Exhibit 4.2
AICCO PREMIUM FINANCE MASTER TRUST,
as Issuer
and
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as successor-in-interest to
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
on behalf of Noteholders
SERIES 2005-1 SUPPLEMENT
Dated as of November 3, 2005
to
BASE INDENTURE
Dated as of November 8, 1999
AICCO PREMIUM FINANCE MASTER TRUST
SERIES 2005-1
Premium Finance Asset Backed Notes
TABLE OF CONTENTS
PAGE
PRELIMINARY STATEMENT ..................................................................................1
DESIGNATION ............................................................................................1
SECTION 1. Definitions.......................................................................1
SECTION 2. Article 3 of the Base Indenture..................................................23
ARTICLE 3 INITIAL ISSUANCE....................................................................24
SECTION 3.1 Initial Issuance.................................................................24
SECTION 3.2. Compensation....................................................................24
SECTION 3.3 Cleanup Call.....................................................................24
SECTION 3.4 Delivery and Payment for the Notes...............................................25
SECTION 3.5 Form of Delivery of the Notes; Depository; Denominations.........................25
SECTION 3. Article 5 of Base Indenture................................................................25
ARTICLE 5 ALLOCATION AND APPLICATION OF COLLECTIONS...........................................26
SECTION 5.10 Rights of Noteholders...........................................................26
SECTION 5.11 Allocations.....................................................................26
SECTION 5.12 Determination of Monthly Interest...............................................32
SECTION 5.13 Determination of Monthly Principal..............................................33
SECTION 5.14 Coverage of Required Amount.....................................................35
SECTION 5.15 Monthly Payments................................................................36
SECTION 5.16 Investor Charge-Offs............................................................42
SECTION 5.17 Excess Spread...................................................................44
SECTION 5.18 Reallocated Principal Collections...............................................46
SECTION 5.19 Shared Principal Collections....................................................48
SECTION 5.20 Accumulation Reserve Account....................................................48
SECTION 5.21 Excess Funding Account..........................................................50
SECTION 5.22 Principal Funding Account.......................................................51
SECTION 5.23 [Reserved]......................................................................53
SECTION 5.24 Class C Reserve Account..........................................................53
SECTION 5.25 Determination of LIBOR..........................................................55
SECTION 5.26 Effect of Other Series..........................................................56
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SECTION 5.27 Seller's or Servicer's Failure to Make a Deposit or Payment.....................56
SECTION 5.29 Servicing Advances..............................................................56
SECTION 4 Article 6 of the Base Indenture.............................................................57
ARTICLE 6 DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS............................................57
SECTION 6.1 Distributions....................................................................57
SECTION 6.2 Monthly Noteholders' Statement..........................................58
SECTION 5. Series 2005-1 Pay Out Events...............................................................61
SECTION 6. Series 2005-1 Termination..................................................................64
SECTION 7. Early Pay Off..............................................................................64
SECTION 8. Amendments.................................................................................64
SECTION 9. Random Removal.............................................................................65
SECTION 10. DPO Policy................................................................................65
SECTION 11. Eligible Receivables......................................................................65
SECTION 12. [Reserved.]...............................................................................66
SECTION 13. Counterparts..............................................................................66
SECTION 14. UCC Security Interest Representations.....................................................66
SECTION 15.Governing Law...............................................................................67
SECTION 16. Waiver of Trial by Jury...................................................................67
SECTION 17. No Petition...............................................................................67
Exhibit A Form of Class A Note
Exhibit B Form of Class B Note
Exhibit C Form of Class C Note
Exhibit D Form of Class D Note
ii
SERIES 2005-1 SUPPLEMENT, dated as of November 3, 2005 (as
amended, modified, restated or supplemented from time to time in with the terms
hereof, this "Series Supplement"), by and among AICCO PREMIUM FINANCE MASTER
TRUST (f/k/a AIG CREDIT PREMIUM FINANCE MASTER TRUST), a Delaware statutory
trust, as Issuer ("Issuer"), and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as
successor-in-interest to BANK ONE, NATIONAL ASSOCIATION, a national banking
association, as trustee (together with its successors in trust under the Base
Indenture referred to below, the "Trustee") to the Base Indenture, dated as of
November 8, 1999, between the Issuer and the Trustee (as amended, modified,
restated or supplemented from time to time, exclusive of Series Supplements, the
"Base Indenture").
Pursuant to this Series Supplement, the Issuer shall create a
new Series of Notes and shall specify the Principal Terms thereof.
PRELIMINARY STATEMENT
WHEREAS, Section 2.2 of the Base Indenture provides, among
other things, that Issuer and the Trustee may at any time and from time to time
enter into a series supplement to the Base Indenture for the purpose of
authorizing the issuance of one or more Series of Notes.
NOW, THEREFORE, the parties hereto agree as follows:
DESIGNATION
(a) There is hereby created a Series of notes to be issued
pursuant to the Base Indenture and this Series Supplement and such Series of
notes shall be designated generally Premium Finance Asset Backed Notes, Series
2005-1. The Notes shall be issued in four classes: (i) the Series 2005-1 Class A
Floating Rate Asset Backed Notes, which shall be designated generally as the
"Class A Notes," (ii) the Series 2005-1 Class B Floating Rate Asset Backed
Notes, which shall be designated generally as the "Class B Notes," (iii) the
Series 2005-1 Class C Floating Rate Asset Backed Notes, which shall be
designated generally as the "Class C Notes" and (iv) the Series 2005-1 Class D
Asset Backed Notes, which shall be designated generally as the "Class D Notes."
The Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes
are referred to collectively as the "Notes." The Notes shall be issued in
minimum denominations of $100,000 and integral multiples of $1,000 in excess
thereof.
(b) Series 2005-1 shall be included in Group One (as defined
below). Series 2005-1 shall not be subordinated to any other Series.
SECTION 1. Definitions
In the event that any term or provision contained herein shall
conflict with or be inconsistent with any provision contained in the Base
Indenture, the terms and provisions of this Series Supplement shall govern. All
Article, Section or subsection references herein mean Articles, Sections or
1
subsections of the Base Indenture, except as otherwise provided herein. All
capitalized terms not otherwise defined herein are defined in the Base
Indenture. Each capitalized term defined herein shall relate only to the Notes
and no other Series of Notes issued by the Trust.
"Accumulation Period Factor" shall mean, for each Monthly
Period, a fraction, the numerator of which is equal to the sum of the initial
investor interests of all outstanding Series, and the denominator of which is
equal to the sum of (a) the Initial Investor Interest, (b) the initial investor
interests of all outstanding Series (other than Series 2005-1) which are not
expected to be in their revolving periods, and (c) the initial investor
interests of all other outstanding Series which are not allocating Shared
Principal Collections to other Series and are in their revolving periods;
provided, however, that this definition may be changed at anytime if the Rating
Agency Condition is satisfied.
"Accumulation Period Length" shall have the meaning assigned
to such term in subsection 5.15(j).
"Accumulation Reserve Account" has the meaning specified in
subsection 5.20(a).
"Accumulation Reserve Account Funding Date" will be the
Transfer Date with respect to the Monthly Period which commences no later than
two months prior to the commencement of the Controlled Accumulation Period, or
such earlier time as the Servicer may determine.
"Accumulation Reserve Draw Amount" shall mean the amount
necessary to cover any shortfalls in the payments of interest on the Notes of
such Series during the Controlled Accumulation Period and on the first Transfer
Date with respect to the Rapid Amortization Period.
"Accumulation Shortfall" shall initially mean zero and shall
thereafter mean, with respect to any Monthly Period during the Controlled
Accumulation Period, the excess, if any, of the Controlled Accumulation Amount
for the previous Monthly Period over the amount deposited into the Principal
Funding Account pursuant to subsections 5.15(f)(i), 5.15(f)(ii), 5.15(f)(iii)
and 5.15(f)(iv) with respect to the Class A Notes, the Class B Notes, the Class
C Notes and the Class D Notes, respectively, for the previous Monthly Period.
"Additional Amounts" has the meaning specified in the Note
Purchase Agreement.
"Adjusted Investor Interest" shall mean, with respect to any
date of determination, an amount equal to the sum of (a) the Class A Adjusted
Investor Interest and (b) the Class B Adjusted Investor Interest, (c) the Class
C Adjusted Investor Interest and (d) the Class D Adjusted Investor Interest.
2
"Administrative Agent" has the meaning set forth in the Note
Purchase Agreement.
"Aggregate Investor Default Amount" means, with respect to any
Monthly Period, the sum of the Investor Default Amounts in respect of such
Monthly Period.
"AIG" means American International Group, Inc., a Delaware
corporation.
"Annualized Monthly Excess Spread Amount" means, in respect of
any Monthly Period, the percentage calculated by dividing (i) an amount equal to
the sum of (A) the amount of collections in respect of Finance Charge
Receivables (including recoveries) allocable to Noteholders for such Monthly
Period, minus (B) the Aggregate Investor Default Amount for such Monthly Period,
minus (C) the Investor Servicing Fee payable on such Transfer Date, minus (D)
the aggregate amount payable to Noteholders in respect of interest on the
immediately succeeding Payment Date by (ii) the average daily outstanding
principal amount of the Notes for such Monthly Period, and multiplying the
resulting quotient by 12.
"Available Accumulation Reserve Account Amount" shall mean an
amount equal to the lesser of the amount on deposit on the Accumulation Reserve
Account (before giving effect to any deposit to be made to the Accumulation
Reserve Account on such Transfer Date) and the Required Accumulation Reserve
Account Amount for such Transfer Date.
"Available Investor Principal Collections" (A) means with
respect to the Notes and any Monthly Period, an amount equal to (i) the Investor
Principal Collections for such Monthly Period (adjusted for any Servicer
Advances of principal and the reimbursement thereof), minus (ii) the amount of
Reallocated Class D Principal Collections, Reallocated Class C Principal
Collections and Reallocated Class B Principal Collections with respect to such
Monthly Period which pursuant to Section 5.18 are required to fund the Class A
Required Amount (from Reallocated Class D Principal Collections, Reallocated
Class C Principal Collections and Reallocated Class B Principal Collections),
the Class B Required Amount (from Reallocated Class D Principal Collections and
Reallocated Class C Principal Collections) and the Class C Required Amount (from
Reallocated Class D Principal Collections), plus (iii) the amount of Shared
Principal Collections with respect to Group One that are allocated to Series
2005-1 in accordance with subsections 5.19(a) and (b) plus (iv) the Investor
Percentage of amounts deposited in the Excess Funding Account in accordance with
Section 5.21, plus (v) during the Controlled Accumulation Period, collections of
Principal Receivables received during such Monthly Period allocable to the Trust
Interest (adjusted for any Servicer Advances of principal and the reimbursement
thereof) plus (v) with respect to the Class C Notes only, amounts withdrawn from
the Class C Reserve Account pursuant to Section 5.24, and (B) when used with
respect to any other Series, has the meaning specified in the applicable Series
Supplement.
3
"Business Day" means, for the purpose of determining LIBOR,
any Business Day (as defined in the Base Indenture) other than a day on which
banking institutions in London, England trading in Dollar deposits in the London
interbank market are authorized or obligated by law or executive order to be
closed; for all other purposes, Business Day has the meaning provided in the
Base Indenture.
"Class A Additional Interest" has the meaning specified in
subsection 5.12(a).
"Class A Adjusted Investor Interest" shall mean, with respect
to any date of determination, an amount equal to the Class A Investor Interest
minus the funds on deposit in the Principal Funding Account (in an amount not to
exceed the Class A Investor Interest) on such date of determination.
"Class A Available Funds" means, with respect to any Monthly
Period, an amount equal to the Class A Floating Allocation of the Collections of
Finance Charge Receivables (including recoveries) allocated to the Investor
Interest (adjusted for Servicer Advances of interest and the reimbursement
thereof) and deposited in the Finance Charge Account for such Monthly Period (or
to be deposited in the Finance Charge Account on the related Transfer Date with
respect to the preceding Monthly Period pursuant to the third paragraph of
subsection 5.4(a)).
"Class A Deficiency Amount" has the meaning specified in
subsection 5.12(a).
"Class A Fixed Allocation" means, with respect to 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, with respect to any
Transfer Date, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class A Adjusted
Investor Interest and the denominator of which is equal to the Adjusted Investor
Interest.
"Class A Initial Investor Interest" means the aggregate
initial principal amount of the Class A Notes, which is $500,000,000.
"Class A Investor Allocation" means with respect to any
Monthly Period, (a) with respect to Investor Default Amounts and Finance Charge
Receivables at any time and Principal Receivables during the Revolving Period,
the Class A Floating Allocation, and (b) with respect to Principal Receivables
during the Controlled Accumulation Period, the Rapid Amortization Period, the
Class A Fixed Allocation.
4
"Class A Investor Charge-Offs" has the meaning specified in
subsection 5.16(a).
"Class A Investor Default Amount" means, with respect 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 such Transfer Date.
"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 in respect of an
amortization period the Class A Notes made to Class A Noteholders prior to such
date, minus (c) the aggregate amount of Class A Investor Charge-Offs pursuant to
subsection 5.16(a), plus (d) the aggregate amount of Excess Spread allocated and
available on all prior Transfer Dates pursuant to subsection 5.17(b) for the
purpose of reimbursing amounts deducted pursuant to the foregoing clause (c).
"Class A Monthly Interest" means the monthly interest payable
in respect of the Class A Notes as calculated in accordance with subsection
5.12(a).
"Class A Monthly Principal" means the monthly principal
payable in respect of the Class A Notes as calculated in accordance with
subsection 5.13(a).
"Class A Note Rate" means, with respect to each Interest
Period prior to the Payoff Date, a variable rate equal to 0.08% in excess of
LIBOR, as determined on the related LIBOR Determination Date.
"Class A Noteholder" means the Person in whose name a Class A
Note is registered in the Note Register.
"Class A Notes" means any of the notes executed by the Issuer
and authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit A hereto. The outstanding balance of the Class A Notes will at all times
equal the Class A Investor Interest.
"Class A Prior Period Interest" means the sum, with respect to
each Interest Period in which the Class A Notes would have accrued interest on
the Class A Investor Interest had such Class A Investor Interest not been
reduced for reasons other than the payment of principal to the Class A
Noteholders, of an amount equal to the product of (i) the Class A Note Rate in
effect during such Interest Period plus 2% per annum, (ii) the actual number of
days in such Interest Period divided by 360 and (iii) the amount by which the
Class A Investor Interest was less than the Class A Investor Interest during
such Interest Period for reasons other than the payment of principal to the
Class A Noteholders; provided, however, that Class A Prior Period Interest will
not be distributed until the Payment Date(s) following the Transfer Date on
which the Class A Investor Interest has been reimbursed in full for any
reductions.
5
"Class A Required Amount" has the meaning specified in
subsection 5.14(a).
"Class A Servicing Fee" has the meaning specified in Section
3.2 hereof.
"Class B Additional Interest" has the meaning specified in
subsection 5.12(b).
"Class B Adjusted Investor Interest" shall mean, with respect
to any date of determination, an amount equal to the Class B Investor Interest
minus the excess, if any, of the Principal Funding Account Balance over the
Class A Investor Interest on such date of determination (such excess not to
exceed the Class B Investor Interest).
"Class B Available Funds" means, with respect to any Monthly
Period, an amount equal to the Class B Floating Allocation of the Collections of
Finance Charge Receivables (including recoveries) allocated to the Investor
Interest (adjusted for Servicer Advances of interest and the reimbursement
thereof) and deposited in the Finance Charge Account for such Monthly Period (or
to be deposited in the Finance Charge Account on the related Transfer Date with
respect to the preceding Monthly Period pursuant to the third paragraph of
subsection 5.4(a)).
"Class B Deficiency Amount" has the meaning specified in
subsection 5.12(b).
"Class B Fixed Allocation" means, with respect to 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, with respect to any
Transfer Date, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class B Adjusted
Investor Interest and the denominator of which is equal to the Adjusted Investor
Interest.
"Class B Initial Investor Interest" means the aggregate
initial principal amount of the Class B Notes, which is $20,160,000.
"Class B Investor Allocation" means with respect to any
Monthly Period, (a) with respect to Investor Default Amounts and Finance Charge
Receivables at any time or Principal Receivables during the Revolving Period,
the Class B Floating Allocation, and (b) with respect to Principal Receivables
during the Controlled Accumulation Period, or the Rapid Amortization Period, the
Class B Fixed Allocation.
6
"Class B Investor Charge-Offs" has the meaning specified in
subsection 5.16(b).
"Class B Investor Default Amount" means, with respect 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 such Transfer Date.
"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 in respect of an
amortization period of the Class B Notes made to Class B Noteholders prior to
such date, minus (c) the aggregate amount of Class B Investor Charge-Offs for
all prior Transfer Dates pursuant to subsection 5.16(b), minus (d) the amount of
the Reallocated Class B Principal Collections allocated pursuant to subsection
5.18(a) and (b) on all prior Transfer Dates for which the Class C Investor
Interest or the Class D Investor 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 5.16(a), plus (f) the
aggregate amount of Excess Spread allocated and available on all prior Transfer
Dates pursuant to subsection 5.17(e) for the purpose of reimbursing amounts
deducted pursuant to the foregoing clauses (c), (d) and (e).
"Class B Monthly Interest" means the monthly interest payable
in respect of the Class B Notes as calculated in accordance with subsection
5.12(b).
"Class B Monthly Principal" means the monthly principal
payable in respect of the Class B Certificates as calculated in accordance with
subsection 5.13(b).
"Class B Note Rate" means, with respect to each Interest
Period prior to the Payoff Date, a variable rate equal to 0.25% in excess of
LIBOR, as determined on the related LIBOR Determination Date.
"Class B Noteholder" means the Person in whose name a Class B
Note is registered in the Note Register.
"Class B Notes" means any of the notes executed by the Issuer
and authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit B hereto. The outstanding balance of the Class B Notes will at all times
equal the Class B Investor Interest.
"Class B Prior Period Interest" shall mean, with respect to
each Interest Period in which the Class B Notes would have accrued interest on
the outstanding principal balance of the Class B Notes had the outstanding
principal balance of the Class B Notes not been reduced for reasons other than
the payment of principal to the Class B Noteholders, an amount equal to the sum
of (a) the product of (i) the Class B Note Rate in effect during such Interest
Period plus 2% per annum, (ii) the actual number of days in such Interest Period
7
divided by 360 and (iii) the amount by which the outstanding principal balance
of the Class B Notes was less than the outstanding principal balance of the
Class B Notes during such Interest Period for reasons other than the payment of
principal to the Class B Noteholders and (b) all unpaid Class B Prior Period
Interest from prior Interest Periods; provided, however, that Class B Prior
Period Interest shall not be distributed until the Payment Date or Payment Dates
following the Transfer Date on which the Class B Notes have been reimbursed in
full for any reductions.
"Class B Required Amount" has the meaning specified in
subsection 5.14(b).
"Class B Servicing Fee" has the meaning specified in Section
3.2 hereof.
"Class C Additional Interest" has the meaning specified in
subsection 5.12(c).
"Class C Adjusted Investor Interest" shall mean, with respect
to any date of determination, an amount equal to the Class C Investor Interest
minus the excess, if any, of the Principal Funding Account Balance over the sum
of the Class A Investor Interest and the Class B Investor Interest on such date
of determination (such excess not to exceed the Class C Investor Interest).
