 7.2.
SECTION 17. Additional Representations and Warranties of Servicer.
AFCO Acceptance and AFCO Credit, as initial Servicer, hereby makes, and any
Successor Servicer by its appointment under the Agreement shall make the
following representations and warranties:
(a) All Consents. All authorizations, consents, orders or approvals of
or registrations or declarations with any Governmental Authority required to be
obtained, effected or given by Servicer in connection with the execution and
delivery of this Series Supplement by Servicer and the performance of the
transactions contemplated by this Series Supplement by Servicer, have been duly
obtained, effected or given and are in full force and effect.
(b) Rescission or Cancellation. The Servicer shall not permit any
rescission or cancellation of any Receivable except as ordered by a court of
competent jurisdiction or other Governmental Authority or in accordance with the
normal operating procedures of Servicer.
SECTION 17. No Petition. Transferor, Servicer, Back-up Servicer and
Trustee, by entering into this Series Supplement and each Holder, by accepting a
Series 1996-1 Certificate hereby covenant and agree that they will not at any
time institute against the Trust, or join in any institution against the Trust
of, any bankruptcy proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Investor Holders, the Agreement or this Series Supplement.
SECTION 18. Amendments. This Series Supplement may be amended pursuant
to Section 13.1 of the Agreement. This Series Supplement may also be amended by
Transferor without the consent of Servicer, Back-up Servicer, Trustee or any
Investor Holder if Transferor provides Trustee with: (i) an Opinion of Counsel
to the effect that such amendment or modification would (A) reduce the risk that
the Trust would be treated as taxable as a publicly traded partnership pursuant
to Internal Revenue Code section 7704 or (B) permit the Trust or a relevant
portion thereof to be treated as a "financial asset securitization investment
trust" and (C) in either case, (1) would not cause the Trust to be classified,
for Federal income tax purposes, as an association (or publicly traded
partnership) taxable as a corporation and (2) would not cause or constitute an
event in which gain or loss would be recognized by any Investor Holder; and (ii)
a certificate that such amendment or modification would not materially and
adversely affect any Investor Holder; provided that no such amendment shall be
deemed effective without Trustee's consent, if Trustee's rights, duties and
obligations hereunder are thereby modified. Promptly after the execution of any
such amendment (other than an amendment pursuant to subsection 13.1(a) of the
Agreement), Trustee shall furnish notification of the substance of such
amendment to each Rating Agency.
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused this
Series 1996-1 Supplement to be duly executed by their respective officers as of
the day and year first above written.
MELLON BANK, N.A., Transferor
By:________________________________
Name:
Title:
AFCO CREDIT CORPORATION, Servicer
By:________________________________
Name:
Title:
AFCO ACCEPTANCE CORPORATION, Servicer
By:________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:________________________________
Name:
Title:
PREMIUM FINANCING SPECIALISTS, INC.
Back-up Servicer
By:________________________________
Name:
Title:
