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MELLON BANK, N.A.
Transferor
AFCO CREDIT CORPORATION
Servicer
AFCO ACCEPTANCE CORPORATION
Servicer
PREMIUM FINANCING SPECIALISTS, INC.
Back-up Servicer
and
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
on behalf of the Holders
of the Mellon Bank Premium Finance Loan Master Trust
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1996
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..................................................
SECTION 1.1 Definitions.............................................
SECTION 1.2 Other Interpretive Provisions...........................
ARTICLE II CONVEYANCE OF RECEIVABLES....................................
SECTION 2.1 Conveyance of Receivables...............................
SECTION 2.2 Acceptance by Trustee...................................
SECTION 2.3 Representations and Warranties of Transferor............
SECTION 2.4 Representations and Warranties of Transferor Relating
to this Agreement and the Receivables.................
SECTION 2.5 Covenants of Transferor.................................
SECTION 2.6 Removal of Receivables..................................
ARTICLE III ADMINISTRATION AND SERVICING................................
SECTION 3.1 Acceptance of Appointment and Other
Matters Relating to Servicer...........................
SECTION 3.2 Servicing Compensation..................................
SECTION 3.3 Representations and Warranties of
Servicer..............................................
SECTION 3.4 Reports and Records for Trustee.........................
SECTION 3.5 Annual Servicer's Certificate...........................
SECTION 3.6 Annual Independent Accountants' Servicing
Report................................................
SECTION 3.7 Tax Treatment...........................................
SECTION 3.8 Notices to Transferor...................................
SECTION 3.9 Reports to the Commission...............................
ARTICLE IV RIGHTS OF HOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS...................................
SECTION 4.1 Rights of Holders.......................................
SECTION 4.2 Establishment of Accounts...............................
SECTION 4.3 Collections and Allocations.............................
SECTION 4.4 Shared Principal Collections............................
SECTION 4.5 Excess Finance Charge Collections.......................
ARTICLE V [ARTICLE V IS RESERVED AND SHALL BE
SPECIFIED IN THE SUPPLEMENT WITH RESPECT TO
ANY SERIES.]...................................................
ARTICLE VI THE CERTIFICATES.............................................
SECTION 6.1 The Certificates........................................
SECTION 6.2 Authentication of Certificates..........................
SECTION 6.3 Registration of Transfer and Exchange
of Certificates........................................
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen
Certificates...........................................
SECTION 6.5 Persons Deemed Owners...................................
SECTION 6.6 Appointment of Paying Agent.............................
SECTION 6.7 Access to List of Holders' Names and
Addresses..............................................
SECTION 6.8 Authenticating Agent....................................
SECTION 6.9 New Issuances...........................................
SECTION 6.10 Book-Entry Certificates.................................
SECTION 6.11 Notices to Clearing Agency..............................
SECTION 6.12 Definitive Certificates.................................
SECTION 6.13 Global Certificate, Euro-Certificate
Exchange Date..........................................
SECTION 6.14 Meetings of Holders.....................................
ARTICLE VII OTHER MATTERS RELATING TO TRANSFEROR........................
SECTION 7.1 Liability of Transferor.................................
SECTION 7.2 Merger or Consolidation of, or
Assumption of the Obligations of,
Transferor.............................................
SECTION 7.3 Limitation on Liability.................................
SECTION 7.4 Liabilities.............................................
ARTICLE VIII OTHER MATTERS RELATING TO SERVICER..........................
SECTION 8.1 Liability of Servicer...................................
SECTION 8.2 Merger or Consolidation of, or Assumption
of the Obligations of, Servicer........................
SECTION 8.3 Limitation on Liability of Servicer and
Others.................................................
SECTION 8.4 Servicer Indemnification of the Trust
and Trustee............................................
SECTION 8.5 Servicer Not to Resign..................................
SECTION 8.6 Access to Certain Documentation and
Information Regarding the Receivables..................
SECTION 8.7 Delegation of Duties....................................
SECTION 8.8 Examination of Records..................................
ARTICLE IX TRUST PAY OUT EVENTS.........................................
SECTION 9.1 Trust Pay Out Events....................................
SECTION 9.2 Additional Rights Upon the Occurrence
of Certain Events......................................
ARTICLE X SERVICER DEFAULTS.............................................
SECTION 10.1 Servicer Defaults.......................................
SECTION 10.2 Trustee to Act; Appointment of
Successor..............................................
SECTION 10.3 Notification to Holders.................................
SECTION 10.4 Waiver of Past Defaults.................................
ARTICLE XI TRUSTEE......................................................
SECTION 11.1 Duties of Trustee.......................................
SECTION 11.2 Certain Matter Affecting Trustee........................
SECTION 11.3 Trustee Not Liable for Recitals in
Certificates...........................................
SECTION 11.4 Trustee May Not Own Certificates........................
SECTION 11.5 Servicer to Pay Trustee's Fees and
Expenses...............................................
SECTION 11.6 Eligibility Requirements for Trustee....................
SECTION 11.7 Resignation or Removal of Trustee.......................
SECTION 11.8 Successor Trustee.......................................
SECTION 11.9 Merger or Consolidation of Trustee......................
SECTION 11.10 Appointment of Co-Trustee or Separate
Trustee................................................
SECTION 11.11 Tax Returns.............................................
SECTION 11.12 Trustee May Enforce Claims Without
Possession of Certificates.............................
SECTION 11.13 Suits for Enforcement...................................
SECTION 11.14 Rights of Holders to Direct Trustee.....................
SECTION 11.15 Representations and Warranties of
Trustee................................................
SECTION 11.16 Maintenance of Office or Agency.........................
SECTION 11.17 Obligor Claims..........................................
SECTION 11.18 Liabilities to Obligors.................................
ARTICLE XII TERMINATION..................................................
SECTION 12.1 Termination of Trust.....................................
SECTION 12.2 Optional Purchase........................................
SECTION 12.3 Final Payment with Respect to any
Series..................................................
SECTION 12.4 Termination Rights of Transferor.........................
ARTICLE XIII MISCELLANEOUS PROVISIONS...................................
SECTION 13.1 Amendment................................................
SECTION 13.2 Protection of Right, Title and
Interest to Trust.......................................
SECTION 13.3 Limitation on Rights of Holders..........................
SECTION 13.4 Governing Law............................................
SECTION 13.5 Notices..................................................
SECTION 13.6 Severability of Provisions...............................
SECTION 13.7 Assignment...............................................
SECTION 13.8 Certificates Non-Assessable and Fully
Paid...................................................
SECTION 13.9 Further Assurances.......................................
SECTION 13.10 No Waiver, Cumulative Remedies...........................
SECTION 13.11 Counterparts.............................................
SECTION 13.12 Third-Party Beneficiaries................................
SECTION 13.13 Actions by Holders.......................................
SECTION 13.14 Rule 144A Information....................................
SECTION 13.15 Merger and Integration...................................
SECTION 13.16 Headings.................................................