"Class C Available Funds" means, with respect to any Monthly
Period, an amount equal to the Class C Floating Allocation of the Collections of
Finance Charge Receivables (including recoveries) allocated to the Investor
Interest (adjusted for Servicer Advances of interest and the reimbursement
thereof) and deposited in the Finance Charge Account for such Monthly Period (or
to be deposited in the Finance Charge Account on the related Transfer Date with
respect to the preceding Monthly Period pursuant to the third paragraph of
subsection 5.4(a)).
"Class C Deficiency Amount" has the meaning specified in
subsection 5.12(c).
"Class C Fixed Allocation" means, with respect to 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 C 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 C Floating Allocation" means, with respect to any
Transfer Date, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class C Adjusted
Investor Interest and the denominator of which is equal to the Adjusted Investor
Interest.
8
"Class C Initial Investor Interest" means the aggregate
initial principal amount of the Class C Notes, which is $9,410,000.
"Class C Investor Allocation" means with respect to any
Monthly Period, (a) with respect to Investor Default Amounts and Finance Charge
Receivables at any time or Principal Receivables during the Revolving Period,
the Class C Floating Allocation, and (b) with respect to Principal Receivables
during the Controlled Accumulation Period, or the Rapid Amortization Period, the
Class C Fixed Allocation.
"Class C Investor Charge-Offs" has the meaning specified in
subsection 5.16(c).
"Class C Investor Default Amount" means, with respect 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 C Floating
Allocation applicable for such Transfer Date.
"Class C Investor Interest" means, on any date of
determination, an amount equal to (a) the Class C Initial Investor Interest,
minus (b) the aggregate amount of principal payments in respect of an
amortization period of the Class C Notes made to Class C Noteholders prior to
such date, minus (c) the aggregate amount of Class C Investor Charge-Offs for
all prior Transfer Dates pursuant to subsection 5.16(c), minus (d) the amount of
the Reallocated Class C Principal Collections allocated pursuant to subsections
5.18(a), (b) and (c) on all prior Transfer Dates for which the Class D Investor
Interest has not been reduced, minus (e) an amount equal to the amount by which
the Class C Investor Interest has been reduced on all prior Transfer Dates
pursuant to subsections 5.16(a) and (b), plus (f) the aggregate amount of Excess
Spread allocated and available on all prior Transfer Dates pursuant to
subsection 5.17(h) for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (c), (d) and (e).
"Class C Monthly Interest" means the monthly interest payable
in respect of the Class C Notes as calculated in accordance with subsection
5.12(c).
"Class C Monthly Principal" means the monthly principal
payable in respect of the Class C Notes as calculated in accordance with
subsection 5.13(c).
"Class C Note Rate" means, with respect to each Interest
Period prior to the Payoff Date, a variable rate equal to 0.55% in excess of
LIBOR, as determined on the related LIBOR Determination Date.
"Class C Noteholder" means the Person in whose name a Class C
Note is registered in the Note Register.
"Class C Notes" means any of the notes executed by the Issuer
and authenticated by or on behalf of the Trustee, substantially in the form of
9
Exhibit C hereto. The outstanding balance of the Class C Notes will at all times
equal the Class C Investor Interest.
"Class C Prior Period Interest" shall mean, with respect to
each Interest Period in which the Class C Notes would have accrued interest on
the outstanding principal balance of the Class C Notes had the outstanding
principal balance of the Class C Notes not been reduced for reasons other than
the payment of principal to the Class C Noteholders, an amount equal to the sum
of (a) the product of (i) the Class C Note Rate in effect during such Interest
Period plus 2% per annum, (ii) the actual number of days in such Interest Period
divided by 360 and (iii) the amount by which the outstanding principal balance
of the Class C Notes was less than the outstanding principal balance of the
Class C Notes during such Interest Period for reasons other than the payment of
principal to the Class C Noteholders and (b) all unpaid Class C Prior Period
Interest from prior Interest Periods; provided, however, that Class C Prior
Period Interest shall not be distributed until the Payment Date or Payment Dates
following the Transfer Date on which the Class C Notes have been reimbursed in
full for any reductions.
"Class C Required Amount" has the meaning specified in
subsection 5.14(c).
"Class C Reserve Account" has the meaning specified in
subsection 5.24(a).
"Class C Reserve Amount" will be equal to the product of the
Funding Percentage and the Initial Investor Interest; provided, however that
upon the occurrence of a Payout Event, the Class C Reserve Amount shall equal
the Class C Adjusted Investor Interest.
"Class C Reserve Event" shall mean a Type 1 Class C Reserve
Event, a Type 2 Class C Reserve Event, or a Type 3 Class C Reserve Event.
"Class C Servicing Fee" has the meaning specified in Section
3.2 hereof.
"Class D Adjusted Investor Interest" shall mean with respect
to any date of determination, an amount equal to the Class D Investor Interest,
minus the funds on deposit in the Principal Funding Account in excess of the sum
of the Class A Investor Interest, the Class B Investor Interest, the Class C
Investor Interest on such date (up to the Class D Investor Interest).
"Class D Available Funds" means, with respect to any Monthly
Period, an amount equal to the Class D Floating Allocation of the Collections of
Finance Charge Receivables (including recoveries) allocated to the Investor
Interest and deposited in the Finance Charge Account for such Monthly Period (or
to be deposited in the Finance Charge Account on the related Transfer Date with
respect to the preceding Monthly Period pursuant to the third paragraph of
subsection 5.4(a)).
10
"Class D Fixed Allocation" means with respect to 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 D 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 D Floating Allocation" means, with respect to any
Transfer Date, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Class D Adjusted Investor
Interest and the denominator of which is equal to the Adjusted Investor
Interest.
"Class D Initial Investor Interest" means the aggregate
initial principal amount of the Class D Notes, which is $8,070,000.
"Class D Investor Allocation" means with respect to any
Monthly Period, (a) with respect to Investor Default Amounts and Finance Charge
Receivables at any time or Principal Receivables during the Revolving Period,
the Class D Floating Allocation, and (b) with respect to Principal Receivables
during the Controlled Accumulation Period or the Rapid Amortization Period, the
Class D Fixed Allocation.
"Class D Investor Charge-Offs" has the meaning specified in
subsection 5.16(d).
"Class D Investor Default Amount" means, with respect 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 Class D Floating
Allocation applicable for such Transfer Date.
"Class D Investor Interest" means an amount equal to (a) the
Class D Initial Investor Interest minus (b) the aggregate amount of principal
payments in respect of an amortization period of the Class D Notes made to the
Class D Noteholders prior to such date, minus (c) the aggregate amount of Class
D Investor Charge-Offs for all prior Transfer Dates pursuant to subsection
5.16(d), minus (d) the amount of Reallocated Principal Collections allocated
pursuant to Section 5.18 on all prior Transfer Dates for which the Class D
Investor Interest was reduced, minus (e) an amount equal to the amount by which
the Class D Investor Interest has been reduced on all prior Transfer Dates
pursuant to Section 5.16, plus (f) the aggregate amount of Excess Spread
allocated and available on all prior Transfer Dates pursuant to subsection
5.17(k) for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e).
"Class D Monthly Interest" has the meaning specified in
subsection 5.12(d).
"Class D Monthly Principal" means the monthly principal
distributable in respect of the Class D Notes as calculated in accordance with
subsection 5.13(d).
11
"Class D Note Rate" means 0%.
"Class D Noteholder" means the Person in whose name a Class D
Note is registered in the Note Register.
"Class D Notes" means any of the notes executed by the Issuer
and authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit D hereto. The outstanding balance of the Class D Notes will at all times
equal the Class D Investor Interest.
"Class D Prior Period Interest" shall mean, with respect to
each Interest Period in which the Class D Notes would have accrued interest on
the outstanding principal balance of the Class D Notes had the outstanding
principal balance of the Class D Notes not been reduced for reasons other than
the payment of principal to the Class D Noteholders, an amount equal to the
product of (i) the Class D Note Rate in effect during such Interest Period, (ii)
the actual number of days in such Interest Period divided by 360 and (iii) the
amount by which the outstanding principal balance of the Class D Notes was less
than the outstanding principal balance of the Class D Notes during such Interest
Period for reasons other than the payment of principal to the Class D
Noteholders and (b) all unpaid Class D Prior Period Interest from prior Interest
Periods; provided, however, that Class D Prior Period Interest shall not be
distributed until the Payment Date or Payment Dates following the Transfer Date
on which the Class D Investor Interest have been reimbursed in full for any
reductions.
"Class D Required Amount" has the meaning specified in
subsection 5.14(d).
"Class D Servicing Fee" has the meaning specified in Section
3.2 hereof.
"Closing Date" means November 3, 2005.
"Code" means the Internal Revenue Code of 1986, as amended.
"Controlled Accumulation Amount" shall mean for any Transfer
Date during the Controlled Accumulation Period, $29,868,888.89; provided,
however, that if the Accumulation Period Length is determined to be less than 18
months pursuant to subsection 5.15(j), the Controlled Accumulation Amount for
each Transfer Date with respect to the Controlled Accumulation Period will be
equal to (i) the product of (x) the sum of (1) the Class A Initial Investor
Interest, (2) the Class B Initial Investor Interest, (3) the Class C Initial
Investor Interest and (4) the Class D Initial Investor Interest and (y) the
Accumulation Period Factor for such Monthly Period divided by (ii) the Required
Accumulation Factor Number.
"Controlled Accumulation Period" shall mean, unless a Pay Out
Event shall have occurred prior thereto, the period commencing at the close of
business on April 15, 2007 or such later date as is determined in accordance
with subsection 5.15(j) and ending on the first to occur of (a) a Pay Out
12
Commencement Date, (b) the commencement of the Rapid Amortization Period and (c)
the Series 2005-1 Termination Date.
"Controlled Deposit Amount" means, for any Payment Date with
respect to the Controlled Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Transfer Date and any existing
Accumulation Shortfall.
"Covered Amount" shall mean an amount, determined as of each
Transfer Date with respect to the Controlled Accumulation Period or the Rapid
Accumulation Period and the first Transfer Date with respect to the Rapid
Amortization Period, equal to the sum of (a) the product of (i) the Class A Note
Rate in effect with respect to such Interest Period, times (ii) a fraction, the
numerator of which is the actual number of days in the related Interest Period
and, the denominator of which is 360, times (iii) the aggregate amount on
deposit in the Principal Funding Account with respect to Class A Monthly
Principal as of the Record Date preceding such Transfer Date, plus (b) the
product of (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 B Note Rate in effect with respect to such Interest Period, times (iii)
the aggregate amount on deposit in the Principal Funding Account with respect to
Class B Monthly Principal as of the Record Date preceding such Transfer Date
plus (c) the product of (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 C Note Rate in effect with respect to such Interest Period,
times (iii) the aggregate amount on deposit in the Principal Funding Account
with respect to Class C Monthly Principal as of the Record Date preceding such
Transfer Date.
"Cumulative Series Principal Shortfall" means the sum of the
Series Principal Shortfalls (as such term is defined in each of the related
Series Supplements) for each Series in Group One.
"Deferred Payment Obligation Return Amount" has the meaning
set forth in the definition of "Eligible Receivable" in Section 1.01 of the Sale
and Servicing Agreement.
"Early Pay Off Date" means a Payment Date on which the Offered
Notes are refinanced, in whole (including accrued and unpaid interest), without
premium, upon prior written notice to the Trustee.
"Excess Funding Account" has the meaning specified in Section
5.21(a).
"Excess Insured Concentration Amounts" is defined in clause
(i) of the definition of Excess Receivables Amount.
13
"Excess Insurer Concentration Amounts" is defined in clauses
(ii), (iii), (iv), (v) and (vi) of the definition of Excess Receivables Amount.
"Excess Receivables Amount" means, as of any date of
determination, the sum of:
(i) the aggregate unpaid principal balance of all
Principal Receivables as of the end of the immediately preceding
Monthly Period having the same Insured but only to the extent such
aggregate balance is in excess of such Insured's Single Insured
Concentration Percentage times the aggregate unpaid principal balance
of all Principal Receivables as of the end of such Monthly Period
(such aggregate excess amounts, the "Excess Insured Concentration
Amounts"); and
(ii) the sum, for each insurer (including any affiliated
insurer) to the extent not included in clause (iii), (iv) or (v)
below:
(a) if more than 3.0% of the aggregate unpaid
principal balance of all Principal Receivables as of the
end of such Monthly Period arise from Premium Finance
Obligations made to finance premiums due to the same Tier
3 Insurer, the aggregate unpaid principal balance of such
Principal Receivables but only to the extent in excess of
such percentage;
(b) if more than 7.0% of the aggregate unpaid
principal balance of all Principal Receivables as of such
Monthly Period arise from Premium Finance Obligations made
to finance premiums due to the same Tier 2 Insurer, the
aggregate unpaid principal balance of such Principal
Receivables but only to the extent in excess of such
percentage;
(c) if more than 11.0% of the aggregate unpaid
principal balance of all Principal Receivables as of the
end of such Monthly Period arise from Premium Finance
Obligations made to finance premiums due to the same Tier
1 Insurer (other than an Exempt Tier 1 Insurer), the
aggregate unpaid principal balance of such Principal
Receivables but only to the extent in excess of such
percentage;
(iii) the sum, for the top 4 Tier 3 Insurers (including
any affiliated insurer for each of the top 4 Tier 3 Insurers) if more
than 7.5% of the aggregate unpaid principal balance of all Principal
Receivables as of the end of such Monthly Period arise from Premium
Finance Obligations made to finance premiums due to the same Tier 3
Insurers, of the aggregate unpaid principal balance of such Principal
Receivables but only to the extent in excess of such percentage;
(iv) the sum, for the top 4 Tier 2 Insurers (including any
affiliated insurer for each of the top 4 Tier 2 Insurers) if more
than 22.5% of the aggregate unpaid principal balance of all Principal
Receivables as of the end of such Monthly Period arise from Premium
Finance Obligations made to finance premiums due to the same Tier 2
14
Insurers, of the aggregate unpaid principal balance of such Principal
Receivables but only to the extent in excess of such percentage;
(v) the sum, for the top 4 Tier 1 Insurers (including any
affiliated insurer for each of the top 4 Tier 1 Insurers) if more
than 35.0% of the aggregate unpaid principal balance of all Principal
Receivables as of the end of such Monthly Period arise from Premium
Finance Obligations made to finance premiums due to the same Tier 1
Insurers (other than the Exempt Tier 1 Insurers), of the aggregate
unpaid principal balance of such Principal Receivables but only to
the extent in excess of such percentage; and
(vi) the excess of the aggregate unpaid principal balance
of Principal Receivables relating to Deferred Payment Obligations
(other than Exempt Deferred Payment Obligations) over 10% of the
aggregate unpaid principal balance of all Principal Receivables, each
as of the end of such Monthly Period.
For purposes of making any calculation pursuant to clauses
(ii) through (vi) above, an amount that would be part of the Excess Receivables
Amount under such clause shall be taken into account only to the extent not
already taken into account under clause (i) above. For purposes of making any
calculation pursuant to clause (vi) above, an amount that would be part of the
Excess Receivables Amount under such clause shall be taken into account only to
the extent not already taken into account under clauses (i) through (v) above.
Such amounts calculated pursuant to clauses (ii) through (vi) above, the "Excess
Insurer Concentration Amounts".
For purposes of any determination based on or relating to the
rating of an insurer, if the obligations of an insurer in connection with a
Premium Finance Obligation are supported by a letter of credit, guarantee or
other credit enhancement, then the Servicer may deem the insurer to have the
ratings of the letter of credit provider or guarantor or the ratings associated
with such other credit enhancement; provided that (a) in the case of a letter of
credit, it is irrevocable, unconditional and either (1) complies with S&P's
criteria for letters of credit in existence at such time or (2) the Rating
Agency Condition is satisfied, and (b) in the case of a guarantee or other
credit enhancement, the Rating Agency Condition is satisfied.
"Excess Spread" means, with respect to any Transfer Date, the
sum of the amounts with respect to such Transfer Date, if any, specified
pursuant to subsections 5.15(a)(iv), 5.15(b)(iii), 5.15(c)(iii) and
5.15(d)(iii), plus the income and earnings referred to in subsections 5.20(d)
and 5.21(c).
"Exempt Tier 1 Insurer" means, on any date of determination,
applying if applicable the Split Rating Determination Methodology, an insurer
that has a then current (i) claims-paying ability rating, if available,
otherwise a senior unsecured rating, from Standard and Poor's of AAA (or if such
entity is AIG or an affiliate of AIG, at least AA-) and/or (ii) insurance
financial strength rating, if available, otherwise a senior unsecured rating,
from Xxxxx'x of Aaa (or if such entity is AIG or an affiliate of AIG, at least
Aa3).
15
"Exempt Deferred Payment Obligation" means, on any date of
determination, applying if applicable, the Split Rating Determination
Methodology, a Deferred Payment Obligation in respect of which the entity
agreeing to pay the Deferred Payment Obligation Return Amount upon cancellation
of the related insurance policy has a then current (i) claims-paying ability
rating, if available, otherwise a senior unsecured rating, from Standard and
Poor's of AAA (or if such entity is AIG or an affiliate of AIG, at least AA-)
and/or (ii) insurance financial strength rating, if available, otherwise a
senior unsecured rating, from Xxxxx'x of Aaa (or if such entity is AIG or an
affiliate of AIG, at least Aa3).
"Financed Premium Percentage" means, in respect of any Monthly
Period, the ratio (expressed as a percentage) of the aggregate of the portions
of premiums financed or committed to be financed, as of the respective dates of
origination of the related Premium Finance Obligations, by all Additional
Receivables transferred to the Trust during such Monthly Period to the aggregate
of the premiums paid or committed to be paid with respect to such Premium
Finance Obligations.
"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 Principal Receivables (with respect to Originator Receivables) in the Trust
as of the close of business on the last day of the prior Monthly Period and (b)
the sum of the numerators used to calculate the respective investor percentages
used for allocations with respect to Principal Receivables for all outstanding
Series on such date of determination.
"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 end of the day on the Payment Date
occurring during such Monthly Period, weighted for a partial accrual period in
the case of the initial Monthly Period with respect to Series 2005-1, and the
denominator of which is the greater of (a) the aggregate amount of Principal
Receivables (with respect to Originator Receivables) in the Trust as of the
close of business on the last day of the preceding Monthly Period ending before
the immediately preceding Payment Date minus Principal Receivables that have
been removed from the Trust pursuant to Section 2.07 of the Sale and Servicing
Agreement and (b) the sum of the numerators used to calculate the respective
investor percentages used for allocations with respect to Finance Charge
Receivables, Investor Default Amounts or Principal Receivables, as applicable,
for all outstanding Series on such date of determination.
"Funding Percentage" means 0.35%, except upon the occurrence
and continuation of a Class C Reserve Event, in which case, (i) 0.85% in the
case of a Type 1 Class C Reserve Event, (ii) 1.35% in the case of Type 2 Class C
Reserve Event and (iii) 1.75% in the case of a Type 3 Class C Reserve Event.
16
"Group One" means Series 2005-1 and each other Series
specified in the related series supplement to be included in Group One.
"Initial Class C Reserve Amount" means the product of the
Funding Percentage and the Initial Investor Interest.
"Initial Investor Interest" means the aggregate initial
principal amount of the Notes, which is $529,570,000.
"Insurer Insolvency Event" means, with respect to any insurer,
the commencement of an insolvency, receivership or similar proceeding in respect
of such insurer.
"Interest Period" means, with respect to any Payment Date, the
period from and including the Payment Date immediately preceding such Payment
Date (or, in the case of the first Payment Date, from and including the Closing
Date) to but excluding such Payment Date.
"Investor Default Amount" means, with respect to any Monthly
Period and any Receivable under a Premium Finance Obligation that became a
Defaulted Obligation during such Monthly Period, an amount equal to the product
of (a) the unpaid amount (including both principal and accrued unpaid finance
charges) of such Receivable as of the date that such Premium Finance Obligation
became a Defaulted Obligation and (b) the Floating Investor Percentage with
respect to such Monthly Period; provided, however, that the calculation of
"Investor Default Amount" shall in no event give effect to losses in respect of
Excess Insured Concentration Amounts computed pursuant to clause (i) of the
definition of Excess Receivables Amount or losses in respect of Excess Insurer
Concentration Amounts (to the extent relating to an Insurer Insolvency Event)
computed pursuant to clauses (ii), (iii), (iv), (v) and (vi) of such definition.
"Investor Interest" means, on any date of determination, an
amount equal to the sum of (a) the Class A Investor Interest, (b) the Class B
Investor Interest, (c) the Class C Investor Interest and (d) the Class D
Investor Interest, each as of such date.
"Investor Percentage" means for any Monthly Period, (a) with
respect to Finance Charge Receivables and Investor Default Amounts at any time
and Principal Receivables during the Revolving Period, the Floating Investor
Percentage and (b) with respect to Principal Receivables 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 into the Principal
Account for such Monthly Period pursuant to subsections 5.11(a)(ii), (iii), (iv)
and (v), or 5.11(b)(ii), (iii), (iv) and (v) or 5.11(d)(ii) in each case, as
applicable to such Monthly Period, (b) the aggregate amount to be treated as
Investor Principal Collections pursuant to subsections 5.15(a)(iii), 5.17(b),
(d), (e), (g), (h) and (k) for such Monthly Period (other than such amount paid
17
from Reallocated Principal Collections), (c) the aggregate amount of Collections
on deposit in the Excess Funding Account on the related Transfer Date that are
to be deposited in the Principal Account pursuant to subsection 5.11(d) and (f)
in connection with the refinancing of any Class of Notes, the aggregate amount
deposited in the Payment Account pursuant to Section 11 hereof.
"Investor Servicing Fee" has the meaning specified in Section
3.2 hereof.
"Legal Final Payment Date" means April 15, 2010.
"LIBOR" means, for any Interest Period, the composite London
interbank offered rate for one-month Dollar deposits determined by the Trustee
for each Interest Period in accordance with the provisions of Section 5.25.
"LIBOR Determination Date" means the second Business Day prior
to the commencement of the subsequent Interest Period (and with respect to the
first Interest Period the second Business Day prior to the Closing Date).
"Mandatory Servicer Advance" has the meaning specified in
Section 5.29.
"Minimum Trust Interest" means for any date of determination
an amount equal to (a) the product of 104% (or such lesser percentage that
satisfies the Rating Agency Condition) times the aggregate investor interest (or
adjusted investor interest if applicable) for all Series outstanding as of such
date minus (b) the aggregate investor interest (or adjusted investor interest if
applicable) for all Series outstanding as of such date plus (c) the Excess
Receivables Amount as of such date plus (d) the portion of the principal balance
of the Receivables having a remaining term of more than twelve months that is in
excess of 10% of the principal balance of the Receivables.
"Monthly Interest" means, with respect to any Transfer Date,
the sum of (a) the Class A Monthly Interest, the Class A Additional Interest, if
any, and the unpaid Class A Deficiency Amount, if any, (b) the Class B Monthly
Interest, the Class B Additional Interest, if any, and the unpaid Class B
Deficiency Amount, if any, (c) the Class C Monthly Interest, the Class C
Additional Interest, if any, and the unpaid Class C Deficiency Amount, if any,
and (d) the Class D Monthly Interest, if any, each with respect to such Transfer
Date.
"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 in respect of Principal Receivables and
in Finance Charges on the Originator Receivables and Underlying Receivables
during such Monthly Period and the denominator of which shall equal the
aggregate amount of Originator Receivables and Underlying Receivables at the end
of the preceding Monthly Period.
"Monthly Period" has the meaning specified in the Base
Indenture.
18
"Net Servicing Fee Rate" means (a) so long as AIC, AICCO, IP
Finance I, IP Finance II and IP Funding or any other affiliate thereof are
separately or collectively the Servicer, 0% per annum and (b) otherwise, 0.50%
per annum.
"Noteholder" means (a) with respect to the Class A Notes, the
holder of record of a Class A Note, (b) with respect to the Class B Notes, the
holder of record of a Class B Note, (c) with respect to the Class C Notes, the
holder of record of a Class C Note, (d) with respect to the Class D Notes, the
holder of record of a Class D Note and (e) with respect to any Notes, the holder
of record of such Notes.
"Noteholders" means the holder of record of a Note.
"Notes" means the Class A Notes, the Class B Notes, the Class
C Notes and the Class D Notes.
"Offered Notes" means the Class A Notes, Class B Notes and
Class C Notes.
"Optional Servicer Advances" has the meaning specified in
Section 5.29.
"Payment Account" means the account established for the
benefit of the Noteholders pursuant to subsection 5.3(c) of the Base Indenture.
"Payment Date" means December 15, 2005 and the fifteenth day
of each calendar month thereafter, or if such fifteenth day is not a Business
Day, the next succeeding Business Day.
"Payoff Date" means the date on which the Notes are redeemed
in full pursuant to Section 7 hereof.
"Payoff Price" means an amount equal to the sum of the unpaid
Investor Interest (including any amounts by which the Investor Interest had
previously been reduced for reasons other than payments of principal, but not
reimbursed) and accrued and unpaid amounts and Monthly Interest and Prior Period
Interest on the Offered Notes at the respective Offered Note Rates through the
day preceding the Payoff Date, less amounts, if any, on deposit on the Payoff
Date in the Payment Account for the payment of accrued and unpaid principal and
interest on the Notes.
"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 Base Indenture
or a Series 2005-1 Pay Out Event is deemed to occur pursuant to Section 5
hereof.
"Pool Factor" means, with respect to the last day of any
Monthly Period, a number carried out to seven decimals representing the ratio of
the Investor Interests as of such day (determined after taking into account any
reduction therein which will occur on the Payment Date following such last day
of such Monthly Period) to the Initial Investor Interests.
19
"Principal Funding Account" shall have the meaning set forth
in Section 5.22.
"Principal Funding Account Balance" shall mean, 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" shall mean, with
respect to each Transfer Date, the investment earnings on funds in the Principal
Funding Account (net of investment expenses and losses) for the period from and
including the immediately preceding Transfer Date to but excluding such Transfer
Date.
"Principal Funding Investment Shortfall" shall mean, as of
each Transfer Date with respect to the Controlled Accumulation Period and the
first Transfer Date with respect to the Rapid Amortization 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 Amortization Period
commencing on the Pay Out Commencement Date and ending on the earlier to occur
of (a) the Series 2005-1 Termination Date and (b) the discharge of the Indenture
of the Trust pursuant to Section 12 of the Base Indenture.
"Rating Agency" means Xxxxx'x and Standard & Poor's.
"Rating Agency Condition" means the notification in writing by
each rating agency requested to rate the Offered Notes to the Seller, the
Servicer and the Trustee that a proposed action will not result in such rating
agency reducing or withdrawing its then existing rating of the Notes of any
outstanding Series or Class of a Series with respect to which it is a rating
agency.
"Reallocated Class B Principal Collections" means, with
respect to any Transfer Date, Collections of Principal Receivables applied in
accordance with subsections 5.18(a) and (b) in an amount not to exceed the
product of (a) the Class B Investor Allocation with respect to the Monthly
Period relating to such Transfer Date and (b) the Investor Percentage with
respect to the Monthly Period relating to such Transfer Date and (c) the amount
of Collections of Principal Receivables with respect to the Monthly Period
relating to such Transfer Date; provided, however, 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 Class C Principal Collections" means, with
respect to any Transfer Date, Collections of Principal Receivables applied in
accordance with subsections 5.18(a) (b) and (c) in an amount not to exceed the
product of (a) the Class C Investor Allocation with respect to the Monthly
Period relating to such Transfer Date and (b) the Investor Percentage with
respect to the Monthly Period relating to such Transfer Date and (c) the amount
20
of Collections of Principal Receivables with respect to the Monthly Period
relating to such Transfer Date; provided, however, that such amount shall not
exceed the Class C Investor Interest after giving effect to any Class C Investor
Charge-Offs for such Transfer Date.
"Reallocated Class D Principal Collections" means, with
respect to any Transfer Date, Collections of Principal Receivables applied in
accordance with subsections 5.18(a), (b), (c) and (d) in an amount not to exceed
the product of (a) the Class D Investor Allocation with respect to the Monthly
Period relating to such Transfer Date and (b) the Investor Percentage with
respect to the Monthly Period relating to such Transfer Date and (c) the amount
of Collections of Principal Receivables with respect to the Monthly Period
relating to such Transfer Date; provided, however, that such amount shall not
exceed the Class D Investor Interest after giving effect to any Class D Investor
Charge-Offs for such Transfer Date.
"Reallocated Principal Collections" means the sum of (a)
Reallocated Class B Principal Collections, (b) Reallocated Class C Principal
Collections and (c) Reallocated Class D Principal Collections.
"Reassignment Amount" with respect to a Reassignment Date
pursuant to subsection 2.04(g) of the Sale and Servicing Agreement and Series
2005-1, means an amount equal to (i) the outstanding balance of the Notes of
such Series at the end of the day immediately preceding the Reassignment Date,
less the amount, if any, previously allocated for payment of principal to such
Noteholders on the related Payment Date in the Monthly Period in which the
Reassignment Date occurs, plus (ii) an amount equal to all interest accrued but
unpaid on the Notes of such Series at the applicable Note Rate for the related
Interest Period through the last day of such Interest Period, less the amount,
if any, previously allocated for payment of interest to the Noteholders of such
Series on the related Payment Date in the Monthly Period in which the
Reassignment Date occurs, plus (without duplication) plus (iii) the aggregate
amount by which the Investor Interest shall have been reduced other than as a
result of principal payments on the Notes.
"Record Date" means for this Series, the day 5 Business Days
prior to the related Payment Date.
"Reference Banks" means four major banks in the London
interbank market selected by the Servicer and identified in an officer's
certificate delivered to the Trustee on the Closing Date or in any subsequent
officer's certificate delivered no later than one Business Day prior to any
applicable LIBOR Determination Date.
"Required Accumulation Factor Number" shall be equal to a
fraction, rounded upwards to the nearest whole number, the numerator of which is
one and the denominator of which is equal to the lowest monthly principal
payment rate on the Accounts, expressed as a decimal, for the 12 months
preceding the date of such calculation; provided, however, that this definition
may be changed at any time if the Rating Agency Condition is satisfied.
21
"Required Accumulation Reserve Account Amount" for any
Transfer Date will be determined by the Servicer from time to time and shall be
equal to an amount not less than 0.05% and not more than 1.00% of the
outstanding principal balance of the Series 2005-1 Notes.
"Revolving Period" means the period from and including the
Closing Date to, but not including, the earliest of (a) the day the Controlled
Accumulation Period commences, (b) the day the Rapid Amortization Period
commences and (c) the Pay Out Commencement Date.
"Scheduled Payment Date" means the Payment Date on October 15,
2008.
"Seller" means A.I. Receivables Transfer Corp.
"Series Principal Shortfall" means with respect to the Notes
and any Transfer Date, the excess, if any, of (a) (i) with respect to any
Transfer Date during the Controlled Accumulation Period, the applicable
Controlled Deposit Amount for such Transfer Date or (ii) with respect to any
Transfer Date during the Rapid Amortization Period, the Adjusted Investor
Interest over (b) the Investor Principal Collections less Reallocated Principal
Collections for such Transfer Date.
"Series 2005-1" means the Series of the AICCO Premium Finance
Master Trust (f/k/a AIG Credit Premium Finance Master Trust) represented by the
Notes.
"Series 2005-1 Pay Out Event" has the meaning specified in
Section 9 hereof.
"Series 2005-1 Termination Date" means the earliest to occur
of (a) the Payment Date on which the Notes plus all other amounts due and owing
to the Noteholders, are paid in full, (b) the Legal Final Payment Date and (c)
the Trust Termination Date.
"Servicer Advances" has the meaning specified in Section 5.29.
"Servicer Default" has the meaning specified in section 10.01
of the Sale and Servicing Agreement.
"Shared Principal Collections" means, with respect to any
Transfer Date, either (a) the amount allocated to the Notes 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 notes of other Series in Group One
which the applicable Series 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 Notes.
"Single Insured Concentration Percentage" means for a given
Insured 2%.
22
"Split Rating Determination Methodology" means (i) in the
event that an insurer has a split rating from Standard & Poor's and Xxxxx'x, the
insurer will be considered to have a single rating equal to the lower of the two
ratings, and (ii) in the event an insurer is rated by one rating agency but not
both rating agencies, that rating will be reduced by one full rating category.
"Tier 1 Insurer" means, on any date of determination,
applying, if applicable, the Split Rating Determination Methodology, an insurer
that has a then current (i) claims-paying ability rating, if available,
otherwise a senior unsecured rating, from Standard and Poor's of at least A-
and/or (ii) insurance financial strength rating, if available, otherwise a
senior unsecured rating, from Xxxxx'x of at least A3.
"Tier 2 Insurer" means, on any date of determination;
applying, if applicable, the Split Rating Determination Methodology, an insurer
that has a then current (i) claims-paying ability rating, if available,
otherwise a senior unsecured rating, from Standard and Poor's of at least BBB-
and/or (ii) insurance financial strength rating, if available, otherwise a
senior unsecured rating, from Xxxxx'x of at least Baa3.
"Tier 3 Insurer" means, on any date of determination,
applying, if applicable, the Split Rating Determination Methodology, (i) an
insurer that as of the end of the immediately preceding Monthly Period has a
then current (a) a claims-paying ability rating, if available, otherwise a
senior unsecured rating, of below investment grade from Standard & Poor's and/or
(b) an insurance financial strength rating, if available, otherwise a senior
unsecured rating, of below investment grade by Xxxxx'x; or (ii) an insurer that
as of the end of the immediately preceding Monthly Period has been rated by
neither Standard & Poor's nor Xxxxx'x.
"Trust" means the AICCO Premium Finance Master Trust (f/k/a
AIG Credit Premium Finance Master Trust), a Delaware statutory trust.
"Type 1 Class C Reserve Event" shall occur if, as of a
Transfer Date, the average of the Annualized Monthly Excess Spread Amounts for
the immediately preceding three Monthly Periods falls below 2.00%.
"Type 2 Class C Reserve Event" shall occur if, as of a
Transfer Date, the average of the Annualized Monthly Excess Spread Amounts for
the immediately preceding three Monthly Periods falls below 1.50%.
"Type 3 Class C Reserve Event" shall occur if, as to a
Transfer Date, the average of Annualized Monthly Excess Spread Amounts for the
immediately preceding Three Monthly Periods falls below 1.00%.
SECTION 2. Article 3 of the Base Indenture. Article 3 shall be
read in its entirety as follows and shall be applicable only to the Notes:
23
ARTICLE 3
INITIAL ISSUANCE
SECTION 3.1 Initial Issuance. Subject to satisfaction of the
conditions precedent set forth herein, on the Closing Date, the Issuer will
issue the Notes in the aggregate initial principal amount equal to the Initial
Investor Interest in accordance with Section 2.2.
SECTION 3.2. Compensation. The share of the Servicing Fee
allocable to Series 2005-1 with respect to any Transfer Date (the "Investor
Servicing Fee") shall be equal to the sum of the Class A Servicing Fee, the
Class B Servicing Fee, the Class C Servicing Fee and the Class D Servicing Fee
with respect to such date. 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 be equal to one-twelfth of the product of (i) the Class A
Floating Allocation, (ii) the Net Servicing Fee Rate and (iii) the Investor
Interest for the relevant Interest Period. 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 be equal to one-twelfth of the product of
(i) the Class B Floating Allocation, (ii) the Net Servicing Fee Rate and (iii)
the Investor Interest for the related Interest Period. The share of the Investor
Servicing Fee allocable to the Class C Investor Interest with respect to any
Transfer Date (the "Class C Servicing Fee") shall be equal to one-twelfth of the
product of (i) the Class C Floating Allocation, (ii) the Net Servicing Fee Rate
and (iii) the Investor Interest for the related Interest Period. The share of
the Investor Servicing Fee allocable to the Class D Investor Interest with
respect to any Transfer Date (the "Class D Servicing Fee") shall be equal to
one-twelfth of the product of (i) the Class D Floating Allocation, (ii) the Net
Servicing Fee Rate and (iii) the Investor Interest for the related Interest
Period. Except as specifically provided above, the Investor Servicing Fee shall
be paid by the cash flows from the Trust Estate allocated to the Issuer or the
noteholders of other Series (as provided in the related series supplements) and
in no event shall the Trust, the Trustee or the Noteholders be liable therefor.
The Class A Servicing Fee shall be payable to the Servicer solely to the extent
amounts are available for distribution in respect thereof pursuant to
subsections 5.15(a)(ii) and 5.17(a). The Class B Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to subsections 5.15(b)(ii) and 5.17(d). The Class C Servicing Fee shall
be payable solely to the extent amounts are available for distribution in
respect thereof pursuant to subsections 5.15(c)(ii) and 5.17(g). The Class D
Servicing Fee shall be payable solely to the extent amounts are available for
distribution in respect thereof pursuant to subsections 5.15(d)(ii) and 5.17(j).
The Servicing Fee for the first Monthly Period will be zero.
SECTION 3.3 Cleanup Call.
(a) The Notes shall be subject to purchase by the Servicer at
its option, in accordance with the terms specified in subsection 9.4(a) on any
24
Payment Date on or after the Payment Date on which the Investor Interest is
reduced to an amount less than or equal to 10% of the Initial Investor Interest.
(b) The deposit required in connection with any such purchase
will be equal to the sum of (a) the outstanding principal balance of the Notes
plus (b) accrued and unpaid interest on the Notes through the day preceding the
Payment Date on which the purchase occurs, plus (c) the aggregate amount by
which the principal balance of the Notes shall have been reduced for reasons
other than payment of principal to the Noteholders, minus (d) the amounts, if
any, on deposit at such Payment Date in the Payment Account for the payment of
principal and interest due the Noteholders.
SECTION 3.4 Delivery and Payment for the Notes. The Trustee
shall execute, authenticate and deliver the Notes in accordance with Section 3.5
and Section 6 below.
SECTION 3.5 Form of Delivery of the Notes; Depository;
Denominations.