EXHIBITS AND SCHEDULES
Schedule I Identified Portfolio
Exhibit A Form of Assignment of Additional Receivables
Exhibit B Form of Monthly Servicer's Certificate
Exhibit C Form of Annual Servicer's Certificate
Exhibit D Form of Annual Opinion of Counsel
Exhibit E Form of Reassignment of Receivables
Exhibit F Form of Reconveyance of Receivables
Exhibit G Form of Notice of Financed Premium
POOLING AND SERVICING AGREEMENT, dated as of December 1, 1996 by and
among MELLON BANK, N.A., a national banking association, as Transferor, AFCO
CREDIT CORPORATION, a New York corporation, as Servicer, AFCO ACCEPTANCE
CORPORATION, a California corporation, as Servicer, Premium Financing
Specialists, Inc., a _________ corporation, as Back-up Servicer and The First
National Bank of Chicago, a national banking association, as Trustee.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and the Holders:
ARTICLE I DEFINITIONS
SECTION 1.1 Definitions. Whenever used in this Agreement, the following
words and phrases have the meanings identified below:
"Account" means, with respect to each Obligor, each account of such
Obligor that is identified as such by the applicable Originator by a separate
account number.
"Addition Date" means the date on which any Additional Receivables are
added to the Receivables Schedule.
"Additional Account" means an Account, all of the Receivables under
which have been conveyed to the Trust after the Closing Date.
"Additional Receivable" means each Premium Finance Agreement added or
required to be added to the Receivable Schedule after the Initial Closing Date
pursuant to subsection 2.1(g).
"Adjusted Aggregate Investor Interest" means as of any date of
determination, the sum of the "Adjusted Investor Interest" (as defined in the
related Supplement) of each Series then issued and outstanding for which an
Adjusted Investor Interest is specified in the related Supplement plus the sum
of the Investor Interests of all other Series then issued and outstanding.
"AFCO Acceptance" means AFCO Acceptance Corporation, a California
corporation.
"AFCO Credit" means AFCO Credit Corporation, a New York corporation.
"Affiliate" of any Person means any other Person controlling,
controlled by or under common control with such Person.
"Aggregate Investor Interest" means, as of any date of determination,
the sum of the Investor Interests of all Series then issued and outstanding.
"Aggregate Investor Percentage" means, as to Principal Receivables,
Finance Charge Receivables and Receivables in Defaulted Accounts, as the case
may be, as of any date of determination, the sum (not to exceed 100%) of the
relevant Investor Percentages for all Series then issued and outstanding.
"Aggregate Receivables" means, with respect to the Receivables as of
any date of determination, the aggregate amount of payments owed on such
Receivables from such date through the respective scheduled final payment dates
of such Receivables (exclusive of Late Fees and any other administrative
charges) less Net Payables as of such date of determination.
"Aggregate Receivable Balance" means, with respect to any Receivable as
of any date of determination the aggregate amount of payments owed on such
Receivable from such date through the scheduled final payment date of such
Receivable (exclusive of Late Fees and any other administrative charges).
"Agreement" means this Pooling and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time, including by any
Supplement.
"Amortization Period" means, as to any Series or Class, any period
specified in the related Supplement during which principal collections are set
aside to repay the principal investment in that Series or Class (excluding
repayments of a Variable Interest during its revolving period).
"Applicants" is defined in Section 6.7.
"Appointment Day" is defined in subsection 9.2(a).
"Authorized Newspaper" means a newspaper of general circulation in the
Borough of Manhattan, The City of New York printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"Average Principal Receivables" means, for any period, an amount equal
to (a) the sum of the aggregate amount of Principal Receivables at the end of
each day during such period divided by (b) the number of days in such period.
"Back-up Servicer" means initially, Premium Financing Specialists,
Inc. and their successors and assigns.
"Bearer Certificates" is defined in Section 6.1.
"Bearer Rules" means the provisions of the Internal Revenue Code, in
effect from time to time, governing the treatment of bearer obligations,
including sections 163(f), 871, 881, 1441, 1442 and 4701, and any regulations
thereunder including, to the extent applicable to any Series, Proposed or
Temporary Regulations.
"Beginning of Month Principal Receivables" means, with respect to the
Receivables and any Monthly Period, an amount equal to the Aggregate Receivables
as of the first day of such Monthly Period (or, in the case of the Monthly
Period commencing December 1996, as of December 1, 1996) minus Finance Charge
Receivables as of such date.
"BIF" means the Bank Insurance Fund administered by the FDIC.
"Book-Entry Certificates" means certificates evidencing a beneficial
interest in the Investor Certificates, ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in Section 6.10.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, or Pittsburgh, Pennsylvania
(or, for any Series, any additional city specified in the related Supplement)
are authorized or obligated by law or executive order to be closed.
"CEDEL" means Cedel Bank, sociJtJ anonyme.
"Certificate" means an Investor Certificate or any Supplemental
Certificate.
"Certificate Owner" means the beneficial owner of a Book-Entry
Certificate, as reflected on the books of the Clearing Agency or of a Person
maintaining an account with the Clearing Agency (directly or as an indirect
participant).
"Certificate Register" is defined in Section 6.3.
"Class" means any class of Investor Certificates of any Series.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency or Foreign Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency or Foreign Clearing Agency.
"Closing Date" means, for any Series, the date of issuance of such
Series of Certificates, as specified in the related Supplement.
"Collection Account" is defined in subsection 4.2(a).
"Collections" means all payments received by Servicer in respect of the
Receivables, including without limitation Recoveries, whether in the form of
cash, checks, wire transfers, ATM transfers or other form of payment in
accordance with the applicable Premium Finance Agreement. If Servicer
establishes any lock-box account for the receipt of payments, a payment shall be
deemed received by Servicer on the date of deposit in such lock-box account.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at Xxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000 Attention: Corporate
Trust Services Division, except if the Place of Payment of any Instrument is New
York City, then for purposes of Section 11.16, such term shall mean the office
or agency of the Trustee in the Borough of Manhattan, the City of New York,
which office at the date hereof is located at First Chicago Trust Company of New
York, 00 Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Coupons" is defined in Section 6.1.
"Credit Enhancement" means, as to any Series, the subordination, cash
collateral guaranty or account, collateral interest, letter of credit, surety
bond, insurance policy, spread account, reserve account, cross-support feature
or any other contract or agreement for the benefit of the Holders of such Series
(or Holders of a Class within such Series) as designated in the applicable
Supplement.
"Credit Enhancement Provider" means, as to any Series, any Person
designated as such in the related Supplement.
"Cut Off Date" means December 1, 1996.
"Date of Processing" means, as to any transaction, the date on which
such transaction is first recorded on Servicer's computer master file of
accounts (without regard to the effective date of such recordation).
"Defaulted Account" means each Account as to which the insurance policy
or policies related to the Receivables in such Account has been canceled for 270
days or more or the Receivables arising thereunder have been charged off in
accordance with Servicer's customary and usual procedures. Notwithstanding any
other provision hereof, any Receivables in Defaulted Accounts that are
Receivables in Ineligible Accounts shall be treated as Receivables in Ineligible
Accounts rather than Receivables in Defaulted Accounts.