(a) The Class A Notes, Class B Notes and Class C Notes shall
be delivered as Registered Notes in book-entry form. The Class D Notes shall be
delivered as Registered Notes in certificated form as provided in Section 2.1,
shall be initially registered in the name of the Seller and, notwithstanding
anything to the contrary contained in the Base Indenture, shall not be
transferred, sold or pledged, in whole or in part, other than pursuant to
Section 2.1.
(b) [RESERVED].
(c) [RESERVED].
(d) [RESERVED].
(e) The Offered Notes will be issuable in minimum
denominations of $100,000 and integral multiples of $1,000 in excess thereof.
The Class D Notes will be issued in minimum denominations of $1,000,000 and
integral multiples of $1,000 in excess thereof.
(f) The holder of a Definitive Note may transfer such
Definitive Note, by surrendering it at (i) the office or agency maintained by
the Trustee for such purpose in The City of New York or (ii) the office of any
transfer agent appointed by the Issuer.
SECTION 3. Article 5 of Base Indenture. Sections 5.1, 5.2,
5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 shall be read in their entirety as provided
in the Base Indenture, and for purposes of Series 2005-1, the following
provisions shall constitute part of Article 5 of the Indenture and shall be
applicable only to the Notes:
25
ARTICLE 5
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 5.10 Rights of Noteholders. The Notes shall be secured
by the Investor Interest in the Trust Estate, consisting of the right to
receive, to the extent necessary to make the required payments with respect to
such Notes at the times and in the amounts specified in the Base Indenture and
this Series Supplement, (a) the Floating Investor Percentage and Fixed Investor
Percentage (as applicable from time to time) of Collections received with
respect to the Receivables and (b) without duplication, funds on deposit in the
Collection Account, the Finance Charge Account, the Principal Account, the
Principal Funding Account, the Accumulation Reserve Account, the Excess Funding
Account, the Payment Account and, with respect to the Class C Notes only, the
Class C Reserve Account. The Class D Notes shall be subordinate to the Class A
Notes, the Class B Notes and the Class C Notes to the extent provided herein.
The Class C Notes shall be subordinate to the Class A Notes and the Class B
Notes to the extent provided herein. The Class B Notes shall be subordinate to
the Class A Notes to the extent provided herein. The Trust Interest shall not
represent any interest in the Collection Account, the Finance Charge Account,
the Principal Account, the Principal Funding Account, the Accumulation Reserve
Account, the Excess Funding Account, the Class C Reserve Account or the Payment
Account, except as specifically provided in this Article 5.
SECTION 5.11 Allocations.
(g) Allocations During the Revolving Period. During the
Revolving Period, the Servicer shall, prior to the close of business on the day
any Collections are deposited in the Collection Account, allocate to the
Investor Interest or the Issuer (as holder of the Trust Interest) and pay or
deposit from the Collection Account the following amounts as set forth below:
(i) Deposit into the Finance Charge Account an amount
equal to the product of (A) the Investor Percentage on the date of
receipt of such Collections and (B) the aggregate amount of
Collections received in respect of Finance Charge Receivables
(including recoveries) on such date to be applied in accordance with
Section 5.15.
(ii) Deposit into the Principal Account an amount equal to
the product of (A) the Class D Investor Allocation on the date of
receipt of such Collections, (B) the Investor Percentage on the date
of receipt of such Collections and (C) the aggregate amount of
Collections received in respect of Principal Receivables on such date
to be applied first in accordance with Section 5.18 and then in
accordance with subsection 5.15(e).
26
(iii) Deposit into the Principal Account an amount equal
to the product of (A) the Class C Investor Allocation on the date of
receipt of such Collections, (B) the Investor Percentage on the date
of receipt of such Collections and (C) the aggregate amount of
Collections received in respect of Principal Receivables on such date
to be applied first in accordance with Section 5.18 and then in
accordance with subsection 5.15(e).
(iv) Deposit into the Principal Account an amount equal to
the product of (A) the Class B Investor Allocation on the date of
receipt of such Collections, (B) the Investor Percentage on the date
of receipt of such Collections and (C) the aggregate amount of
Collections received in respect of Principal Receivables on such date
to be applied first in accordance with Section 5.18 and then in
accordance with subsection 5.15(e).
(v) Deposit into the Principal Account an amount equal to
the product of (A) the Class A Investor Allocation on the date of
receipt of such Collections, (B) the Investor Percentage on the date
of receipt of such Collections and (C) the aggregate amount of
Collections received in respect of Principal Receivables on such date
to be applied in accordance with subsection 5.15(e);
(vi) Pay to the Issuer, (without duplication) an amount
equal to the excess, if any, of the aggregate amount of Collections
received in respect of Finance Charge Receivables and Principal
Receivables on the date of receipt of such Collections over the sum
of (A) the amounts deposited pursuant to subsections 5.11(a)(i),
(ii), (iii), (iv) and (v) above; (B) amounts required to be deposited
in the Class C Reserve Account pursuant to 5.24(c) from Collections
received in respect of Finance Charge Receivables only and (D) any
amounts required to be otherwise applied under any comparable
provision of any other Series Supplement; provided, however, that the
amount to be paid to the Issuer, pursuant to this subsection
5.11(a)(vi) and any comparable provision of any other Series
Supplement with respect to any such date shall be paid to the Issuer,
only to the extent that the Trust Interest as of the end of the prior
Monthly Period (as adjusted to give effect to the inclusion in or
removal from the Trust of all Receivables transferred to or from the
Trust and/or any reduction or increase in any outstanding notes since
the end of such prior Monthly Period and on or prior to the following
Payment Date and the application of payments referred to in
subsection 5.4(b) of the Base Indenture) is greater than the largest
required Minimum Trust Interest of any Series outstanding and
otherwise shall be deposited into the Excess Funding Account in
accordance with subsection 5.11(f).
27
(h) Allocations During the Controlled Accumulation Period.
During the Controlled Accumulation Period the Servicer shall, prior to the close
of business on the day any Collections are deposited in the Collection Account,
allocate to the Investor Interest or the Issuer (as holder of the Trust
Interest), and pay or deposit from the Collection Account the following amounts
as set forth below:
(i) Deposit into the Finance Charge Account an amount
equal to the product of (A) the Investor Percentage on the date of
receipt of such Collections and (B) the aggregate amount of
Collections received in respect of Finance Charge Receivables on such
date to be applied in accordance with Section 5.15.
(ii) Deposit into the Principal Account an amount equal to
the product of (A) the Class D Investor Allocation on the date of
receipt of such Collections, (B) the Investor Percentage on the date
of receipt of such Collections and (C) the aggregate amount of
Collections received in respect of Principal Receivables on such date
to be applied first in accordance with Section 5.18 and then in
accordance with subsection 5.15(f).
(iii) Deposit into the Principal Account an amount equal
to the product of (A) the Class C Investor Allocation on the date of
receipt of such Collections, (B) the Investor Percentage on the date
of receipt of such Collections and (C) the aggregate amount of
Collections received in respect of Principal Receivables on such date
to be applied first in accordance with Section 5.18 and then in
accordance with subsection 5.15(f).
(iv) Deposit into the Principal Account an amount equal to
the product of (A) the Class B Investor Allocation on the date of
receipt of such Collections, (B) the Investor Percentage on the date
of receipt of such Collections and (C) the aggregate amount of
Collections received in respect of Principal Receivables on such date
to be applied first in accordance with Section 5.18 and then in
accordance with subsection 5.15(f).
(v) Deposit into the Principal Account an amount equal to
the product of (A) the Class A Investor Allocation on the date of
receipt of such Collections, (B) the Investor Percentage on the date
of receipt of such Collections and (C) the aggregate amount of
Collections received in respect of Principal Receivables on such date
to be applied in accordance with subsection 5.15(f).
(vi) Pay to the Issuer (without duplication), an amount
equal to the excess, if any, of the aggregate amount of Collections
received in respect of Finance Charge Receivables and Principal
Receivables on the date of receipt of such Collections over the sum
28
of (A) the amounts deposited pursuant to subsections 5.11(b)(i),
(ii), (iii), (iv) and (v) above; (B) amounts required to be deposited
in the Class C Reserve Account pursuant to 5.24(c) from Collections
received in respect of Finance Charge Receivables only and (C) any
amounts required to be otherwise applied under any comparable
provision of any other Series Supplement; provided, however, that the
amount to be paid to the Issuer, pursuant to this subsection
5.11(b)(vi) and any comparable provision of any other Series
Supplement with respect to any such date shall be paid to the Issuer
only to the extent that the Trust Interest as of the end of the prior
Monthly Period (as adjusted to give effect to the inclusion in or
removal from the Trust of all Receivables transferred to or from the
Trust and/or any reduction or increases in any outstanding notes
since the end of such prior Monthly Period and on or prior to the
following Payment Date and the application of payments referred to in
subsection 5.4(b) of the Base Indenture) is greater than the largest
required Minimum Trust Interest of any Series outstanding and
otherwise shall be deposited into the Excess Funding Account in
accordance with subsection 5.11(f).
(i) [RESERVED].
(j) Allocations During the Rapid Amortization Period. During
the Rapid Amortization Period, the Servicer shall, prior to the close of
business on the day any Collections are deposited in the Collection Account,
allocate to the Noteholders and pay or deposit from the Collection Account the
following amounts as set forth below:
(i) Deposit into the Finance Charge Account an amount
equal to the product of (A) the Investor Percentage on the date of
receipt of such Collections and (B) the aggregate amount of
Collections received in respect of Finance Charge Receivables on such
date to be applied in accordance with Section 5.15.
(ii) Deposit into the Principal Account an amount equal to
the product of (A) the Investor Percentage on the date of receipt of
such Collections and (B) the aggregate amount of Collections
processed in respect of Principal Receivables on such date; provided,
however, that the amount deposited into the Principal Account
pursuant to this subsection 5.11(d)(ii) shall not exceed the sum of
(a) the Adjusted Investor Interest as of such date (after taking into
account any payments to be made on the Payment 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 (b) any Reallocated Principal Collections
relating to the Monthly Period in which such deposit is made.
(iii) Pay to the Issuer, (without duplication) an amount
equal to the excess, if any, of the aggregate amount of Collections
received in respect of Finance Charge Receivables and Principal
29
Receivables on the date of receipt of such Collections over the sum
of (A) the amounts deposited pursuant to subsections 5.11(d)(i) and
(ii) above; (B) amounts required to be deposited in the Class C
Reserve Account pursuant to 5.24(c) from Collections received in
respect of Finance Charge Receivables only and (C) any amounts
required to be otherwise applied under any comparable provision of
any other Series Supplement; provided, however, that the amount to be
paid to the Issuer, pursuant to this subsection 5.11(d)(iii) and any
comparable provision of any other Series Supplement with respect to
any such date shall be paid to the Issuer, only to the extent that
the Trust Interest as of the end of the prior Monthly Period (as
adjusted to give effect to the inclusion in, or removal from, the
Trust of all Receivables transferred to or from the Trust and/or any
reduction or increase in any outstanding notes since the end of such
prior Monthly Period and on or prior to the following Payment Date
and the application of payments referred to in subsection 5.4(b) of
the Base Indenture) is greater than the largest required Minimum
Trust Interest of any Series outstanding and otherwise shall be
deposited into the Excess Funding Account in accordance with
subsection 5.11(f).
(k) Priority of Allocations during the Rapid Amortization
Period. During the Rapid Amortization Period, Available Investor Principal
Collections will be paid to the Class A Noteholders on each distribution date
until the earliest of:
(i) the date on which the Class A Notes are paid in full;
(ii) the Series 2005-1 Termination Date; and
(iii) the Trust Termination Date.
After the Class A Notes have been paid in full and if the
Series 2005-1 Termination Date or the Trust Termination Date has not occurred,
Available Investor Principal Collections will be paid to the Class B Noteholders
on each distribution date until the earliest of:
(i) the date on which the Class B Notes are paid in full;
(ii) the Series 2005-1 Termination Date; and
(iii) the Trust Termination Date.
After the Class B Notes have been paid in full and if the
Series 2005-1 Termination Date or the Trust Termination Date has not occurred,
Available Investor Principal Collections will be paid to the Class C Noteholders
on each distribution date until the earliest of:
30
(i) the date on which the Class C Notes are paid in full;
(ii) the Series 2005-1 Termination Date; and
(iii) the Trust Termination Date.
(l) Excess Funding Collections. Any Collections in respect of
Principal Receivables or Finance Charge Receivables not allocated and paid to
the Issuer, because of the limitations contained in subsections 5.11(a)(vi),
5.11(b)(vi), 5.11(d)(iii), 5.15(e)(ii), 5.15(f)(vi) and 5.17(o) 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 (without
duplication) to the Issuer, on any subsequent date when, and only to the extent
that the Trust Interest as of the end of the prior Monthly Period (as adjusted
to give effect to the inclusion in or removal from the Trust of all Receivables
transferred to or from the Trust and/or any reduction in any outstanding notes
since the end of such prior Monthly Period and on or prior to the following
Payment Date) is greater than the largest required Minimum Trust Interest of any
Series outstanding; provided, however, that if an Accumulation Period or an
Amortization Period commences with respect to any Series, any funds on deposit
in the Excess Funding Account, shall be released from the Excess Funding
Account, deposited in the Principal Account and treated as Shared Principal
Collections to the extent needed to cover principal payments due to or for the
benefit of such Series.
(m) Notwithstanding the preceding provisions of subsections
5.11(a), (b), (d) and (f), the deposits required by such subsections shall be
subject to the third paragraph of subsection 5.4(a) of the Base Indenture; so
long as the requirements of such third paragraph are satisfied, any amount
required to be on deposit in any Series Account need not be deposited until the
Transfer Date prior to the Payment Date on which such amount is to be paid to
Noteholders. With respect to any Series of notes, and notwithstanding anything
in the Base Indenture or any Series Supplement to the contrary, whether or not
the Servicer is required to make monthly or daily deposits from the Collection
Account into the Finance Charge Account, the Principal Account or the Excess
Funding Account with respect to any Monthly Period, (i) the Servicer will only
be required to deposit Collections from the Collection Account into the Finance
Charge Account, the Principal Account or the Excess Funding Account up to the
required amount to be deposited into any such deposit account or, without
duplication, paid on or prior to the related Payment Date to the noteholders of
all Series and (ii) if at any time prior to such Payment Date the amount of
Collections deposited in the Collection Account exceeds the amount required to
be deposited pursuant to clause (i) above, the Servicer will be permitted to
withdraw the excess from the Collection Account and allocate and pay such excess
(without duplication) to the Issuer, in accordance with subsection 5.4(c) of the
Base Indenture.
31
SECTION 5.12 Determination of Monthly Interest.
(a) The amount of monthly interest payable to the Class A
Notes shall be determined as of each Transfer Date and shall be an amount equal
to the product of (i)(A) a fraction, the numerator of which is the actual number
of days in the related Interest Period and the denominator of which is 360,
times (B) the Class A Note Rate in effect with respect to the related Interest
Period, and (ii) the outstanding principal balance of the Class A Notes at the
start of such Interest Period (the "Class A Monthly Interest"); provided,
however, that in addition to Class A Monthly Interest an amount equal to the sum
of (i) the amount of any unpaid Class A Deficiency Amounts, as defined below,
and (ii) an amount equal to the product of (A) a fraction, the numerator of
which is the actual number of days in the related Interest Period and the
denominator of which is 360, times (B) a rate equal to 2% per annum over the
Class A Note Rate in effect with respect to the related Interest Period, times
(C) 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
Noteholders) (such product, the "Class A Additional Interest") shall also be
payable to the Class A Notes; provided further, that the "Class A Deficiency
Amount" for any Transfer Date shall be equal to the excess, if any, of (x) the
sum of the Class A Monthly Interest, the Class A Additional Interest and the
Class A Deficiency Amount as determined pursuant to the preceding sentence for
the prior Interest Period, over (y) the amount actually paid in respect thereof
on the preceding Payment Date.
(b) The amount of monthly interest payable to the Class B
Notes shall be determined as of each Transfer Date and shall be an amount equal
to the product of (i)(A) a fraction, the numerator of which is the actual number
of days in the related Interest Period and the denominator of which is 360,
times (B) the Class B Note Rate in effect with respect to the related Interest
Period, and (ii) the outstanding principal balance of the Class B Notes at the
start of such Interest Period (the "Class B Monthly Interest"); provided,
however, that in addition to Class B Monthly Interest an amount equal to the sum
of (i) the amount of any unpaid Class B Deficiency Amounts, as defined below,
and (ii) an amount equal to the product of (A) a fraction, the numerator of
which is the actual number of days in the related Interest Period and the
denominator of which is 360, times (B) a rate equal to 2% per annum over the
Class B Note Rate in effect with respect to the related Interest Period, and (C)
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 Noteholders)
(such product, the "Class B Additional Interest") shall also be payable to the
Class B Notes; provided further, that the "Class B Deficiency Amount" for any
Transfer Date shall be equal to the (x) the sum of the Class B Monthly Interest,
the Class B Additional Interest and the Class B Deficiency Amount as determined
pursuant to the preceding sentence for the prior Interest Period, over (y) the
amount actually paid in respect thereof on the preceding Payment Date.
(c) The amount of monthly interest payable to the Class C
Notes shall be determined as of each Transfer Date and shall be an amount equal
to the product of (i)(A) a fraction, the numerator of which is the actual number
of days in the related Interest Period and the denominator of which is 360,
times (B) the Class C Note Rate in effect with respect to the related Interest
32
Period, and (ii) the outstanding principal balance of the Class C Notes at the
start of such Interest Period (the "Class C Monthly Interest"); provided,
however, that in addition to Class C Monthly Interest an amount equal to the sum
of (i) the amount of any unpaid Class C Deficiency Amounts, as defined below,
and (ii) an amount equal to the product of (A) a fraction, the numerator of
which is the actual number of days in the related Interest Period and the
denominator of which is 360, times (B) a rate equal to 2% per annum over the
Class C Note Rate in effect with respect to the related Interest Period, and (C)
any Class C Deficiency Amount from the prior Transfer Date, as defined below (or
the portion thereof which has not theretofore been paid to Class C Noteholders)
(such product, the "Class C Additional Interest") shall also be payable to the
Class C Notes; provided further, that the "Class C Deficiency Amount" for any
Transfer Date shall be equal to the (x) the sum of the Class C Monthly Interest,
the Class C Additional Interest and the Class C Deficiency Amount as determined
pursuant to the preceding sentence for the prior Interest Period, over (y) the
amount actually paid in respect thereof on the preceding Payment Date.
(d) The amount of monthly interest payable to the Class D
Notes shall be determined as of each Transfer Date and shall be an amount equal
to the product of (i)(A) a fraction, the numerator of which is the actual number
of days in the related Interest Period and the denominator of which is 360,
times (B) the Class D Note Rate in effect with respect to the related Interest
Period, and (ii) the outstanding principal balance of the Class D Notes at the
start of such Interest Period (the "Class D Monthly Interest").
SECTION 5.13 Determination of Monthly Principal.