"Default Amount" means, with respect to any Monthly Period, the excess,
if any, of (i) the amount of Principal Receivables in Defaulted Accounts which
are charged off during such Monthly Period over (ii) Recoveries for such Monthly
Period.
"Definitive Certificates" is defined in Section 6.10.
"Depository" is defined in Section 6.10.
"Depository Agreement" means, as to each Series (subject to the related
Supplement), the agreement among Transferor, Trustee and the applicable Clearing
Agency.
"Determination Date" means, unless otherwise specified in the related
Supplement, the third Business Day prior to each Transfer Date.
"Distribution Account" is defined in subsection 4.2(c).
"Distribution Date" is defined, for each Series, in the related
Supplement.
"Dollars", "$" or "U.S. $" means United States dollars.
"Eligible Account" means as of the Cut Off Date, with respect to
Accounts under which the Initial Receivables arise, and as of the earliest
Addition Date of the Additional Receivables arising under an Additional Account,
with respect to each Additional Account, each Account the Receivables under
which:
(a) are payable in United States dollars:
(b) have been funded by the related Originator in whole or in part;
(c) do not relate to an insurance policy related to Lloyds of London;
(d) do not relate to a Premium Finance Agreement under which the
Obligor is a Governmental Authority; and
(e) are underwritten in accordance with guidelines that are not
materially different from the underwriting guidelines that were used by the
Originators with respect to the Initial Receivables.
"Eligible Receivable" means each Receivable, as of the Cut Off Date and
with respect to each Additional Receivable, as of the date of origination of
such Receivable:
(a) which the related Obligor used all the proceeds of such Receivable
to pay premiums and related items with respect to commercial property or
casualty insurance policies, governed by the law of any State or territory
of the United States or the District of Columbia, under which such Obligor
is the insured;
(b) with respect to which all material consents, licenses, approvals
or authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given in
connection with the creation of such Receivable or the execution, delivery
and performance by the related Originator of the related Premium Finance
Agreement, have been duly obtained, effected or given and are in full force
and effect as of the date of transfer of such Receivable to the Trust;
(c) which, at the time of transfer of such Receivable to the Trust,
the terms of the related Premium Finance Agreement have not been waived or
modified except for waivers or modifications that were made by the
Originators in accordance with the Guidelines;
(d) with respect to which the related Premium Finance Agreement is not
subject to any right of rescission, setoff, counterclaim, defense arising
out of violations of usury laws or any other defenses of any Obligor at the
time of the transfer of such Receivable to the Trust, other than defenses
that may arise after the time of transfer out of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights in general and general equity principles;
(e) with respect to which, at the time of transfer of such Receivable
to the Trust, the related Originator has not taken any action which would
impair, or failed to take any action necessary to avoid impairing, the
rights of the Trust or the Certificateholders therein;
(f) which is not delinquent for more than 30 days;
(g) which is among the Initial Receivables, that provides the related
Originator with a limited power of attorney allowing it to cancel the
related insurance policy, if cancelable, in accordance with state law upon
non-payment of a loan installment by the related Obligor;
(h) which is an Additional Receivable, that provides the related
Originator with a limited power of attorney allowing it to cancel the
related insurance policy, in accordance with state law upon non-payment of
a loan installment by the related Obligor;
(i) which grants the related Originator a security interest in the
related Unearned Premium and allows such Originator to direct the related
insurance company to pay such Originator any such Unearned Premium
calculated as of the time of cancellation of the related insurance policy,
if cancelable;
(j) with respect to which the related insurance policy has not been
canceled;
(k) with respect to which the stated address of the Obligor in the
related Premium Finance Agreement is in a Permitted State;
(l) which was underwritten in accordance with the related Guidelines;
(m) which was originated in compliance, in all material respects, with
all Requirements of Law applicable to the applicable Originator and
pursuant to loan documents which comply, in all material respects, with all
Requirements of Law applicable to the applicable Originator;
(n) which is the legal, valid and binding payment obligation of the
related Obligor, legally enforceable against such Obligor in accordance
with its terms;
(o) with respect to which the related Obligor is not the subject of a
bankruptcy or insolvency proceeding;
(p) with respect to which the related Premium Finance Agreement
provides for monthly payments by the related Obligor;
(q) which, with respect to Additional Receivables conveyed to the
Trust on or after February 1, 1997 only, the Trust has a first priority
perfected security interest in the Unearned Premium related to such
Additional Receivable and a Notice of Financed Premium has been delivered
to the applicable insurance company or companies;
(r) which is a "general intangible" under the Uniform Commercial Code
in the States of New York and Pennsylvania and is not evidenced by a
promissory note;
(s) which after giving effect to the transfer of such Receivable to
the Trust does not cause an Excess Insurer Concentration Amount to exist;
(t) which after giving effect to the transfer of such Receivable to
the Trust does not cause an Excess Obligor Concentration Amount to exist ;
and
(u) which after giving effect to the transfer of such Receivable to
the Trust does not cause the Investment Grade Insurer Percentage to be less
than the Required Investment Grade Insurer Percentage.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Euroclear Operator" means Xxxxxx Guaranty Trust Company of New York,
Brussels, Belgium office, as operator of the Euroclear System.
"Excess Finance Charge Collections" means, with respect to any
Transfer Date, the aggregate amount for all outstanding Series that the related
Supplements specify are to be treated as "Excess Finance Charge Collections" for
such Transfer Date.
"Excess Insurer Concentration Amount" shall have the meaning set forth
in any Supplement.
"Excess Obligor Concentration Amount" means as of any date of
determination, the amount of Aggregate Receivables related to a single Obligor
(or an affiliated group of Obligors), but only to the extent such amount is in
excess of 5% of the amount of Aggregate Receivables as of such date of
determination.
"Excess Funding Account" is defined in subsection 4.2(b).
"Extended Trust Termination Date" is defined in subsection 12.1(a).
"FDIC" means the Federal Deposit Insurance Corporation.
"Finance Charge Account" is defined in subsection 4.2(b).
"Finance Charge Collections" means, with respect to the Receivables
and any Monthly Period, an amount equal to the sum of (i) the aggregate amount
of interest accrued on such Receivables for such Monthly Period calculated on
the basis of the Rule of 78's Method, plus (ii) late fees and other
administrative charges collected during such Monthly Period, plus (iii) Net
Recoveries received during such Monthly Period.
"Finance Charge Receivables" means, with respect to the Receivables as
of the last day in any Monthly Period, the aggregate amount of unearned interest
on such Receivables as of such date calculated in accordance with the Rule of
78's Method.
"Finance Charge Shortfall" is defined, for any Series, in the related
Supplement.
"Foreign Clearing Agency" means CEDEL and the Euroclear Operator.
"Global Certificate" is defined in Section 6.13.
"Governmental Authority" means the United States of America, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Group" means, as to any Series, the group of Series in which the
related Supplement specifies that such Series shall be included.
"Guidelines" means the Originators' (or, if the Originators are no
longer the servicer, the Back-up Servicer's) policies and procedures relating to
the operation of its insurance premium finance loan business, including policies
and procedures for determining the creditworthiness of borrowers and insurance
carriers, the extension of credit to borrowers and collection of insurance
premium finance loans, as such policies and procedures may be amended from time
to time.