(a) The amount of monthly principal deposited in the Principal
Funding Account or payable from the Principal Account with respect to the Class
A Notes on each Transfer Date ("Class A Monthly Principal"), beginning with the
Transfer Date in the month in which the Controlled Accumulation Period begins
or, if earlier, the first Transfer Date occurring after the Rapid Amortization
Period begins, shall be equal to the least of (i) the Available Investor
Principal Collections on deposit in the Principal Account for such Transfer
Date, (ii) for each Transfer Date occurring with respect to the Controlled
Accumulation Period, the Controlled Deposit Amount for such Transfer Date and
(iii) the Class A Adjusted Investor Interest prior to any deposit into the
Principal Funding Account (after taking into account any adjustments to be made
on such Transfer Date pursuant to Section 5.16) on such Transfer Date.
(b) The amount of monthly principal deposited in the Principal
Funding Account or payable from the Principal Account with respect to the Class
B Notes on each Transfer Date (the "Class B Monthly Principal"), relating to the
Controlled Accumulation Period, beginning with the Transfer Date on which an
amount equal to the Class A Investor Interest has been deposited into the
Principal Funding Account (after taking into account any payments to be made on
such Transfer Date), or during the Rapid Amortization Period, beginning with the
Transfer Date immediately preceding the Payment Date on which the Class A Notes
will be paid in full (after taking into account payments to be made on the
related Payment Date), shall be an amount equal to the least of (i) the
33
Available Investor Principal Collections on deposit in the Principal Account
with respect to such Transfer Date (minus the portion of such Available Investor
Principal Collections applied to Class A Monthly Principal on such Transfer
Date) (ii) for each Transfer Date with respect to the Class B Controlled
Accumulation Period, the Controlled Deposit Amount for such Transfer Date (minus
the Class A Monthly Principal for such Transfer Date) and (iii) the Class B
Adjusted Investor Interest prior to any deposit in the Principal Funding Account
(after taking into account any adjustments to be made on such Transfer Date
pursuant to Sections 5.16 and 5.18) on such Transfer Date.
(c) The amount of monthly principal deposited in the Principal
Funding Account or payable from the Principal Account with respect to the Class
C Notes on each Transfer Date (the "Class C Monthly Principal"), relating to the
Controlled Accumulation Period, beginning with the Transfer Date on which an
amount equal to the sum of (i) the Class A Investor Interest and (ii) the Class
B Investor Interest has been deposited into the Principal Funding Account (after
taking into account any payments to be made on such Transfer Date), or during
the Rapid Amortization Period, beginning with the Transfer Date immediately
preceding the Payment Date on which the Class B Notes will be paid in full
(after taking into account payments to be made on the related Payment Date),
shall be an amount equal to the least of (i) the Available Investor Principal
Collections on deposit in the Principal Account with respect to such Transfer
Date (minus the portion of such Available Investor Principal Collections applied
to Class A Monthly Principal and Class B Monthly Principal on such Transfer
Date) (ii) for each Transfer Date with respect to the Class C Controlled
Accumulation Period, the Controlled Deposit Amount for such Transfer Date (minus
the sum of the Class A Monthly Principal and Class B Monthly Principal for such
Transfer Date) and (iii) the Class C Adjusted Investor Interest prior to any
deposit in the Principal Funding Account (after taking into account any
adjustments to be made on such Transfer Date pursuant to Sections 5.16 and 5.18)
on such Transfer Date.
(d) The amount of monthly principal deposited in the Principal
Funding Account or payable from the Principal Account with respect to the Class
D Notes on each Transfer Date (the "Class D Monthly Principal"), with respect to
(A) the Controlled Accumulation Period, beginning with the Transfer Date on
which an amount equal to the sum of (i) the Class A Investor Interest, (ii) the
Class B Investor Interest and (iii) the Class C Investor Interest has been
deposited in the Principal Funding Account (after taking into account deposits
to be made on such Transfer Date), or (B) the Rapid Amortization Period
beginning with the Transfer Date immediately preceding the Payment Date on which
the Class C Notes will have been paid in full (after taking into account
payments to be made on the related Payment Date), shall be an amount equal to
the least of (i) the Available Investor Principal Collections on deposit in the
Principal Account with respect to such Transfer Date (minus the portion of such
Available Investor Principal Collections applied to Class A Monthly Principal,
Class B Monthly Principal and Class C Monthly Principal on such Transfer Date),
(ii) for each Transfer Date with respect to the Controlled Accumulation Period,
the Controlled Deposit Amount for such Transfer Date (minus the sum of the Class
A Monthly Principal, the Class B Monthly Principal and Class C Monthly Principal
34
for such Transfer Date); and (iii) the Class D Adjusted Investor Interest prior
to any deposit in the Principal Funding Account (after taking into account any
adjustments to be made on such Transfer Date pursuant to Sections 5.16 and 5.18)
on such Transfer Date.
SECTION 5.14 Coverage of Required Amount.
(a) On or before each Transfer Date, the Servicer shall
determine the amount (the "Class A Required Amount"), if any, equal to the
amount 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 that will be
payable on the related Payment Date, plus (vi) the Class A Investor Default
Amount, if any, for the prior Monthly Period exceeds the Class A Available Funds
for the related Monthly Period.
(b) On or before each Transfer Date, the Servicer shall
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 that will be payable on the related Payment Date, exceeds the
Class B Available Funds for the related Monthly Period, plus (ii) the Class B
Investor Default Amount, if any, for the prior Monthly Period.
(c) On or before each Transfer Date, the Servicer shall
determine the amount (the "Class C Required Amount"), if any, equal to the sum
of (i) the amount, if any, by which the sum of (A) the Class C Monthly Interest
for such Transfer Date, plus (B) the Class C Deficiency Amount, if any, for such
Transfer Date, plus (C) the Class C Additional Interest, if any, for such
Transfer Date, plus (D) the Class C Servicing Fee for the prior Monthly Period,
plus (E) the Class C Servicing Fee, if any, due but not paid on any prior
Transfer Date that will be payable on the related Payment Date, exceeds the
Class C Available Funds for the related Monthly Period, plus (ii) the Class C
Investor Default Amount, if any, for the prior Monthly Period.
(d) On or before each Transfer Date, the Servicer shall
determine the amount (the "Class D Required Amount"), if any, equal to the sum
of (i) the amount, if any, by which the sum of (A) the Class D Servicing Fee for
such Transfer Date, plus (B) the Class D Servicing Fee, if any, due but not paid
on any prior Transfer Date, exceeds the Class D Available Funds for the related
Monthly Period, plus (ii) Class D Monthly Interest for such Transfer Date, plus
(iii) the Class D Deficiency Amount, if any for such Transfer Date plus (iv) the
Class D Investor Default Amount, if any, for such Transfer Date.
35
(e) In the event that the sum of the Class A Required Amount,
the Class B Required Amount and the Class C Required Amount for such Transfer
Date is greater than zero, the Servicer shall give written notice to the Trustee
of such positive Class A Required Amount, Class B Required Amount and Class C
Required Amount or before such Transfer Date. In the event that the Class A
Required Amount for such Transfer Date is greater than zero, all or a portion of
the Excess Spread in an amount equal to the Class A Required Amount, to the
extent available, for such Transfer Date shall be paid from the Finance Charge
Account Transfer Date pursuant to subsection 5.17(a). In the event that the
Class A Required Amount for such Transfer Date exceeds the amount of Excess
Spread, the Collections of Principal Receivables allocable to each Class with
respect to the prior Monthly Period shall be applied as specified in Section
5.18. In the event that the Class B Required Amount for such Transfer Date is
greater than zero, all or a portion of Excess Spread in an amount equal to the
Class B Required Amount, to the extent available, shall be distributed from the
Finance Charge Account pursuant to subsection 5.17(d). In the event that 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
5.17(d), the Collections of Principal Receivables allocable to each Class shall
be applied as specified in Section 5.18. In the event that the Class C Required
Amount for such Transfer Date is greater than zero, all or a portion of Excess
Spread in an amount equal to the Class C Required Amount, to the extent
available, shall be distributed from the Finance Charge Account pursuant to
subsection 5.17(g). In the event that the Class C Required Amount for such
Transfer Date exceeds the amount of Excess Spread available to fund the Class C
Required Amount pursuant to subsection 5.17(g), the Collections of Principal
Receivables allocable to each Class shall be applied as specified in Section
5.18; provided, however, that the sum of any payments pursuant to this paragraph
shall not exceed the sum of the Class A Required Amount, the Class B Required
Amount and Class C Required Amount.
Funds, if any, credited to the Class C Reserve Account will be
used to pay any Class C Monthly Interest and Class C Additional Interest
remaining unpaid after the applications and allocations described in this
Section 5.14(e).
SECTION 5.15 Monthly Payments. On or before each Transfer
Date, the Servicer shall instruct the Trustee in writing (which writing shall be
substantially in the form of the Monthly Servicer Report, attached as Exhibit C
to the Sale and Servicing Agreement) to withdraw and the Trustee, acting in
accordance with such instructions, shall withdraw on such Transfer Date or the
related Payment Date, as applicable, to the extent of available funds, the
amounts in respect of the Notes required to be withdrawn from the Finance Charge
Account, the Principal Account, the Principal Funding Account, the Excess
Funding Account and the Payment Account as follows:
(a) An amount equal to the Class A Available Funds deposited
into the Finance Charge Account for the related Monthly Period shall be
distributed on each Transfer Date in the following priority:
36
(i) an amount equal to Class A Monthly Interest for such
Transfer Date, plus the amount of any Class A Deficiency Amount, if
any, for such Transfer Date, plus the amount of any Class A
Additional Interest, if any, for such Transfer Date, shall be
deposited by the Servicer or the Trustee into the Payment Account;
(ii) an amount equal to the Class A Servicing Fee for such
Transfer Date, plus the amount of any Class A Servicing Fee due but
not paid to the Servicer on any prior Transfer Date shall be paid to
the 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 as set forth in Section 5.17.
(b) An amount equal to the Class B Available Funds deposited
into the Finance Charge Account for the related Monthly Period will be
distributed on each Transfer Date in the following priority:
(i) an amount equal to the Class B Monthly Interest for
such Transfer Date, plus the amount of any Class B Deficiency Amount,
if any, for such Transfer Date, plus the amount of any Class B
Additional Interest, if any, for such Transfer Date, shall be
deposited by the Servicer or the Trustee into the Payment Account;
(ii) an amount equal to the Class B Servicing Fee for such
Transfer Date, plus the amount of any Class B Servicing Fee due but
not paid to the Servicer on any prior Transfer Date for such Transfer
Date shall be paid to the Servicer; and
(iii) the balance, if any, shall constitute Excess Spread
and shall be allocated and distributed as set forth in Section 5.17.
(c) An amount equal to the Class C Available Funds deposited
into the Finance Charge Account for the related Monthly Period will be
distributed on each Transfer Date in the following priority:
(i) an amount equal to the Class C Monthly Interest for
such Transfer Date, plus the amount of any Class C Deficiency Amount,
if any, for such Transfer Date, plus the amount of any Class C
Additional Interest, if any, for such Transfer Date, shall be
deposited by the Servicer or the Trustee into the Payment Account;
37
(ii) an amount equal to the Class C Servicing Fee for such
Transfer Date, plus the amount of any Class C Servicing Fee due but
not paid to the Servicer on any prior Transfer Date for such Transfer
Date shall be paid to the Servicer; and
(iii) the balance, if any, shall constitute Excess Spread
and shall be allocated and distributed as set forth in Section 5.17.
(d) An amount equal to the Class D Available Funds deposited
into the Finance Charge Account for the related Monthly Period shall be
distributed on each Transfer Date in the following priority:
(i) an amount equal to the Class D Monthly Interest for
such Transfer Date, shall be deposited by the Servicer or the Trustee
into the Payment Account;
(ii) an amount equal to the Class D Servicing Fee for such
Transfer Date, plus the amount of any Class D Servicing Fee due but
not paid to the Servicer on any prior Transfer Date shall be paid to
the Servicer; and
(iii) the balance, if any, shall constitute Excess Spread
and shall be allocated and distributed as set forth in Section 5.17.
(e) During the Revolving Period, an amount equal to the
Available Investor Principal Collections deposited into the Principal Account
for the related Monthly Period shall be distributed on each Transfer Date in the
following priority:
(i) 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 for such Transfer Date 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, if any, and (B) 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 2005-1; and
(ii) 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 subsection 5.15(e)(i) above shall
be paid to the Issuer; provided, however, that the amount to be paid
to the Issuer, pursuant to this subsection 5.15(e)(ii) with respect
to such Transfer Date shall be paid to the Issuer, if, and only to
the extent that the Trust Interest as of the end of the prior Monthly
Period (adjusted to give effect to the inclusion in or removal from
the Trust of all Receivables transferred to or from the Trust and/or
38
any reduction in any outstanding notes since the end of such prior
Monthly Period and on or prior to the following Payment Date and the
application of payments referred to in subsection 5.4(b) of the Base
Indenture) is greater than the largest required Minimum Trust
Interest of any Series outstanding and otherwise shall be deposited
into the Excess Funding Account in accordance with subsection
5.11(f).
(f) During the Controlled Accumulation Period or the Rapid
Amortization Period, an amount equal to the Available Investor Principal
Collections deposited into the Principal Account for the related Monthly Period
shall be distributed on each Transfer Date 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 Payment Account;
(ii) after giving effect to the distribution referred to
in clause (i) above, an amount equal to the Class B Monthly
Principal, shall be (A) during the Controlled Accumulation Period,
deposited into the Principal Funding Account, and (B) during the
Rapid Amortization Period, deposited into the Payment Account;
(iii) after giving effect to the distribution referred to
in clauses (i) and (ii) above, an amount equal to the Class C Monthly
Principal, shall be (A) during the Controlled Accumulation Period,
deposited into the Principal Funding Account, and (B) during the
Rapid Amortization Period, deposited into the Payment Account;
(iv) after giving effect to the distributions referred to
in clauses (i), (ii) and (iii) above, an amount equal to the Class D
Monthly Principal shall be (A) during the Controlled Accumulation
Period, deposited into the Principal Funding Account, and (B) during
the Rapid Amortization Period distributed to the Class D Noteholders;
(v) 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 5.15(f)(i), (ii), (iii) and (iv) above 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, if any, and (B) the
Available Investor Principal Collections remaining after the
application specified in subsections 5.15(f)(i), (ii), (iii) and (iv)
above shall remain in the Principal Account to be treated as Shared
39
Principal Collections and applied to Series in Group One other than
this Series 2005-1; and
(vi) an amount equal to the excess, if any of (A) the
Available Investor Principal Collections over (B) the applications
specified in Subsections 5.15(f)(i) through (v) above shall be paid
to the Issuer; provided, however, that the amount to be paid to the
Issuer pursuant to this subsection 5.15(f)(vi) with respect to such
Transfer Date shall be paid to the Issuer if, and only to the extent
that, the Trust Interest as of the end of the prior Monthly Period
(adjusted to give effect to the inclusion in or removal from the
Trust of all Receivables transferred to or from the Trust and/or any
reduction in any outstanding notes since the end of such prior
Monthly Period and on or prior to the following Payment Date and the
application of payments referred to in subsection 5.4(b) of the Base
Indenture) is equal to or greater than the largest required Minimum
Trust Interest of any Series outstanding and otherwise shall be
deposited into the Excess Funding Account in accordance with
subsection 5.11(f).
(g) 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 Scheduled Payment Date, the Trustee, acting in
accordance with instructions from the Servicer, shall withdraw from the
Principal Funding Account and deposit in the Payment Account the amount on
deposit in the Principal Funding Account.
(h) On each Payment Date, the Trustee, acting in accordance
with instructions from the Servicer, shall pay in accordance with subsections
6.1(a), 6.1(b), 6.1(c) and 6.1(d) from the Payment Account the following amounts
(in each case determined as of the immediately preceding Transfer Date) in the
following order of priority: (i) to the Class A Noteholders from the Payment
Account, the amount deposited into the Payment Account pursuant to subsection
5.15(a)(i) on the preceding Transfer Date, (ii) to the Class B Noteholders from
the Payment Account, the amount deposited into the Payment Account pursuant to
subsection 5.15(b)(i) on the preceding Transfer Date, (iii) to the Class C
Noteholders from the Payment Account, the amount deposited into the Payment
Account pursuant to subsection 5.15(c)(i) on the preceding Transfer Date and
(iv) to the Class D Noteholders from the Payment Account, the amount deposited
into the Payment Account pursuant to subsection 5.15(d)(i) on the preceding
Transfer Date.
(i) On the earlier to occur of (a) the Scheduled Payment Date
in the Controlled Accumulation Period, (b) the first Payment Date occurring
after the Rapid Amortization Period begins, and on each Payment Date thereafter,
the Trustee, acting in accordance with instructions from the Servicer, shall pay
in accordance with subsections 6.1(a), 6.1(b) and 6.1(c) from the amount
deposited into the Payment Account pursuant to subsection 5.15(f) the following
amounts (in each case determined as of the immediately preceding Transfer Date)
on the related Transfer Date in the following priority:
40
(i) to the Class A Noteholders from the Payment Account,
an amount equal to the least of (A) the amount on deposit in the
Payment Account, (B) the Class A Monthly Principal and (C) the
outstanding balance of the Class A Notes;
(ii) to the Class B Noteholders from the Payment Account,
after giving effect to the distributions referred to in clause (i)
above, an amount equal to the least of (A) the amount on deposit in
the Payment Account, (B) the Class B Monthly Principal and (C) the
outstanding balance of the Class B Notes;
(iii) to the Class C Noteholders from the Payment Account,
after giving effect to the distributions referred to in clauses (i)
and (ii) above, an amount equal to the least of (A) the amount on
deposit in the Payment Account, (B) the Class C Monthly Principal and
(C) the outstanding balance of the Class C Notes; provided that
amounts in the Class C Reserve Account, if any, shall be used to
cover any shortfall in payments described in this Subclause (i)(iii);
(iv) to the Servicer from the Payment Account, after
giving effect to the distributions in clauses (i), (ii) and (iii)
above, the amount to be deposited into the Payment Account pursuant
to subsection 5.15(d)(ii) on the preceding Transfer Date; and
(v) to the Class D Noteholders from the Payment Account,
after giving effect to the distributions referred to in clauses (i),
(ii), (iii) and (iv) above, an amount equal to the lesser of (A) the
amount on deposit in the Payment Account, (B) the Class D Monthly
Principal and (C) the outstanding balance of the Class D Notes.
(j) The Controlled Accumulation Period is scheduled to
commence at the close of business on April 15, 2007; provided, however, that, if
the Accumulation Period Length (determined as described below) is less than 18
months, the date on which the Controlled Accumulation Period actually commences
will be delayed to the first Business Day of the month that is the number of
whole months prior to the Scheduled Payment Date at least equal to the
Accumulation Period Length and, as a result, the number of Monthly Periods in
the Controlled Accumulation Period will at least equal the Accumulation Period
Length. On the Determination Date immediately preceding the April 15, 2007
Payment Date, and each Determination Date thereafter until the Controlled
Accumulation Period begins, the Servicer will determine the "Accumulation Period
Length" which will equal the number of whole months such that the sum of the
Accumulation Period Factors for each month during such period will be equal to
or greater than the Required Accumulation Factor Number; provided, however, that
the Controlled Accumulation Period Length will be determined to be no less than
one month; provided further, however, that the determination of the Accumulation
Period Length may be changed at any time if the Rating Agency Condition is
satisfied.
41
SECTION 5.16 Investor Charge-Offs.