"Holder" means the Person in whose name a Certificate is registered in
the Certificate Register and, if applicable, the holder of any Bearer
Certificate or Coupon, as the case may be, and, as to any Series, such other
Person deemed to be an "Investor Holder" or "Holder" in any related Supplement
except as otherwise provided in such Supplement.
"Identified Portfolio" means the Premium Finance Agreements in which
the stated address of the Obligor is in a Permitted State.
"Ineligible Account" is defined in subsection 3.10(c).
"Initial Closing Date" means December __, 1996.
"Initial Investor Interest" means as to any Series, the amount stated
in the related Supplement.
"Initial Receivables" means the Premium Finance Agreements on the
Receivables Schedule delivered to the Trustee on the Initial Closing Date.
"Insolvency Event" is defined in subsection 9.2(a).
"Insurer Schedule" means a schedule dated as of a Determination Date
which lists (in order) each of the top 25 insurance carriers with respect to the
Receivables as of such Determination Date, each ranked in accordance with the
aggregate amount of the portion of the Aggregate Receivables which relate to the
financing of insurance premiums of such insurance carrier as of such
Determination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Investment Company Act" means the Investment Company Act of 1940.
"Investment Grade Insurer Percentage" shall have the meaning set forth
in any Supplement.
"Investor Account" means each of the Finance Charge Account, the
Excess Funding Account and the Distribution Account.
"Investor Certificate" means any one of the certificates (including
Bearer Certificates, Registered Certificates and Global Certificates) executed
by Transferor and authenticated by Trustee substantially in the form (or forms
in the case of a Series with multiple Classes) attached to the related
Supplement.
"Investor Holder" means the holder of record of an Investor
Certificate.
"Investor Interest" is defined, as to any Series, in the related
Supplement.
"Investor Percentage" is defined, as to any Series, in the related
Supplement.
"Investor Servicing Fee" is defined in Section 3.2.
"Issuance" means either of the procedures described under Section
6.9(b).
"Issuance Date" is defined in subsection 6.9(b).
"Issuance Notice" is defined in subsection 6.9(b).
"Late Fees" means with respect to any Receivable, amounts referred to
as "late fees" (or similar terms) in the related Premium Finance Agreement.
"Licensing Laws" means any statute or regulation which would impose a
requirement that the Originator or any Successor Servicer obtain and maintain a
license in order to engage in the business of insurance premium financing.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, participation or equity interest, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) and which upon investigation does not
relate to any Receivable or comparable law of any jurisdiction to evidence any
of the foregoing; provided that any assignment pursuant to Section 7.2 shall not
be deemed to constitute a Lien.
"Net Recoveries" means with respect to any Monthly Period the excess,
if any, of Recoveries for such Monthly Period over the amount of Principal
Receivables in Defaulted Accounts which are charged off during such Monthly
Period.
"Monthly Period" means, unless otherwise defined in any Supplement,
each period from and including the first day of a calendar month to and
including the last day of that calendar month.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Notice of Financed Premium" means each notice of financed premium
delivered to the Trustee by an Originator pursuant to the Receivables Purchase
Agreement and in the form of Exhibit G.
"Obligor" means, as to any Receivable, the Person or Persons obligated
to make payments on that Receivable, including any guarantor.
"Officer's Certificate" means a certificate signed by any Vice
President or more senior officer of Transferor or Servicer and delivered to
Trustee
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Person providing the opinion, and who shall be
reasonably acceptable to Trustee.
"Originator" means either AFCO Credit or AFCO Acceptance.
"Paired Series" means each Series that has been paired with another
Series (one of which Series may be prefunded or partially prefunded) such that a
reduction of the Investor Interest of one Series results in an increase of the
Investor Interest of the other Series.
"Paying Agent" means any paying agent appointed pursuant to Section
6.6 and shall initially be Trustee.
"Pay Out Event" means each Trust Pay Out Event and, as to any Series,
each other "Pay Out Event," if any, described in the Supplement for such Series.
"Permitted Investments" means, unless otherwise provided in the
Supplement with respect to any Series: (a) book-entry securities or negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence (i) obligations of or are fully guaranteed by the United
States of America, (ii) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof or domestic branches
of foreign banks and subject to supervision and examination by Federal or state
banking or depository institution authorities, provided that at the time of the
Trust's investment or contractual commitment to invest therein, the certificates
of deposit or short-term deposits of such depository institution or trust
company shall have a credit rating from Moody's and Standard & Poor's of P-1 and
A-1 +, respectively, (iii) commercial paper having, at the time of the Trust's
investment or contractual commitment to invest therein, a rating from Moody's
and Standard & Poor's of P-1 and A-1 +, respectively, (iv) bankers' acceptances
issued by any depository institution or trust company described in clause (a)
(ii), (v) investments in money market or common trust funds rated AAA-m or
AAA-mg by Standard & Poor's and P-1 by Moody's if such investment will not
require the Trust to register as an "investment company" under the Investment
Company Act, and (vi) repurchase obligations with respect to (A) any security
described in clause (a)(i) or (B) any other security issued or guaranteed by an
agency or instrumentality of the United States of America, in either case
entered into with a depository institution or trust company (acting as
principal) described in clause (a)(ii); (b) demand deposits in the name of the
Trust or Trustee in any depository institution or trust company described in
clause (a)(ii); and (c) any other investment if (i) after 10 Business Days
notice to each Rating Agency of the purchase of such investment none of the
Rating Agencies have informed the Transferor that such purchase will cause the
then current rating on the Certificates to be downgraded or withdrawn and (ii)
purchase of such investment will not require the Trust to be registered as an
investment company under the Investment Company Act.
"Permitted State" means as of any date of determination any state with
respect to which each of the Originators, Transferor, Servicer, Trustee and the
Trust has either complied with such state's Licensing Laws or is not required to
be licensed under such Licensing Laws, in each case as evidenced by either (i)
an Opinion of Counsel or (ii) written correspondence from the applicable state
authority and a related Permitted State Officer's Certificate, which the Trustee
may conclusively rely on. On the Initial Closing Date the Permitted States shall
include the states listed on Exhibit ___.
"Permitted State Officer's Certificate" means, with respect to the
determination of whether any state is a Permitted State, an Officer's
Certificate of AFCO Credit certifying that the applicable written correspondence
from a state authority is the written correspondence referred to in clause (ii)
of the definition of "Permitted State" with respect to the state in question.
"Person" means any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
other entity of similar nature.
"PFS" means Premium Financing Specialists, Inc.
"Premium Finance Agreement" shall mean a written agreement by which an
insured or prospective insured promises to pay to either AFCO Credit or AFCO
Acceptance, as the case may be, an amount advanced or to be advanced thereunder
to an insurance company (or to an insurance broker or agent for payment to the
insurance company) in payment of premiums on an insurance contract together with
any finance charges and any other incidental fees and charges.
"Principal Collections" means, with respect to the Receivables and any
Monthly Period, all Collections not treated as Finance Charge Collections.
"Principal Receivables" means, with respect to the Receivables as of
any date of determination, an amount equal to the product of (x) the Aggregate
Receivables as of such date of determination and (y) a fraction, the numerator
of which is the Beginning of Month Principal Receivables and the denominator of
which is the amount of Month Aggregate Receivables as of the first day of the
current Monthly Period.
"Principal Sharing Series" means a Series that, pursuant to the
related Supplement, is entitled to receive Shared Principal Collections.
"Principal Shortfalls" is defined, as to any Series, in the related
Supplement.
"Principal Terms" is defined in subsection 6.9(c).
"Qualified Institution" is defined in subsection 4.2(a).
"Rating Agency" means, as to each Series, the rating agency or
agencies, if any, specified in the related Supplement.
"Rating Agency Condition" means, as to any event or condition, receipt
by Transferor from each Rating Agency of written confirmation that such event or
condition will not result in a downgrade or withdrawal of its then current
rating of any outstanding Series.
"Reassignment" is defined in subsection 2.6(b)(ii).
"Reassignment Date" is defined in subsection 2.4(e).
"Receivable" means each Premium Finance Agreement that is listed or is
required to be listed on the Receivables Schedule pursuant to subsection 2.1(g).
"Receivables Schedule" means a computer file or microfiche list
containing a true and complete list of the Premium Finance Agreements required
to be listed thereon pursuant to subsection 2.1(g), each identified by account
number and setting forth the principal balance of each such Premium Finance, as
of (a) the Cut Off Date (for the Premium Finance Agreements listed on the
Receivables Schedule delivered on the Initial Closing Date) or (b) the related
Addition Date (for any Premium Finance Agreements added to the Receivables
Schedule on such Addition Date).
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement dated as of the date hereof, by and among AFCO Credit, AFCO Acceptance
and Transferor.
"Record Date" means, with respect to any Distribution Date, the last
Business Day of the preceding Monthly Period.
"Recoveries" means all amounts, including the proceeds of Unearned
Premiums received by Servicer with respect to Defaulted Account, less related
expenses of outside collection agencies.
"Registered Certificates" is defined in Section 6.1.
"Removal Date" is defined in subsection 2.6(a).
"Removal Notice Date" is defined in subsection 2.6(a).
"Removed Accounts" is defined in subsection 2.6(a).
"Required Investment Grade Insurer Percentage" shall have the meaning
set forth in any Supplement.
"Requirements of Law" for any Person means the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including usury laws, the Federal Truth in
Lending Act and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System).
"Responsible Officer" means any officer within the Corporate Trust
Office (or any successor group of Trustee), including any Vice President, any
Assistant Secretary or any other officer of Trustee customarily performing
functions similar to those performed by any person who at the time shall be an
above-designated officer and any particular officer to whom any corporate trust
mailer is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Rule of 78's Method" means the method under which a portion of a
payment allocated to earned interest and the portion allocable to principal is
determined according to the sum of the months digits or any equivalent method
commonly referred to as the "Rule of 78's."
"SAIF" means the Savings Association Insurance Fund administered by
the FDIC.
"Securities Act" means the Securities Act of 1933.
"Series" means any series of Investor Certificates issued pursuant to
a Supplement.
"Series Account" means any account established pursuant to a
Supplement for the benefit of the related Series.
"Series Servicing Fee Percentage" is defined, as to any Series, in the
related Supplement.
"Series Termination Date" is defined, as to any Series, in the related
Supplement.
"Servicer" means (a) initially AFCO Credit and AFCO Acceptance and (b)
after any Person is appointed as Successor Servicer, such Person as herein
provided to service the Receivables.
"Servicer Default" is defined in Section 10.1.
"Servicer Ineligible Account" is defined in Section 3.10(c).
"Servicing Fee" is defined in Section 3.2
"Servicing Officer" means any officer of Servicer involved in, or
responsible for, the administration and servicing of the Receivables whose name
appears on a list of servicing officers furnished to Trustee by Servicer, as
such list may be amended from time to time.
"Shared Principal Collections" means, with respect to any Transfer
Date, the aggregate amount for all outstanding Series that the related
Supplements specify are to be treated as "Shared Principal Collections" for such
Transfer Date.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc.
"Successor Servicer" is defined in subsection 10.2(a).
"Supplement" means, as to any Series or Supplement Certificate, a
supplement to this Agreement executed in conjunction with any issuance of that
Series or Supplement Certificate.
"Supplemental Certificate" is defined in subsection 6.3(b).
"Tax Opinion" means, as to any action, an Opinion of Counsel to the
effect that, for Federal income tax purposes, (a) such action will not adversely
affect the tax characterization as debt of Investor Certificates of any
outstanding Series or Class with respect to which an Opinion of Counsel was
delivered at the time of their issuance that such Investor Certificates would be
characterized as debt, (b) such actions will not cause the Trust to be
classified, for Federal income tax purposes, as an association (or publicly
traded partnership) taxable as a corporation and (c) such action will not cause
or constitute an event in which gain or loss would be recognized by any Investor
Certificateholder.
"Termination Notice" is defined in Section 10.1.
"Transfer Agent and Registrar" is defined in Section 6.3 and shall
initially be Trustee's Corporate Trust Office.
"Transfer Date" means, unless otherwise specified in the related
Supplement, with respect to any Series, the Business Day immediately prior to
each Distribution Date.
"Transferor" means Mellon Bank, N.A., a national banking association.
"Transferor Ineligible Account" is defined in Section 2.4(d)(iii).
"Transferor Interest" shall equal on any date of determination an
amount equal to (a) the amount of Principal Receivables as of such date of
determination, less (b) the Adjusted Aggregate Investor Amount on such date of
determination, less (c) the outstanding amount of all Supplemental Certificates
(and any purchased interest sold pursuant to subsection 6.9(d)) as of such date
of determination, plus (d) the amount on deposit in the Excess Funding Account
on such date of determination.
"Transferor Percentage" means, on any date of determination, when used
with respect to Principal Receivables, Finance Charge Receivables and Defaulted
Accounts, a percentage equal to 100% minus the Aggregate Investor Percentage
with respect to such categories of Receivables.
"Transferor Servicing Fee" is defined in Section 3.2.
"Trust" means the trust created by this Agreement, which shall be
known as the Mellon Bank Premium Finance Loan Master Trust, and the corpus of
which is the Trust Assets.
"Trust Assets" means (i) the Receivables conveyed to the Trust from
time to time; (ii) all monies due or to become due with respect to such
Receivables, including all monies received from insurance companies and state
insurance guaranty funds representing returns of Unearned Premiums, the proceeds
from any guarantees issued by insurance agents with respect to the Receivables
and other charges due on such Receivables; (iii) such amounts as may be from
time to time deposited into the Collection Account, the Finance Charge Account,
the Excess Funding Account, the Distribution Account and any Series Account;
(iv) any Enhancement issued with respect to any Series; (v) all of Transferor's
rights under Receivables Purchase Agreement and (vi) the proceeds of all of the
foregoing.
"Trust Extension" is defined in subsection 12.1(a).
"Trust Pay Out Event" is defined in Section 9.1.