(a) On or before each Transfer Date, the Servicer shall
calculate the Class A Investor Default Amount. If on any Transfer Date, the
Class A Investor Default Amount for such Transfer Date exceeds the sum of the
amount to be distributed with respect thereto pursuant to subsection
5.15(a)(iii) and 5.17(a) and Section 5.18 with respect to such Monthly Period,
the Class D Investor Interest (after giving effect to reductions for any Class D
Investor Charge-Offs and any Reallocated Principal Collections on such Transfer
Date) shall be reduced by the amount of such excess, but not by more than the
lesser of the Class A Investor Default Amount and the Class D Investor Interest
(after giving effect to reductions for any Class D Investor Charge-Offs and any
Reallocated Principal Collections on such Transfer Date) for such Transfer Date.
In the event that such reduction would cause the Class D Investor Interest to be
a negative number, the Class D Investor Interest shall be reduced to zero, and
the Class C Investor Interest (after giving effect to reductions for any Class C
Investor Charge-Offs and any Reallocated Principal Collections for which the
Class D Investor Interest is not reduced on such Transfer Date) shall be reduced
by the amount by which the Class D Investor Interest would have been reduced
below zero. In the event that such reduction would cause the Class C Investor
Interest to be a negative number, the Class C Investor Interest shall 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 Principal Collections
for which the Class C Investor Interest is not reduced on such Transfer Date)
shall be reduced by the amount by which the Class C Investor Interest would have
been reduced below zero. In the event that such reduction would cause the Class
B Investor Interest to be a negative number, the Class B Investor Interest shall
be reduced to zero, and the Class A Investor Interest shall be reduced (but not
below zero) 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"). The Class A Investor
Interest shall thereafter 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
5.17(b).
(b) On or before each Transfer Date, the Servicer shall
calculate the Class B Investor Default Amount. If on any Transfer Date, the
Class B Investor Default Amount for such Transfer Date exceeds the amount of
Excess Spread and Reallocated Principal Collections that are allocated and
available to fund such amount pursuant to subsection 5.17(d) and Section 5.18,
the Class D Investor Interest (after giving effect to reductions for any Class D
Investor Charge-Offs and any Reallocated Principal Collections on such Transfer
Date and after giving effect to any adjustments with respect thereto as
described in subsection 5.16(a) above) shall be reduced by the amount of such
42
excess, but not by more than the lesser of the Class B Investor Default Amount
and the Class D Investor Interest (after giving effect to reductions for any
Class D Investor Charge-Offs and any Reallocated Principal Collections on such
Transfer Date and after giving effect to any adjustments with respect thereto as
described in subsection 5.16(a) above) for such Transfer Date. In the event that
such reduction would cause the Class D Investor Interest to be a negative
number, the Class D Investor Interest shall be reduced to zero, and the Class C
Investor Interest (after giving effect to reductions for any Class C Investor
Charge-Offs and any Reallocated Principal Collections for which the Class D
Investor Interest is not reduced on such Transfer Date) shall be reduced by the
amount by which the Class D Investor Interest would have been reduced below
zero. In the event that such reduction would cause the Class C Investor Interest
to be a negative number, the Class C Investor Interest shall be reduced to zero
and the Class B Investor Interest shall be reduced (but not below zero) by the
amount by which the Class C Investor 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 shall also
be reduced (but not below zero) by the amount of Reallocated Principal
Collections in excess of the Class C Investor Interest and the Class D Investor
Interest (after giving effect to reductions for any Class C Investor Charge-Offs
and Class D Investor Charge-Offs and any Reallocated Investor Principal
Collections on such Transfer Date) allocated thereto pursuant to Section 5.18
and then by the amount of any portion of the Class B Investor Interest allocated
to the Class A Investor Interest to avoid a reduction in the Class A Investor
Interest pursuant to subsection 5.16(a) above. 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 Notes) on any Transfer Date by the amount of
Excess Spread allocated and available for that purpose as described under
subsection 5.17(e).
(c) On or before each Transfer Date, the Servicer shall
calculate the Class C Investor Default Amount. If on any Transfer Date, the
Class C Investor Default Amount for such Transfer Date exceeds the amount of
Excess Spread and Reallocated Principal Collections that are allocated and
available to fund such amount pursuant to subsection 5.17(g) and Section 5.18,
the Class D Investor Interest (after giving effect to reductions for any Class D
Investor Charge-Offs and any Reallocated Principal Collections on such Transfer
Date and after giving effect to any adjustments with respect thereto as
described in subsection 5.16(b) above) shall be reduced by the amount of such
excess, but not by more than the lesser of the Class D Investor Default Amount
and the Class C Investor Interest (after giving effect to reductions for any
Class D Investor Charge-Offs and any Reallocated Principal Collections on such
Transfer Date and after giving effect to any adjustments with respect thereto as
described in subsection 5.16(b) above) for such Transfer Date. In the event that
such reduction would cause the Class D Investor Interest to be a negative
number, the Class D Investor Interest shall be reduced to zero and the Class C
Investor Interest shall be reduced (but not below zero) by the amount by which
the Class D Investor Interest would have been reduced below zero, but not by
more than the Class C Investor Default Amount for such Transfer Date (a "Class C
Investor Charge-Off"). The Class C Investor Interest shall also be reduced (but
not below zero) by the amount of Reallocated Principal Collections in excess of
the Class D Investor Interest (after giving effect to reductions for any Class D
Investor Charge-Offs and any Reallocated Investor Principal Collections on such
Transfer Date) allocated thereto pursuant to Section 5.18 and then by the amount
43
of any portion of the Class C Investor Interest allocated to the Class A
Investor Interest to avoid a reduction in the Class A Investor Interest pursuant
to subsection 5.16(a) above or to the Class B Investor Interest to avoid a
reduction in the Class B Investor Interest pursuant to subsection 5.16(b) above.
The Class C Investor Interest will thereafter be reimbursed (but not to an
amount in excess of the unpaid principal balance of the Class C Notes) on any
Transfer Date by the amount of Excess Spread allocated and available for that
purpose as described under subsection 5.17(h).
(d) On or before each Transfer Date, the Servicer shall
calculate the Class D Investor Default Amount. If on any Transfer Date, the
Class D Investor Default Amount for such Transfer Date exceeds the amount of
Excess Spread allocated and available to fund such amount pursuant to subsection
5.17(j), the Class D Investor Interest shall be reduced by the amount of such
excess, but not by more than the lesser of the Class D Investor Default Amount
and the Class D Investor Interest for such Transfer Date (a "Class D Investor
Charge-Off"). The Class D Investor Interest shall also be reduced (but not below
zero) by the amount of Reallocated Principal Collections allocated thereto
pursuant to Section 5.18 and then by the amount of any portion of the Class D
Investor Interest allocated to avoid a reduction the Class A Investor Interest,
pursuant to subsection 5.16(a), the Class B Investor Interest, pursuant to
subsection 5.16(b), or the Class C Investor Interest, pursuant to Subsection
5.16(c). The Class D Investor Interest shall thereafter deemed to be reimbursed
(but not in excess of the unpaid principal balance of the Class D Notes) on any
subsequent Transfer Date by the amount of the Excess Spread allocated and
available for that purpose as described under subsection 5.17(k).
(e) For purposes of calculating the Investor Default Amount
and the Excess Receivables Amount, the Servicer shall keep records sufficient to
track cumulative losses in respect of Receivables on an Insured-by-Insured basis
and on an insurer-by-insurer basis.
(f) Except as otherwise expressly provided herein, if losses
and investment expenses attributable to the investment of amounts on deposit in
any Investor Account or any Series Account shall exceed interest and investment
earnings in respect of such amounts during any Monthly Period, the net losses
and expenses shall be allocated between the investor interests of all
outstanding Series, on the one hand, and the Trust Interest, on the other hand,
in the same proportion that losses in respect of Receivables are so allocated
for such Monthly Period.
SECTION 5.17 Excess Spread. On or before each Transfer Date,
the Trustee acting pursuant to the Servicer's instructions, shall apply Excess
Spread in the Finance Charge Account 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 5.15(a);
44
(b) an amount equal to the aggregate amount by which the Class
A Investor Interest has been reduced below the Class A Initial Investor Interest
on previous Transfer Dates for reasons other than the payment of principal to
the Class A Noteholders (but not in excess of the aggregate amount of such
reductions that have not been previously reimbursed) will be treated as a
portion of Available Investor Principal Collections and deposited into the
Principal Account on such Transfer Date;
(c) an amount equal to the Class A Prior Period Interest, if
any, will be paid to the Class A Noteholders;
(d) 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 5.15(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;
(e) an amount equal to the aggregate amount by which the Class
B Investor Interest has been reduced below the Class B Initial Investor Interest
on previous Transfer Dates for reasons other than the payment of principal to
the Class B Noteholders (but not in excess of the aggregate amount of such
reductions that have not been previously reimbursed) will be treated as a
portion of Available Investor Principal Collections and deposited into the
Principal Account on such Transfer Date;
(f) an amount equal to the Class B Prior Period Interest, if
any, will be paid to the Class B Noteholders;
(g) an amount equal to the Class C Required Amount, if any,
with respect to such Transfer Date will be used to fund the Class C Required
Amount and be applied first in accordance with, and in the priority set forth
in, subsection 5.15(c) and then any remaining amount available to pay the Class
C Investor Default Amount shall 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 Class
C Investor Interest has been reduced below the Class C Initial Investor Interest
on previous Transfer Dates for reasons other than the payment of principal to
the Class C Noteholders (but not in excess of the aggregate amount of such
reductions that have not been previously reimbursed) will be treated as a
portion of Available Investor Principal Collections and deposited into the
Principal Account on such Transfer Date;
(i) an amount equal to the Class C Prior Period Interest, if
any, will be paid to the Class C Noteholders;
(j) an amount equal to the Class D Required Amount, if any,
with respect to such Transfer Date will be used to fund the Class D Required
Amount and be applied first in accordance with, and in the priority set forth
45
in, subsection 5.15(d) and then any remaining amount available to pay the Class
D Investor Default Amount shall be treated as a portion of Investor Principal
Collections and deposited into the Principal Account on such Transfer Date;
(k) an amount equal to the aggregate amount by which the Class
D Investor Interest has been reduced below the Class D Initial Investor Interest
on previous Transfer Dates for reasons other than the payment of principal to
the Class D Noteholders (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) will be treated as a
portion of Available Investor Principal Collections and deposited into the
Principal Account on such Transfer Date;
(l) [Reserved.]
(m) any remaining Excess Spread, after giving effect to the
payments made pursuant to subparagraphs (g) through (l) above will be credited
to the Class C Reserve Account to the extent necessary to cause the funds in the
Class C Reserve Account to equal the Class C Reserve Amount;
(n) an amount equal to the Class D Prior Period Interest, if
any, will be paid to the Class D Noteholders;
(o) on each Transfer Date from and after the Accumulation
Reserve Account Funding Date, but prior to the date on which the Accumulation
Reserve Account terminates as set forth in Section 5.20(c), an amount up to the
excess, if any, of the Required Accumulation Reserve Account Amount over the
Available Accumulation Reserve Account Amount shall be deposited into the
Accumulation Reserve Account; and
(p) any remaining Excess Spread, after giving effect to the
payments made pursuant to subparagraphs (a) through (o) above, shall be paid to
the Trust and will not be available for any future payment to Noteholders,
provided that a Pay Out Event has not occurred; provided, however, that such
amount shall be paid to the Trust pursuant to this subsection 5.17(o) only to
the extent that the Trust Interest as of the end of the immediately preceding
Monthly Period (after giving effect to the inclusion in or removal from the
Trust of all Receivables transferred to or from the Trust and/or any reduction
or increase in any outstanding notes since the end of such prior Monthly Period
and on or prior to the following Payment Date and the application of payments
referred to in subsection 5.4(b) of the Base Indenture) is greater than the
largest required Minimum Trust Interest and otherwise shall be deposited into
the Excess Funding Account in accordance with Section 5.11(f).
SECTION 5.18 Reallocated Principal Collections. On or before
each Transfer Date, the Trustee shall withdraw from the Principal Account and
apply Reallocated Principal Collections (applying first all Reallocated Class D
Principal Collections, then all Reallocated Class C Principal Collections and
then all Reallocated Class B Principal Collections, to the extent necessary)
46
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 available to cover the Class A Required Amount pursuant to
subsection 5.17(a) on such Transfer Date shall be transferred to the Finance
Charge Account and shall be applied pursuant to subsections 5.15(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 available to cover the Class B Required Amount pursuant to
subsection 5.17(d) on such Transfer Date shall be transferred to the Finance
Charge Account and shall be applied first pursuant to subsections 5.15(b)(i) and
(ii) and then pursuant to subsection 5.17(d), provided that the amount
transferred pursuant to this clause (b) shall not exceed the excess (if any) of
(x) the sum of the Class D Investor Interest plus the Class C Investor Interest
plus the Class B Investor Interest over (y) the amount described in the clause
(a) above.
(c) an amount equal to the excess, if any, of (i) the Class C
Required Amount, if any, with respect to such Transfer Date over (ii) the amount
of Excess Spread available to cover the Class C Required Amount pursuant to
subsection 5.17(g) on such Transfer Date shall be transferred to the Finance
Charge Account and shall be applied first pursuant to subsections 5.15(c)(i) and
(ii) and then pursuant to subsection 5.17(g), provided that the amount
transferred pursuant to this clause (c) shall not exceed the excess (if any) of
(x) the sum of the Class D Investor Interest plus the Class C Investor Interest
over (y) the sum of the amounts described in clause (a) and clause (b) above.
(d) on each Transfer Date, the Class D Investor Interest shall
be reduced by the amount of Reallocated Principal Collections for such Transfer
Date. In the event that such reduction would cause the Class D Investor Interest
(after giving effect to any Class D Investor Charge-Offs for such Transfer Date)
to be a negative number, the Class D Investor Interest (after giving effect to
any Class D Investor Charge-Offs for such Transfer Date) shall be reduced to
zero and the Class C Investor Interest shall be reduced (but not below zero)
after giving effect to any Class C Investor Charge-Offs for such Transfer Date
by the amount by which the Class D Investor Interest would have been reduced
below zero. In the event that such reduction would cause the Class C Investor
Interest (after giving effect to any Class C Investor Charge-Offs for such
Transfer Date) to be a negative number, the Class C Investor Interest (after
giving effect to any Class C Investor Charge-Offs for such Transfer Date) shall
be reduced to zero and the Class B Investor Interest shall be reduced (but not
below zero) after giving effect to any Class B Investor Charge-Offs for such
Transfer Date by the amount by which the Class C Investor Interest would have
been reduced below zero.
47
SECTION 5.19 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 2005-1 on any Transfer Date shall be treated and applied as
Available Investor Principal Collections pursuant to Section 5.15 and pursuant
to such Section 5.15 shall be deposited in the Payment Account or distributed to
the Issuer.
(b) Shared Principal Collections allocable to Series 2005-1
with respect to any Transfer Date means an amount equal to the Series Principal
Shortfall, if any, with respect to Series 2005-1 for such Transfer Date;
provided, however, 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 2005-1 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 2005-1 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, the Servicer shall determine the Class A Required Amount,
Class B Required Amount, the Class C Required Amount and the Class D Required
Amount, Excess Spread and Reallocated Principal Collections as of such
Determination Date for the following Transfer Date.
SECTION 5.20 Accumulation Reserve Account.
(a) The Servicer shall establish and maintain with a Qualified
Institution in the name of the Trustee, on behalf of the Trust, for the benefit
of the Noteholders, a segregated account (the "Accumulation Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Noteholders. The Trustee shall possess all right,
title and interest in all funds on deposit from time to time in the Accumulation
Reserve Account and in all proceeds thereof. The Accumulation Reserve Account
shall be under the sole dominion and control of the Trustee for the benefit of
the Noteholders. If at any time the institution holding the Accumulation Reserve
Account ceases to be a Qualified Institution, the Trustee shall notify each
Rating Agency within 2 Business Days and within 10 Business Days establish a new
Accumulation Reserve Account meeting the conditions specified above with a
Qualified Institution, and shall transfer any cash or any investments to such
new Accumulation Reserve Account. On each Transfer Date from and after the
Accumulation Reserve Account Funding Date, the Trustee, at the direction of the
Servicer, shall apply Excess Spread as set forth in Section 5.17(o) to increase
the amount on deposit in the Accumulation Reserve Account to the extent such
amount is less than the Required Accumulation Reserve Account Amount.
48
(b) Funds remaining on deposit in the Accumulation Reserve
Account shall be invested at the written direction of the Servicer by the
Trustee in Permitted Investments that will mature so that such funds will be
available for withdrawal on or prior to the following Transfer Date. The Trustee
shall:
(i) hold each Permitted Investment (other than such as are
described in clause (c) of the definition thereof) that constitutes
investment property through a securities intermediary, which
securities intermediary shall agree with the Trustee that (I) such
investment property shall at all times be credited to a securities
account of the Trustee, (II) such securities intermediary shall
comply with entitlement orders originated by the Trustee without the
further consent of any other person or entity, (III) all property
credited to such securities account shall be treated as a financial
asset, (IV) such securities intermediary shall waive any lien on,
security interest in, or right of set-off with respect to any
property credited to such securities account, and (V) such agreement
shall be governed by the laws of the State of New York;
(ii) maintain for the benefit of Noteholders possession or
control of each other Permitted Investment (including any negotiable
instruments, if any, evidencing such Permitted Investments) not
described in clause (i) above (other than such as are described in
clause (c) of the definition thereof); and
(iii) cause each Permitted Investment described in clause
(c) of the definition thereof to be registered in the name of the
Trustee or any of its nominees by the issuer thereof;
provided that no Permitted Investment shall be disposed of prior to its maturity
date. Terms used in clause (i) above that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC.
(c) All interest and earnings (net of losses and investment
expenses) accrued on funds on deposit in the Accumulation Reserve Account shall
be retained in the Accumulation Reserve Account (to the extent the amount on
deposit is less than the Required Accumulation Reserve Account Amount) or
deposited in the Finance Charge Account and treated as Class A Available Funds.
(d) On or before each Transfer Date with respect to the
Controlled Accumulation Period and on the first Transfer Date with respect to
the Rapid Amortization Period that commences after the Accumulation Reserve
Account Funding Date, the Trustee, acting at the Servicer's direction given on
or before such Transfer Date, shall transfer from the Accumulation Reserve
Account to the Finance Charge Account an amount equal to the lesser of (a) the
Available Accumulation Reserve Account Amount with respect to such Transfer Date
and (b) the Accumulation Reserve Draw Amount with respect to such Transfer Date,
for application to the Class A Available Funds, the Class B Available Funds,
49
Class C Available Funds and Class D Available Funds as set forth in this Series
Supplement.
The Accumulation Reserve Account will be terminated upon the
earlier to occur of (a) the termination of the Trust pursuant to the Master
Trust Agreement, (b) the first Transfer Date with respect to the Rapid
Amortization Period and (c) the Transfer Date immediately preceding the
Scheduled Payment Date. Upon termination of the Accumulation Reserve Account,
all amounts on deposit therein will be distributed to the Trust and will not be
available for any future payment to Noteholders.
SECTION 5.21 Excess Funding Account.