"Trust Termination Date" means the earliest to occur of (a) unless a
Trust Extension shall have occurred, the First Business Day after the
Distribution Date with respect to any Series following the date on which funds
shall have been deposited in the Distribution Account or the applicable Series
Account for the payment of Investor Holders of each Series then issued and
outstanding sufficient to pay in full such Certificates (b), if a Trust
Extension shall have occurred, the Extended Trust Termination Date (c) and
________.
"Trustee" means The First National Bank of Chicago, and its successors
and any corporation resulting from or surviving any consolidation or merger to
which it or its successors may be a party and any successor trustee appointed as
herein provided.
"UCC" means the Uniform Commercial Code as in effect in any specified
jurisdiction.
"Undivided Interest" means the undivided interest in the Trust
evidenced by an Investor Certificate.
"Unearned Premium" shall mean, with respect to any Receivable, the
portion, if any, of any insurance premium financed under the related Premium
Finance Agreement that is considered unearned and is required under applicable
law and/or the terms of the related insurance policy to be returned by the
insurance company directly, or indirectly through an insurance broker or agent,
to an Originator upon issuance to the related Obligor of a notice of
cancellation of the related insurance policy, if such insurance policy is
cancelable.
"Variable Interest" means either of (a) any Investor Certificate that
is designated as a variable funding certificate in the related Supplement and
(b) any purchased interest sold as permitted by subsection 6.9(d).
"Vice President" when used with respect to the Trustee, means any Vice
President, whether or not designated by a number or a word or words added before
or after the title "Vice President."
SECTION 1.2 Other Interpretive Provisions. With respect to any Series,
all terms used and not defined herein are used as defined in the related
Supplement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document delivered pursuant hereto unless
otherwise defined therein. For purposes of this Agreement and all such
certificates and other documents, unless the context otherwise requires: (a)
accounting terms not otherwise defined in this Agreement, and accounting terms
partly defined in this Agreement to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles; (b) terms defined in Article 9 of the UCC as in effect in the
Commonwealth of Pennsylvania and not otherwise defined in this Agreement are
used as defined in that Article; (c) any reference to each Rating Agency shall
only apply to any specific rating agency if such rating agency is then rating
any outstanding Series; (d) references to any amount as on deposit or
outstanding on any particular date means such amount at the close of business on
such day; (e) the words "hereof," "herein" and "hereunder" and words of similar
import refer to this Agreement (or the certificate or other document in which
they are used) as a whole and not to any particular provision of this Agreement
(or such certificate or document); (f) references to any Section, Schedule or
Exhibit are references to Sections, Schedules and Exhibits in or to this
Agreement (or the certificate or other document in which the reference is made),
and references to any paragraph, subsection, clause or other subdivision within
any Section or definition refer to such paragraph, subsection, clause or other
subdivision of such Section or definition; (g) the term "including" means
"including without limitation"; (h) references to any law or regulation refer to
that law or regulation as amended from time to time and include any successor
law or regulation; (i) references to any Person include that Person's successors
and assigns; and (j) headings are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof. The
agreements, representations and warranties of AFCO Credit and AFCO Acceptance
and Mellon Bank, N.A. in this Agreement, in their respective capacities as
Servicer and Transferor, shall be deemed to be its agreements, representations
and warranties only so long as it remains a party to this Agreement in such
capacity. The monthly Servicer certificate shall be in substantially the form of
Exhibit B, with such changes as Servicer may determine to be necessary or
desirable; provided that no such change shall serve to exclude information
required by this Agreement or any Supplement. Servicer shall, upon mailing such
determination, deliver to Trustee and each Rating Agency an Officer's
Certificate to which shall be annexed the form of the related Exhibit, as so
changed. Upon the delivery of such Officer's Certificate to Trustee, the related
Exhibit, as so changed, shall for all purposes of this Agreement constitute such
Exhibit. Trustee may conclusively rely upon such Officer's Certificate in
determining whether the related Exhibit, as changed, conforms to the
requirements of this Agreement.
SECTION 1.3 Daily Allocation of Finance Charge Collections.
(a) On each Business Day in each Monthly Period, the amount of
Collections treated as Collections on Finance Charge Receivables ("Daily Finance
Charge Collections") shall be an amount equal to the Finance Charge Collections
in the immediately preceding Monthly Period divided by the number of Business
Days in such Monthly Period.
(b) Notwithstanding the foregoing, the Servicer may adopt a different
method of determining the amount of Finance Charge Collections which in the good
faith judgment of the Servicer is designed to more accurately reflect the
amounts constituting Finance Charge Collections.
SECTION 1.4 Daily Allocation of Principal Collections. For each
Business Day in each Monthly Period, the amount of Collections treated as
Collections on Principal Receivables ("Daily Principal Collections") shall equal
the amount of Collections received by the Servicer on such day less the amount
of Daily Finance Charge Collections for such day.
SECTION 1.5 Servicer Obligation to True-Up. (a) On the Determination
Date following each Monthly Period, the Servicer shall be obligated to true-up
the amount that should have been recorded as Collections in respect of Principal
Receivables and Finance Charge Receivables in accordance with the definitions of
Principal Collections and Finance Charge Collections, respectively.
(b) Notwithstanding the foregoing, the Servicer may adopt a different
method of estimating the amount of Collections allocable to the Accounts which
in the good faith judgment of the Servicer is designed to more accurately
reflect the actual amounts being collected in respect thereof. The Servicer
shall provide to each Rating Agency and to the Trustee written notice each time
the Servicer adopts a different method of estimating such amounts.
Sections 1.3, 1.4 and 1.5 shall only apply if Servicer is required to
make daily deposits of Collections into the Collection Account pursuant to
Section 4.3.
ARTICLE II CONVEYANCE OF RECEIVABLES
SECTION 2.1 Conveyance of Receivables. (a) Transferor hereby
transfers, assigns and otherwise conveys to Trustee, on behalf of the Trust, for
the benefit of the Holders, without recourse, all of its right, title and
interest in and to (i) the Initial Receivables, including the power of attorney
included therein, (ii) the Transferor's security interest in the related
Unearned Premiums (iii) all monies due or to become due with respect to such
Receivables on or after the Cut Off Date, including all monies received from
insurance companies and state insurance guaranty funds representing returns of
Unearned Premiums, the proceeds from any guarantees issued by insurance agents
in respect of the Receivables and other charges due on such Receivables, (iv)
the Receivables Purchase Agreement and, (v) all proceeds of all of the foregoing
(the property described in clauses (i) - (v) above being, the "Conveyed
Property").
(b) Transferor hereby transfers, assigns, and otherwise conveys to the
Trustee, on behalf of the Trust, for the benefit of the Holders, without
recourse, as of the related Addition Date, all of its right title and interest
in and to (i) the Additional Receivables, including the power of attorney
included therein, (ii) the Transferor's security interest in the related
Unearned Premiums, (iii) all monies due or to become due with respect to such
Additional Receivables on or after the related Addition Date, including all
monies received from insurance companies and state insurance guaranty funds
representing returns of Unearned Premiums, the proceeds of any guarantees issued
by insurance agents in respect of the Additional Receivables and other charges
due on such Additional Receivables, (iv) and all of the proceeds of the
foregoing (the property described in clauses (i) -(iv) above being, the
"Additional Property").
(c) In connection with any transfer, assignment and conveyance
pursuant Section 2.1(a) or Section 2.1(b), Transferor agrees to record and file,
at its own expense, a financing statement (including any continuation statements
with respect to such financing statement when applicable) with respect to the
Conveyed Property and the Additional Property meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect the assignment of the Conveyed Property and the Additional Property
to the Trust, and to deliver a file-stamped copy of such financing statement or
continuation statement or other evidence of such filing to Trustee on or prior
to the date of issuance of the Certificates (and in the case of any continuation
statements filed pursuant to this Section 2.1, as soon as practicable after
receipt thereof by Transferor). The foregoing transfer, assignment and
conveyance to the Trust shall be made to Trustee, on behalf of the Trust, and
each reference in this Agreement to such transfer, assignment and conveyance
shall be construed accordingly.
(d) In connection with any transfer pursuant to Section 2.1,
Transferor agrees, at its own expense, (i) on or prior to the Initial Closing
Date or the applicable Addition Date, as applicable to cause each of the
Originators pursuant to the Receivables Purchase Agreement to indicate in its
computer files that the related Receivables or the Additional Receivables, as
applicable have been transferred to Transferor pursuant to the Receivables
Purchase Agreement and then to Trustee, on behalf of the Trust, pursuant to this
Agreement for the benefit of the Holders by identifying such Receivables or the
Additional Receivables, as applicable as those that may be accessed on the
applicable Originator's computer files through use of one or more of the
Database Codes set forth on Schedule I.
(e) The parties intend that if, and to the extent that, any transfer
pursuant to this Section 2.1 is not deemed to be a sale, Transferor shall be
deemed hereunder to have granted to Trustee, on behalf of the Trust, for the
benefit of the Holders, a first priority perfected security interest in all of
Transferor's right, title and interest in, to and under the Conveyed Property
and that this Agreement shall constitute a security agreement under applicable
law.
(f) Transferor covenants and agrees that with respect to any
Additional Receivables conveyed to the Trust it shall:
(i) represent and warrant that, as of the day any Additional
Receivable is conveyed to the Trust, such conveyance constitutes
either (x) a valid transfer and assignment to Trustee, on behalf of
the Trust, of all right, title and interest of Transferor in and to
the Additional Receivables, and all monies due or to become due with
respect to such Receivables including all monies received from
insurance companies and state insurance guaranty funds representing
returns of Unearned Premiums and other charges due on such Receivables
and all proceeds thereto, all of which will be held by Trustee on
behalf of the Trust, free and clear of any Lien of any Person claiming
through or under Transferor or any of its Affiliates, except for (i)
Liens permitted under subsection 2.5(b), (ii) the Transferor Interest
and (iii) Transferor's right to receive interest accruing on, and
investment earnings in respect of, the Finance Charge Account and the
Excess Funding Account, or any Series Account as provided in this
Agreement and any related Supplement or (y) a grant of a security
interest (as defined in the UCC as in effect in the Commonwealth of
Pennsylvania), in such property to the Trust, which is enforceable
with respect to the Additional Receivables, including monies received
from insurance companies and state insurance guaranty funds
representing returns of Unearned Premiums and other charges due on the
related Receivables and all proceeds thereto upon the conveyance of
such Additional Receivables to the Trust. If such conveyance
constitutes the grant of a security interest to the Trust in such
property, upon the filing of a financing statement as described in
Section 2.1 with respect to such Additional Receivables and the
proceeds (as defined in the UCC as in effect in the Commonwealth of
Pennsylvania), thereof, the Trust shall have a first priority
perfected security interest in such property, except for Liens
permitted under subsection 2.5(b);
(ii) not transfer on any day any Receivable to the Trust which
would cause as of such day, after giving effect to such transfer (i)
an increase in any Excess Obligor Concentration Amount (as calculated
on the Determination Date immediately preceding such day); and (ii) an
increase in any Excess Insurer Concentration Amount (as calculated on
the Determination Date immediately preceding such day); or (iii) the
Investment Grade Insurer Percentage (calculated on the Determination
Date immediately preceding such day) to be decreased, if on such day
the Investment Grade Insurer Percentage is less that the Required
Investment Grade Insurer Percentage; and
(iii) Transferor shall deliver to Trustee an Officer's
Certificate confirming the items set forth in clauses (i) and (ii).
(g) On the date any Premium Finance Agreements are conveyed to the
Transferor pursuant to the Receivables Purchase Agreement, the Transferor shall,
prior to or simultaneously with conveying such Premium Finance Agreements to the
Trust, add or cause to be added such Premium Finance Agreements to the
Receivables Schedule.
Pursuant to the request of Transferor, Trustee shall cause
Certificates in authorized denominations evidencing the entire interest in the
Trust to be duly authenticated and delivered to or upon the order of Transferor
pursuant to Section 6.2.
SECTION 2.2 Acceptance by Trustee. (a) Trustee hereby acknowledges its
acceptance, on behalf of the Trust, of all right, title and interest previously
held by Transferor in and to the Conveyed Property, and declares that it shall
maintain such right, title and interest, upon the Trust herein set forth, for
the benefit of all Holders. Trustee further acknowledges that, prior to or
simultaneously with the execution and delivery of this Agreement, Transferor
delivered to Trustee the Receivables Schedule referred to in subsection 2.1(d).
(b) Trustee agrees not to disclose to any Person any of the account
numbers or other information contained in the computer files or microfiche lists
delivered to Trustee by the Originators or the Transferor pursuant to Sections
2.1, and 2.6 except as is required in connection with the performance of its
duties hereunder or in enforcing the rights of the Holders or to a Successor
Servicer appointed pursuant to Section 10.2, as mandated pursuant to any
Requirement of Law applicable to Trustee or as requested by any Person in
connection with financing statements filed with the Trust. Trustee agrees to
take such measures as shall be reasonably requested by Transferor to protect and
maintain the security and confidentiality of such information, and, in
connection therewith, shall allow Transferor to inspect Trustee's security and
confidentiality arrangements from time to time during normal business hours. In
the event that Trustee is required by law to disclose any such information,
Trustee shall provide Transferor with prompt written notice, unless such notice
is prohibited by law, of any such request or requirement so that Transferor may
request a protective order or other appropriate remedy. Trustee shall make best
efforts to provide Transferor with written notice no later than five days prior
to any disclosure pursuant to this subsection 2.2(b).
(c) Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
SECTION 2.3 Representations and Warranties of Transferor. Transferor
hereby represents and warrants to the Trust as of the Initial Closing Date:
(a) Organization and Good Standing. Transferor is a national banking
association duly organized and validly existing in good standing under the laws
of the United States and has full corporate power, authority and legal right to
own its properties and conduct its business as such properties are presently
owned and such business is presently conducted, and to execute, deliver and
perform its obligations under this Agreement and to execute and deliver to
Trustee the Certificates pursuant hereto.