(a) The Servicer has established and maintained and shall
continue to maintain, with a Qualified Institution, in the name of the Trustee,
on behalf of the Trust, for the benefit of the noteholders of all outstanding
Series in Group One, including the Noteholders, a segregated trust account (the
"Excess Funding Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of such noteholders. The
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Excess Funding Account and in all proceeds thereof. The
Excess Funding Account shall be under the sole dominion and control of the
Trustee for the benefit of the noteholders of all outstanding Series in Group
One, including the Noteholders. If at any time the institution holding the
Excess Funding Account ceases to be a Qualified Institution, the Trustee shall
notify each Rating Agency and within 10 Business Days establish a new Excess
Funding Account meeting the conditions specified above with a Qualified
Institution, and shall transfer any cash or any investments to such new Excess
Funding Account. The Trustee, at the direction of the Servicer, shall (i) make
withdrawals from the Excess Funding Account from time to time for the purposes
set forth in subsection 5.11(f), and any comparable provision of any other
Series Supplement and (ii) make deposits into the Excess Funding Account as
specified in subsection 5.11(f) and any comparable provision of any other Series
Supplement.
(b) Funds on deposit in the Excess Funding Account shall be
invested at the written direction of the Seller by the Trustee in Permitted
Investments. Funds on deposit in the Excess Funding Account on any Transfer
Date, after giving effect to any withdrawals from the Excess 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:
(i) hold each Permitted Investment (other than such as are
described in clause (c) of the definition thereof) that constitutes
investment property through a securities intermediary, which
securities intermediary shall agree with the Trustee that (I) such
investment property shall at all times be credited to a securities
account of the Trustee, (II) such securities intermediary shall
comply with entitlement orders originated by the Trustee without the
further consent of any other person or entity, (III) all property
credited to such securities account shall be treated as a financial
50
asset, (IV) such securities intermediary shall waive any lien on,
security interest in, or right of set-off with respect to any
property credited to such securities account, and (V) such agreement
shall be governed by the laws of the State of New York;
(ii) maintain for the benefit of the noteholders of all
outstanding Series of Group One, including the Noteholders possession
or control of each other Permitted Investment (including any
negotiable instruments, if any, evidencing such Permitted
Investments) not described in clause (i) above (other than such as
are described in clause (c) of the definition thereof); and
(iii) cause each Permitted Investment described in clause
(c) of the definition thereof to be registered in the name of the
Trustee or any of its nominees by the issuer thereof; provided that
no Permitted Investment shall be disposed of prior to its maturity
date. Terms used in clause (i) above that are defined in the New York
UCC and not otherwise defined herein shall have the meaning set forth
in the New York UCC.
(c) All interest and earnings (net of losses and investment
expenses) accrued on funds on deposit in the Excess Funding Account to the
extent allocable to this Series shall be treated as Excess Spread and allocated
pursuant to Section 5.17.
SECTION 5.22 Principal Funding Account.
(a) The Trustee shall establish and maintain with a Qualified
Institution, which may be the Trustee, in the name of the Trust, on behalf of
the Trust, for the benefit of the Noteholders, a segregated trust account with
the corporate trust department of such Qualified Institution (the "Principal
Funding Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Noteholders. The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Principal Funding Account and in all proceeds thereof. The Principal
Funding Account shall be under the sole dominion and control of the Trustee for
the benefit of the Noteholders. If at any time the institution holding the
Principal Funding Account ceases to be a Qualified Institution, the Seller shall
notify the Trustee, and the Trustee upon being notified (or the Servicer on its
behalf) shall, within 10 Business Days, establish a new Principal Funding
Account meeting the conditions specified above with a Qualified Institution, and
shall transfer any cash or any investments to such new Principal Funding
Account. The Trustee, at the written direction of the Servicer, shall (i) make
withdrawals from 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 the termination of the Principal Funding Account make deposits
into the Principal Funding Account in the amounts specified in, and otherwise in
accordance with, subsection 5.15(f).
51
(b) Funds on deposit in the Principal Funding Account shall be
invested at the written direction of the Servicer by the 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:
(i) hold each Permitted Investment (other than such as are
described in clause (c) of the definition thereof) that constitutes
investment property through a securities intermediary, which
securities intermediary shall agree with the Trustee that (I) such
investment property shall at all times be credited to a securities
account of the Trustee, (II) such securities intermediary shall
comply with entitlement orders originated by the Trustee without the
further consent of any other person or entity, (III) all property
credited to such securities account shall be treated as a financial
asset, (IV) such securities intermediary shall waive any lien on,
security interest in, or right of set-off with respect to any
property credited to such securities account, and (V) such agreement
shall be governed by the laws of the State of New York;
(ii) maintain for the benefit of Noteholders possession or
control of each other Permitted Investment (including any negotiable
instruments, if any, evidencing such Permitted Investments) not
described in clause (i) above (other than such as are described in
clause (c) of the definition thereof); and
(iii) cause each Permitted Investment described in clause
(c) of the definition thereof to be registered in the name of the
Trustee or any of its nominees by the issuer thereof;
provided that no Permitted Investment shall be disposed of prior to its maturity
date. Terms used in clause (i) above that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC.
(c) On each Transfer Date with respect to the Controlled
Accumulation Period and on the first Transfer Date with respect to the Rapid
Amortization Period, the Trustee, acting at the 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 in the following priority:
(i) an amount up to that portion of the Covered Amount
computed pursuant to clause (a) of the definition of Covered Amount
shall be treated as Class A Available Funds to be applied pursuant to
subsections 5.15(a)(i) and (ii);
52
(ii) an amount up to that portion of the Covered Amount
computed pursuant to clause (b) of the definition of Covered Amount
shall be treated as Class B Available Funds to be applied pursuant to
subsection 5.15(b)(i); and
(iii) an amount up to that portion of the Covered Amount
computed pursuant to clause (c) of the definition of Covered Amount
shall be treated as Class C Available Funds to be applied pursuant to
subsection 5.15(c)(i).
SECTION 5.23 [Reserved].
SECTION 5.24 Class C Reserve Account.
(a) The Trustee shall establish and maintain with a Qualified
Institution, which may be the Trustee in the name of the Trust, on behalf of the
Trust, for the benefit of the Class C Noteholders, a segregated trust account
with the corporate trust department of such Qualified Institution (the "Class C
Reserve Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Class C Noteholders. The
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Class C Reserve Account and in all proceeds thereof. The
Class C Reserve Account shall be under the sole dominion and control of the
Trustee for the benefit of the Class C Noteholders. If at any time the
institution holding the Class C Reserve Account ceases to be a Qualified
Institution, the Seller shall notify the Trustee, and the Trustee upon being
notified (or the Servicer on its behalf) shall, within 10 Business Days,
establish a new Class C Reserve Account meeting the conditions specified above
with a Qualified Institution, and shall transfer any cash or any investments to
such new Class C Reserve Account. On the Closing Date, the Trustee, at the
written direction of the Servicer, shall deposit the initial Class C Reserve
Amount in to the Class C Reserve Account. On each Transfer Date, the Trustee, at
the written direction of the Servicer, shall deposit into the Class C Reserve
Account an amount equal to the Class C Reserve Amount.
(b) Funds on deposit in the Class C Reserve Account shall be
invested at the written direction of the Servicer by the Trustee in Permitted
Investments. Funds on deposit in the Class C Reserve Account on any Transfer
Date, after giving effect to any withdrawals from the Class C 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:
(i) hold each Permitted Investment (other than such as are
described in clause (c) of the definition thereof) that constitutes
investment property through a securities intermediary, which
securities intermediary shall agree with the Trustee that (I) such
investment property shall at all times be credited to a securities
account of the Trustee, (II) such securities intermediary shall
comply with entitlement orders originated by the Trustee without the
53
further consent of any other person or entity, (III) all property
credited to such securities account shall be treated as a financial
asset, (IV) such securities intermediary shall waive any lien on,
security interest in, or right of set-off with respect to any
property credited to such securities account, and (V) such agreement
shall be governed by the laws of the State of New York;
(ii) maintain for the benefit of Class C Noteholders
possession or control of each other Permitted Investment (including
any negotiable instruments, if any, evidencing such Permitted
Investments) not described in clause (i) above (other than such as
are described in clause (c) of the definition thereof); and
(iii) maintain for the benefit of Class C Noteholders
possession or control of each other Permitted Investment (including
any negotiable instruments, if any, evidencing such Permitted
Investments) not described in clause (i) above (other than such as
are described in clause (c) of the definition thereof); and
provided that no Permitted Investment shall be disposed of prior to its maturity
date. Terms used in clause (i) above that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC.
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 Class C Reserve Account shall be retained in the Class C
Reserve Account (to the extent that the amount is less than the Class C Reserve
Amount) and the balance, if any, shall be deposited into the Finance Charge
Account and included in Class C Available Funds for such Transfer Date. For
purposes of determining the availability of funds or the balance in the Class C
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 each Transfer Date, funds (to the extent available
therefor) otherwise payable to the Trust on such date will be deposited in the
Class C Reserve Account to the extent necessary to cause the funds credited to
the Class C Reserve Account to equal the Class C Reserve Amount. Funds on
deposit in the Class C Reserve Account will be withdrawn and paid to the Trust
to the extent that as of any date of determination the amounts credited thereto
exceed the Class C Reserve Amount.
The Trust will use the funds, if any, in the Class C Reserve
Account (i) on each Payment Date, to cover any shortfalls in payments of
interest to Class C Noteholders and (ii) on the earlier of the Legal Final
Maturity and the Payment Date on which the Class A Notes and the Class B Notes
are paid in full or the Class A Investor Interest and Class B Investor Interest
are reduced to zero, to cover any shortfall in payments of principal to Class C
54
Noteholders. Upon the payment in full of the Class C Notes, any amount remaining
in the Class C Reserve Account will be released to the Trust.
SECTION 5.25 Determination of LIBOR.
(a) On each LIBOR Determination Date, the Trustee shall
determine LIBOR on the basis of the rate for Dollar deposits for a period equal
to one month (commencing on the first day of the applicable Interest Period)
which appears on Telerate Page 3750 as of 11:00 A.M. (London time) on such LIBOR
Determination Date (or such other page as may replace that page on the Dow Xxxxx
Telerate Service for the purpose of displaying London interbank offered rates of
major banks).
(b) If on any LIBOR Determination Date such rate does not
appear on Telerate Page 3750 (or such other page), then LIBOR for the applicable
Interest Period shall be determined on the basis of the rates at which Dollar
deposits are offered by the Reference Banks at approximately 11:00 A.M. (London
time) on such LIBOR Determination Date to prime banks in the London interbank
market for a period equal to one month (commencing on the first day of such
Interest Period). The Trustee shall 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 such Interest Period shall be the
arithmetic mean of such quotations (rounded, if necessary, to the nearest whole
multiple of 0.0625%). If on the LIBOR Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR shall be:
(i) the rate per annum (rounded, as aforesaid) that the
Trustee determines to be the arithmetic mean of the offered
quotations that leading banks in the City of New York selected by the
Servicer are quoting at or about 11:00 A.M. (New York time) on such
LIBOR Determination Date to leading European banks for Dollar
deposits for a period equal to one month (commencing on the first day
of the applicable Interest Period); or
(ii) if the banks selected as aforesaid by the Servicer
are not quoting as described in clause (i) above, LIBOR for such
Interest Period will be LIBOR as determined on the previous LIBOR
Determination Date, (or, in the case of the first LIBOR Determination
Date, 4.088% per annum).
(c) The Class A Note Rate, the Class B Note Rate, the Class C
Note Rate and the Class D Note Rate applicable to the then current and the
immediately preceding Interest Periods may be obtained by any Noteholder by
telephoning the Trustee at its Corporate Trust Office at (000) 000-0000.
(d) On each LIBOR Determination Date prior to 12:00 noon (New
York time), the Trustee shall send to the Servicer, by facsimile or by email
notification of LIBOR for the following Interest Period.
55
SECTION 5.26 Effect of Other Series.
Notwithstanding anything to the contrary contained herein, in
the event that additional Series of notes are issued from time to time in
accordance with Section 2.2, the Excess Funding Account may be retitled in order
to reflect the fact that amounts on deposit therein shall be for the additional
benefit of the holders of such other Series and the amounts to be deposited
therein and withdrawn therefrom may be calculated with reference to such other
Series; provided that no such action or calculation shall adversely affect the
interests of the Noteholders in any material respect.
SECTION 5.27 Seller's or Servicer's Failure to Make a Deposit
or Payment. If the Servicer or the Seller fails to make, or give instructions to
make, any payment, deposit or withdrawal (other than as required by subsections
2.04(d), 2.04(e) and 2.04(f) of the Sale and Servicing Agreement and subsection
12.4(a) and Section 12.1) required to be made or given by the Servicer or
Seller, respectively, at the time specified in the Base Indenture or this Series
Supplement (including applicable grace periods), the Trustee shall make such
payment, deposit or withdrawal from the applicable account without instruction
from the Servicer or Seller. The Trustee shall be required to make any such
payment, deposit or withdrawal hereunder only to the extent that the Trustee has
sufficient information to allow it to determine the amount thereof; provided,
however, that the Trustee shall in all cases be deemed to have sufficient
information to determine the amount of interest payable to the Noteholders on
each Payment Date. The Servicer shall, upon request of the Trustee, promptly
provide the Trustee with all information necessary to allow the Trustee to make
such payment, deposit or withdrawal. Such funds or the proceeds of such
withdrawal shall be applied by the Trustee in the manner in which such payment
or deposit should have been made by the Seller or the Servicer, as the case may
be.
SECTION 5.28 [Reserved.]
SECTION 5.29 Servicing Advances. In the event that on any
Transfer Date the unpaid principal balance of Deferred Payment Obligations
exceeds 10% of the aggregate principal balance of all Receivables, and the
insurance policy underlying any such Deferred Payment Obligation has been
cancelled, then on such date the Servicer will make an advance (a "Mandatory
Servicer Advance") of the lesser of (a) the shortfall, if any, between the
amount of interest due on the Notes on such date and the amount of collections
and other amounts available to pay such interest pursuant to the provisions of
this Series Supplement other than this Section 5.29, (b) the Investor Percentage
of the amount of Deferred Payment Obligation Return Amounts that the Servicer
expects to collect in the future relating to Exempt Deferred Payment Obligations
related to cancelled insurance policies, less the aggregate amount of previously
unreimbursed Servicer Advances, and (c) the Investor Percentage of the excess of
the unpaid principal balance of Deferred Payment Obligations over 10% of the
aggregate principal balance of all Receivables. Notwithstanding any other
provision of this Series Supplement, the proceeds of such Mandatory Servicer
Advance shall be treated as Principal Collections and Finance Charge Collections
allocable to the Investor Interest in the order that such amounts are due on the
56
related Deferred Payment Obligations. The Servicer shall not be obligated to
advance any amount that it determines to be unrecoverable. Mandatory Servicer
Advances shall be reimbursable from the Investor Percentage of the proceeds if
any of the related Deferred Payment Obligations, or if the same are determined
to be unrecoverable, then from the Investor Percentage of Principal Collections
and/or Finance Charge Collections, depending on whether the amounts advanced
were of principal or interest. In addition, the Servicer may at its option make
advances of the Investor Percentage of other amounts due and unpaid on assets of
the Trust (the "Optional Servicer Advances" and together with the Mandatory
Servicer Advances, the "Servicer Advances"). The Optional Servicer Advances
shall be reimbursable in the same manner as the Mandatory Servicer Advances.
SECTION 4 Article 6 of the Base Indenture. Article 6 of the
Base Indenture shall read in its entirety as follows and shall be applicable
only to the Noteholders:
ARTICLE 6
DISTRIBUTIONS AND REPORTS TO NOTEHOLDERS
SECTION 6.1 Distributions.
(a) On each Payment Date, the Trustee shall distribute (in
accordance with the Monthly Servicer Report delivered on or before the related
Transfer Date by the Servicer to the Trustee pursuant to subsection 3.04(b) of
the Sale and Servicing Agreement) to each Class A Noteholder of record on the
immediately preceding Record Date (other than as provided in Section 12.5
respecting a final distribution) such Noteholder's pro rata share (based on the
aggregate Investor Interests represented by Class A Notes held by such
Noteholder) of amounts on deposit in the Payment Account as are payable to the
Class A Noteholders pursuant to Section 5.15 by wire transfer to an account
designated by the Holders of the Class A Notes, except that with respect to
Class A Notes registered in the name of the nominee of a Clearing Agency, such
distribution shall be made in immediately available funds.
(b) On each Payment Date, the Trustee shall distribute (in
accordance with the Monthly Servicer Report delivered on or before the related
Transfer Date by the Servicer to the Trustee pursuant to subsection 3.04(b) of
the Sale and Servicing Agreement) to each Class B Noteholder of record on the
immediately preceding Record Date (other than as provided in Section 12.5
respecting a final distribution) such Noteholder's pro rata share (based on the
aggregate Investor Interests represented by Class B Notes held by such
Noteholder) of amounts on deposit in the Payment Account as are payable to the
Class B Noteholders pursuant to Section 5.15 by check mailed to each Class B
Noteholder (at such Noteholder's address as it appears in the Note Register) or
by wire transfer to an account designated by the Holders of the Class B Notes,
except that with respect to Class B Notes registered in the name of the nominee
of a Clearing Agency, such distribution shall be made in immediately available
funds.
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(c) On each Payment Date, the Trustee shall distribute (in
accordance with the Monthly Servicer Report delivered on or before the related
Transfer Date by the Servicer to the Trustee pursuant to subsection 3.04(b) of
the Sale and Servicing Agreement) to each Class C Noteholder of record on the
immediately preceding Record Date (other than as provided in Section 12.5
respecting a final distribution) such Noteholder's pro rata share (based on the
aggregate Investor Interests represented by Class C Notes held by such
Noteholder) of amounts on deposit in the Payment Account as are payable to the
Class C Noteholders pursuant to Section 5.15 by check mailed to each Class C
Noteholder (at such Noteholder's address as it appears in the Note Register) or
by wire transfer to an account designated by the Holders of the Class C Notes,
except that with respect to Class C Notes registered in the name of the nominee
of a Clearing Agency, such distribution shall be made in immediately available
funds.
(d) On each Payment Date, the Trustee shall distribute (in
accordance with the Monthly Servicer Report delivered by the Servicer to the
Trustee pursuant to subsection 3.04(b) of the Sale and Servicing Agreement) to
each Class D Noteholder of record on the immediately preceding Record Date
(other than as provided in Section 12.5 respecting a final distribution) such
Noteholder's pro rata share (based on the aggregate Investor Interests
represented by Class D Notes held by such Noteholder) of amounts on deposit in
the Payment Account as are payable to the Class D Noteholders pursuant to
Section 5.15 by check mailed to each Class D Noteholder (at such Noteholder's
address as it appears in the Note Register).
(e) Notwithstanding anything to the contrary contained in the
Base Indenture or this Series Supplement, if the amount distributable in respect
of principal on any Class of Notes on any Payment Date is less than one dollar,
then no such distribution of principal need be made on such Payment Date.
SECTION 6.2 Monthly Noteholders' Statement
(a) On or before each Payment Date, the Trustee shall make
available via its Website, initially located at xxx.xxxxxxxx.xxx/xxx to each
Noteholder, with respect to each Noteholder's interest and to each Rating Agency
a statement substantially in the form of Exhibit E to this Series Supplement
prepared by the Servicer and delivered to the Trustee on the preceding
Determination Date and setting forth, among other things, the following
information (which, in the case of subclauses (i), (ii) and (iii) below, shall
be stated on the basis of an original principal amount of $1,000 per Note and,
in the case of subclauses (ix), (x) and (xi) shall be stated on an aggregate
basis and on the basis of an original principal amount of $1,000 per Note):
(i) the total amount distributed to holders of Notes;
(ii) the amount of such distribution allocable to Class A
Monthly Principal, Class B Monthly Principal, Class C Monthly
Principal and Class D Monthly Principal, respectively;
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(iii) the amount of such 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, Class C Monthly Interest, Class C Deficiency
Amounts, Class C Additional Interest and Class D Monthly Interest,
respectively;
(iv) the amount of Collections of Principal Receivables
received during the related Monthly Period and allocated in respect
of the Class A Notes, Class B Notes, Class C Notes and Class D Notes,
respectively;
(v) the amount of Collections of Finance Charge
Receivables received during the related Monthly Period and allocated
in respect of the Class A Notes, Class B Notes. Class C Notes and
Class D Notes, respectively;
(vi) the aggregate amount of Principal Receivables, the
Investor Interest, the Adjusted Investor Interest, the Class A
Investor Interest, the Class A Adjusted Investor Interest, the Class
B Investor Interest, the Class B Adjusted Investor Interest, the
Class C Investor Interest, the Class C Adjusted Investor Interest,
the Class D Investor Interest, the Floating Investor Percentage, the
Class A Floating Allocation, the Class B Floating Allocation, the
Class C Floating Allocation, the Class D Floating Allocation and the
Fixed Investor Percentage with respect to the Principal Receivables
in the Trust as of the end of the preceding Monthly Period;
(vii) the aggregate outstanding balance of Receivables
which were 1-30 days, 31-60 days, 61-90 days, 91-120 days, 121-150
days and more than 150 days delinquent, respectively, following
cancellation of the related insurance policies in accordance with the
Servicer's then existing Guidelines as of the end of the preceding
Monthly Period (or, if cancellation was delayed, whether due to a
stay by reason of an Insured's bankruptcy or other reason, after the
date the policy would have been cancelled in the absence of such
delay);
(viii) the Aggregate Investor Default Amount as of the end
of the preceding Monthly Period and the Class A Investor Default
Amount, the Class B Investor Default Amount, the Class C Investor
Default Amount and the Class D Investor Default Amount for the
related Transfer Date;
(ix) the aggregate amount of Class A Investor Charge-Offs,
Class B Investor Charge-Offs, Class C Investor Charge-Offs, Class D
Investor Charge-Offs and other reductions in the absence of principal
distributions in the Investor Interests for such Transfer Date;
59
(x) the aggregate amount of Class A Investor Charge-Offs,
Class B Investor Charge-Offs, Class C Investor Charge-Offs, Class D
Investor Charge-Offs and other reductions in the absence of principal
distributions in the Investor Interests deemed to have been
reimbursed on such Transfer Date;
(xi) outstanding principal balance of the Class A Notes,
the Class B Notes, the Class C Notes and the Class D Notes,
respectively, as of the end of the day on the Payment Date;
(xii) [Reserved];
(xiii) the amount of the Class A Servicing Fee, the Class
B Servicing Fee, the Class C Servicing Fee and the Class D Servicing
Fee for such Transfer Date;
(xiv) the amount of Reallocated Class D Principal
Collections, Reallocated Class C Principal Collections and
Reallocated Class B Principal Collections with respect to such
Payment Date;
(xv) LIBOR for the Interest Period ending on the day
before such Payment Date;
(xvi) the Pool Factor as of the end of the immediately
preceding Monthly Period;
(xvii) the Available Accumulation Reserve Account Amount
and the amount, if any, of funds required to be withdrawn from the
Accumulation Reserve Account for such Transfer Date;
(xviii) [Reserved];
(xix) the Class C Reserve Account Amount and the
Annualized Excess Spread Amount;
(xx) the amount of Class A Available Funds, Class B
Available Funds, Class C Available Funds and Class D Available Funds
on deposit in the Finance Charge Account on the related Transfer
Date;
(xxi) the date on which the Controlled Accumulation Period
and/or the Rapid Amortization Period commenced;
(xxii) [Reserved];
(xxiii) the amount of Class A Prior Period Interest, Class
B Prior Period Interest, Class C Prior Period Interest and Class D
Prior Period Interest accrued on the Notes;
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(xxiv) the aggregate outstanding principal amount of
Deferred Payment Obligations as of the end of the prior Monthly
Period, expressed in dollars and as a percentage of the outstanding
principal amount of Receivables in the Trust Estate;
(xxv) the aggregate outstanding principal amount of
Receivables that have not been funded as of the end of the prior
Monthly Period; and
(xxvi) such other items as are set forth in Exhibit F to
this Series Supplement.
(b) Annual Noteholders' Tax Statement. On or before January 31
of each calendar year, beginning with calendar year 2005, the Trustee shall
distribute to each Person who at any time during the preceding calendar year was
a Noteholder, a statement prepared by the Trustee containing the information
required to be contained in the regular monthly report to Noteholders, as set
forth in subclauses (i), (ii) and (iii) above, aggregated for such calendar year
or the applicable portion thereof during which such Person was a Noteholder,
together with such other customary information (consistent with the treatment of
the Notes as debt) as the Trustee deems necessary or desirable to enable the
Noteholders to prepare their tax returns. Such obligations of the Trustee shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time in effect.
SECTION 5. Series 2005-1 Pay Out Events. A "Series 2005-1 Pay
Out Event" refers to any of the following events:
(a) failure on the part of any of the Originators, the Issuer
or the Seller (i) to make any payment or deposit required by the terms of the
Receivables Purchase Agreement, the Sale and Servicing Agreement, the Base
Indenture or this Series Supplement, on or before the date occurring five
Business Days after the date such payment or deposit is required to be made
herein or (ii) failure on the part of any of the Originators, the Issuer or the
Seller duly to observe or perform in any material respect any other covenants or
agreements of such entity set forth in the Receivables Purchase Agreement, the
Sale and Servicing Agreement, the Base Indenture or this Series Supplement,
which failure has a material adverse effect on the Noteholders (which
determination shall be made without reference to the subordination of any Class
of Notes) and 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 such entity by the Trustee, or to such entity and the Trustee
by the Holders of Notes evidencing in the aggregate not less than 50% of the
Investor Interests of this Series 2005-1, and continues to affect materially and
adversely the interests of the Noteholders (which determination shall be made
without reference to the subordination of any Class of Notes) for such period;
61
(b) any representation or warranty made by any of the
Originators, the Issuer or the Seller in the Receivables Purchase Agreement, the
Sale and Servicing Agreement, the Base Indenture or this Series Supplement, or
any information contained in a computer file or microfiche list required to be
delivered by such entity pursuant to Section 2.01 or 2.06 of the Sale and
Servicing Agreement (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
such entity by the Trustee, or to such entity and the Trustee by the Holders of
Notes evidencing in the aggregate not less than 50% of the Investor Interests of
this Series 2005-1, and (ii) as a result of which the interests of the
Noteholders are materially and adversely affected (which determination shall be
made without reference to whether any funds are available by reason of the
subordination of any Class of Notes) and continue to be materially and adversely
affected (which determination shall be made without reference to whether any
funds are available by reason of the subordination of any Class of Notes) for
such period; provided, however, that a Series 2005-1 Pay Out Event pursuant to
this subsection 9(b) shall not be deemed to have occurred hereunder if the
Seller has accepted reassignment of or paid its portion of principal due under
the related Receivable, or all of such Receivables, if applicable, during such
period in accordance with the provisions of subsections 2.04(e) or 2.04(f) of
the Sale and Servicing Agreement;
(c) the Trust Interest as of the end of the immediately
preceding Monthly Period (adjusted to give effect to the inclusion in or removal
from the Trust of all Receivables transferred to or from the Trust and/or any
reduction or increase in any outstanding notes since the end of the immediately
preceding Monthly Period and on or prior to the following Payment Date) does not
at least equal the largest required Minimum Trust Interest of any outstanding
Series (adjusted to give effect to any reduction or increase in any outstanding
notes on or prior to the following Payment Date);
(d) any Servicer Default occurs which would have a material
adverse effect on the Noteholders (which determination shall be made without
reference to the subordination of the Class B, C or D Notes);
(e) if the Monthly Payment Rate is less than 12% for three
consecutive Monthly Periods;
(f) if the Financed Premium Percentage exceeds 90% for three
consecutive Monthly Periods;
(g) if the Annualized Monthly Excess Spread Amount is less
than 0.00% for three consecutive Monthly Periods;
(h) upon an Event of Default;
62
(i) the Notes have not been paid in full on the Scheduled
Payment Date;
(j) an Insolvency Event occurs with respect to AIG; and
(k) the Trustee shall fail to have a valid first priority
perfected interest in any portion of the Trust Assets, which has a material
adverse effect on the interests of the Noteholders, and the Issuer shall fail to
repurchase such affected portion of the Trust Assets within one Business Day's
notice of such failure.
A "Trust Pay Out Event" refers to any of the following events:
(a) an Insolvency Event occurs with respect to any of the
Originators, the Servicer or the Seller;
(b) the Seller shall become unable for any reason to transfer
the Collections on, or other proceeds of, Originator Receivables to the Issuer
in accordance with the provisions of this Agreement;
(c) the Issuer or the Seller shall have become an "investment
company" required to register or shall have become under the "control" of an
"investment company" required to register under the Investment Company Act of
1940, as amended; and
(d) AIG shall fail to meet its obligations under the AIG
Support Agreement or the support obligations are amended, modified or
terminated, other than as permitted under the AIG Support Agreement.
In the case of any event described in subsection (a), (b), (d), (f) or (k) of
the definition of a Series 2005-1 Pay Out Event, after the applicable grace
period set forth in such subsections, a Series 2005-1 Pay Out Event shall occur
on the tenth Business Day thereafter unless prior to such day Holders of Notes
evidencing in the aggregate not less than 50% of the Investor Interests of this
Series 2005-1 shall notify the Trustee, the Seller and the Servicer in writing
that a Series 2005-1 Pay Out Event should not occur. In the case of any event
described in subsections (c), (e), (g), (h), (i) or (j) of the definition of a
Series 2005-1 Pay Out Event and the events described on subsections (a), (b),
(c) or (d) of the definition of a Trust Pay Out Event, a Series 2005-1 Pay Out
Event shall occur without any notice or other action on the part of the Trustee
or the Noteholders immediately upon the occurrence of such event.
Notwithstanding anything to the contrary in the Base
Indenture, if a Pay Out Event occurs during the Controlled Accumulation Period,
any amount on deposit in the Principal Funding Account will be paid to the Class
A Noteholders and, after the Class A Notes have been paid in full, the Class B
Noteholders and, after the Class B Notes have been paid in full, the Class C
Noteholders and, after Class C Notes have been paid in full, the Class D Notes
63
on the first distribution date with respect to the Rapid Amortization Period.
Notwithstanding anything to the contrary in the Base
Indenture, no Series 2005-1 Pay Out Event may be amended, waived or deleted and
no new Series 2005-1 Series Pay Out Event may be added, without the prior
consent of the Holder of a Note Majority of this Series.
SECTION 6. Series 2005-1 Termination. Except as otherwise
provided in subsection 12.5(b), the right of the Noteholders to receive payments
from the Trust will terminate on the first Business Day following the Series
2005-1 Termination Date.
SECTION 7. Early Pay Off. The Seller may redeem the Notes (a
"Payoff") from funds deposited into the Payment Account representing the
proceeds of the refinancing of any outstanding Series of notes on any Payment
Date on or after July 15, 2008 (the Payment Date on which the Notes are to be
refinanced, the "Payoff Date"), in whole or in part (without premium) from funds
deposited into the Payment Account equal to the Payoff Price, upon notice to the
Trustee of such election.
The Payoff Price will be deposited in the Payment Account by
no later than 1:00 p.m. New York City time on the Payoff Date. Amounts on
deposit in the Payment Account for any such Payoff will be paid to the
Noteholders, first to redeem all of the Class A Notes, next to redeem all of the
Class B Notes, next to redeem all of the Class C Notes and finally to redeem all
of the Class D Notes. If the Notes are to be redeemed on a Payoff Date, the
Seller shall commence efforts towards a refinancing of the Notes by the issuance
of new debt, on or before July 15, 2008.
The Early Payoff rights of the Seller described in this
Section 7 will terminate in the event that, as a result of changes in applicable
accounting principles, such Early Payoff rights would cause the transfer of the
Receivables to not be treated as a sale under such accounting principles.
SECTION 8. Amendments.
(a) Notwithstanding Section 10.1 of the Base Indenture, the
Transfer and Servicing Agreements, the Base Indenture and this Series 2005-1
Supplement may be amended by the parties thereto without the consent of the
Indenture Trustee or the Noteholders, if the Seller delivers to the Issuer and
the Indenture Trustee:
(i) a certificate of an authorized officer stating that,
in the Seller's reasonable belief, the amendment will not have a
material adverse effect on any Noteholder; and
(ii) written confirmation from each Rating Agency that the
amendment will not result in a reduction or withdrawal of its
then-existing rating of the Notes.
64
(b) Such Agreements may also be amended with the consent of
Noteholders representing at least 50% of the then outstanding principal balance
of the Notes. Even with consent, no amendment may occur if it:
(i) reduces the amount of, or delays the timing of any
distributions to be made to Noteholders, without the consent of each
affected noteholder;
(ii) changes the definition or the manner of calculating
the interest of any Noteholder, without the consent of each affected
Noteholder;
(iii) reduces the percentage set forth under this heading
of the outstanding principal balance of the Notes required to consent
to any amendment, without the consent of each affected Noteholder; or
(iv) adversely affects the rating of any class of Notes by
any Rating Agency;
without the consent of Noteholders requesting at least 50% of the
then-outstanding principal balance of the Notes of each affected class. For
purposes of determining whether the requisite consent to any amendment has been
given, Notes held by the Seller and its Affiliates shall be considered not
outstanding.
However, no such amendment shall be deemed effective without
the Indenture Trustee's consent, if the Indenture Trustee's rights, duties and
obligations under the Series 2005-1 Supplement are thereby modified. Promptly
after the effectiveness of any such amendment, the Trust shall deliver a copy of
such amendment to each of the Servicer, the Indenture Trustee and each Rating
Agency described in this Series 2005-1 Supplement.
SECTION 9. Random Removal. So long as any Notes are
outstanding, the Servicer shall randomly select Receivables to be removed from
the Trust Estate pursuant to Section 5.8 and pursuant to Section 2.07(b) of the
Sale and Servicing Agreement.
SECTION 10. DPO Policy. Policy No. 6457520 issued by Starr
Excess Liability Insurance International Limited shall not be terminated unless
such termination will not result in a qualification or reduction of the then
existing rating given by Xxxxx'x and Standard & Poors or unless agreed to by the
Trustee or by 50% of the Noteholders, and, after such termination, Xxxxx'x and
Standard & Poors are notified that such termination has occurred.
SECTION 11. Eligible Receivables. So long as any Notes are
outstanding, the definition of "Eligible Receivables" in the Sale and Servicing
Agreement shall be amended by revising the second parenthetical phrase in clause
65
(l) thereof to read as follows: "(except as provided under applicable bankruptcy
and insolvency law)."
SECTION 12. [Reserved.]
SECTION 13. 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 14. UCC Security Interest Representations.
(a) This Agreement creates a valid and continuing security
interest (as defined in the applicable UCC) in the Principal Receivables and the
Finance Charge Receivables in favor of the Indenture Trustee, which security
interest is prior to all other Liens, and is enforceable as such as against
creditors of and purchasers from the Originators, the Seller and the Issuer.
(b) The Principal Receivables and the Finance Charge
Receivables constitute "accounts" or "general intangibles" within the meaning of
the applicable UCC.
(c) The Issuer owns and has good and marketable title to the
Principal Receivables and the Finance Charge Receivables free and clear of any
Lien, claim or encumbrance of any Person.
(d) The Issuer has received all consents and approvals
required by the terms of the Principal Receivables and the Finance Charge
Receivables for the transfer of the Principal Receivables and the Finance Charge
Receivables hereunder to the Indenture Trustee.
(e) The Issuer has caused or will have caused, within ten
days, the filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law in order to perfect
the security interest in the Principal Receivables and the Finance Charge
Receivables granted to the Indenture Trustee hereunder.
(f) Other than the security interest granted to the Indenture
Trustee pursuant to this Agreement, the Issuer has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the Principal
Receivables and the Finance Charge Receivables. The Issuer has not authorized
the filing of and is not aware of any financing statements against the Issuer
that include a description of collateral covering the Principal Receivables and
the Finance Charge Receivables other than any financing statement (i) relating
to the security interest granted to Indenture Trustee hereunder, (ii) that has
been terminated, or (iii) that names the Indenture Trustee as secured party. The
Issuer is not aware of any judgment or tax lien filings against the Issuer.
66
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. EACH OF THE PARTIES TO THIS SERIES SUPPLEMENT AND EACH NOTEHOLDER HEREBY
AGREES TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE
JUDGMENTS THEREOF. EACH OF THE PARTIES AND EACH NOTEHOLDER HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.
SECTION 16. Waiver of Trial by Jury. To the extent permitted
by applicable law, each of the parties hereto and each of the Noteholders
irrevocably waives all right of trial by jury in any action, proceeding or
counterclaim arising out of or in connection with this Series Supplement or the
Related Documents or any matter arising hereunder or thereunder.
SECTION 17. No Petition. The Issuer and the Trustee, by
entering into this Series Supplement and each Noteholder, by accepting a Note
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 Noteholders, the Sale and
Servicing Agreement, the Base Indenture or this Series Supplement.
67
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be duly executed by their respective officers as of the day and
year first above written.
AICCO PREMIUM FINANCE MASTER TRUST, as Issuer
By: CHASE BANK USA, NATIONAL ASSOCIATION
not in its individual capacity but solely
as Owner Trustee
By:
-------------------------------------------
Name:
Title:
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as successor-in-interest to BANK ONE, NATIONAL
ASSOCIATION, as Indenture Trustee
By:
-------------------------------------------
Name:
Title:
AGREED TO WITH RESPECT TO SECTION 5.29, SECTION 9 AND SECTION 11 HEREOF:
A.I. CREDIT CORP., as a Servicer
By:
-----------------------------------------------
Name:
Title:
AICCO, INC., as a Servicer
By:
-----------------------------------------------
Name:
Title:
68
IMPERIAL PREMIUM FUNDING, INC.,
as a Servicer
By:
-----------------------------------------------
Name:
Title:
AICCO, INC.,
as a Servicer
By:
-----------------------------------------------
Name:
Title:
IMPERIAL PREMIUM FINANCE, INC.,
as a Servicer
By:
-----------------------------------------------
Name:
Title:
69
AGREED TO WITH RESPECT TO SECTION 11 HEREOF:
A.I. CREDIT CORP.
By:
-----------------------------------------------
Name:
Title:
70