(b) Due Qualification. Transferor is duly qualified to do business and
is in good standing (or is exempt from such requirement) in any state required
in order to conduct its business, and has obtained all necessary licenses and
approvals with respect to Transferor required under Federal and Pennsylvania law
(including any necessary licenses required under the Licensing Laws of each
Permitted State).
(c) Transferor`s Deposit Accounts. As of the Initial Closing Date,
deposits in Transferor's deposit accounts were insured to the limits provided by
law by BIF.
The representations and warranties set forth in this Section 2.3 shall
survive the transfer and assignment of the respective Receivables to the Trust
and any termination of the rights and obligations of Servicer pursuant to
Section 10.1. Transferor hereby represents and warrants to the Trust, with
respect to any Series of Certificates, as of its Closing Date, unless otherwise
stated in the related Supplement, that the representations and warranties of
Transferor set forth in this Section 2.3 are true and correct as of such date
(and for purposes of such representations and warranties, (x) "Certificates"
means the Certificates issued on the related Closing Date and (y) references to
the Initial Closing Date shall be deemed to refer to that Closing Date). Upon
discovery by Transferor, Servicer or Trustee of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the others.
SECTION 2.4 Representations and Warranties of Transferor Relating to
this Agreement, the Receivables Purchase Agreement and the Receivables.
(a) Binding Obligation; Valid Transfer and Assignment. Transferor
hereby represents and warrants to the Trust that, as of the Initial Closing
Date:
(i) The execution and delivery of this Agreement and the
Receivables Purchase Agreement by Transferor and the consummation of
the transactions provided for in this Agreement and the Receivables
Purchase Agreement have been duly authorized by Transferor by all
necessary corporate action on its part, and this Agreement and the
Receivables Purchase Agreement will remain, from the time of its
execution, an official record of Transferor.
(ii) This Agreement, the Certificates and the Receivables
Purchase Agreement constitute legal, valid and binding obligations of
Transferor, enforceable against Transferor in accordance with their
terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and the rights of creditors of national
banking associations, and (B) as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or
in equity).
(iii) No Conflict. The execution and delivery of this Agreement,
the Certificates and the Receivables Purchase Agreement, the
performance of the transactions contemplated by this Agreement, the
Certificates and the Receivables Purchase Agreement and the
fulfillment of the terms hereof and thereof will not conflict with,
result in any breach of any of the material terms and provisions of,
or constitute (with or without notice or lapse of time or both) a
material default under, any indenture, contract, agreement, mortgage,
deed of trust or other instrument to which Transferor is a party or by
which it or any of its properties are bound.
(iv) No Violation. The execution and delivery of this Agreement,
the Certificates and the Receivables Purchase Agreement, the
performance of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof and thereof will not conflict with or
violate any Requirements of Law applicable to Transferor.
(v) This Agreement constitutes either (A) a valid transfer,
assignment and conveyance to Trustee, on behalf of the Trust, for the
benefit of the Holders, of all right, title and interest of Transferor
in and to the Conveyed Property all of which will be held by Trustee
on behalf of the Trust, free and clear of any Lien of any Person
claiming through or under Transferor or any of its Affiliates, except
for (i) Liens permitted under subsection 2.5(b), (ii) the Transferor
Interest and (iii) Transferor's right to receive interest accruing on,
and investment earnings in respect of, the Finance Charge Account and
the Excess Funding Account, or any Series Account as provided in this
Agreement and any related Supplement or (B) a grant of an enforceable
security interest (as defined in the UCC as in effect in the
Commonwealth of Pennsylvania) in the Conveyed Property. If this
Agreement constitutes the grant of a security interest to the Trust in
the Conveyed Property, upon the filing of the financing statement
described in Section 2.1, the Trust shall have a first priority
perfected security interest in such property, except for Liens
permitted under subsection 2.5(b). Neither Transferor nor any Person
claiming through or under Transferor shall have any claim to or
interest in the Excess Funding Account, the Finance Charge Account,
the Distribution Account or any Series Account, except for
Transferor's rights to receive interest accruing on, and investment
earnings in respect of, the Finance Charge Account and Excess Funding
Account as provided in this Agreement (or, if applicable, any Series
Account as provided in any Supplement) and, if this Agreement
constitutes the grant of a security interest in such property, except
for the interest of Transferor in such property as a debtor for
purposes of the UCC as in effect in the Commonwealth of Pennsylvania.
(vi) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of Transferor, threatened against
Transferor before any court, regulatory body, administrative agency,
or other tribunal or governmental instrumentality (i) asserting the
invalidity of this Agreement, the Certificates or the Receivables
Purchase Agreement, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Certificates or the Receivables
Purchase Agreement, (iii) seeking any determination or ruling that, in
the reasonable judgment of Transferor, would materially and adversely
affect the performance by Transferor of its obligations under this
Agreement, the Certificates or the Receivables Purchase Agreement,
(iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement or
the Certificates or (v) seeking to affect adversely the income tax
attributes of the Trust.
(vii) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental
body or official required in connection with the execution and
delivery of this Agreement, the Certificates and the Receivables
Purchase Agreement, the performance of the transactions contemplated
by this Agreement, the Certificates and the Receivables Purchase
Agreement and the fulfillment of the terms hereof, have been obtained.
(b) Eligibility of Receivables. Transferor hereby represents and
warrants to the Trust as of the Initial Closing Date with respect to the Initial
Receivables, as of each Addition Date:
(i) Each Receivable is an Eligible Receivable.
(ii) Each Additional Receivable conveyed to the Trust is an
Eligible Receivable, and the representations and warranties set forth
in subsection 2.4(a) are true and correct on the day such Additional
Receivable is conveyed to the Trust.
(iii) Each Receivable then existing has been conveyed to the
Trust free and clear of any Lien of any Person claiming through or
under Transferor or any of its Affiliates (other than Liens permitted
under subsection 2.5(b)) and in compliance, in all material respects,
with all Requirements of Law applicable to Transferor.
(iv) The related Receivables Schedule is, as of any date, an
accurate and complete listing in all material respects of all the
Receivables conveyed to the Trust as of such date and the information
contained therein with respect to the identity of each Receivable is
true and correct in all material respects as of the date such
Receivables are conveyed to the Trust. As of the Cut Off Date, the
Aggregate Receivables in all the Accounts was $_____________, of which
$_____________ were Principal Receivables.
(c) Notice of Breach. The representations and warranties set forth in
this Section 2.4 shall survive the transfer and assignment of the respective
Receivables to the Trust. Upon discovery by Transferor, Servicer or Trustee of a
breach of any of the representations and warranties set forth in this Section
2.4, the party discovering such breach shall give prompt written notice to the
other parties mentioned above. Transferor agrees to cooperate with Servicer and
Trustee in attempting to cure any such breach.
(d) Transfer of Receivables in Ineligible Accounts.
(i) Automatic Removal. In the event of a breach with respect to a
Receivable of any representations and warranties set forth in
subsection 2.4(b) (iii), and any of the following two conditions is
met: (A) as a result of such breach such Receivable is charged off as
uncollectible or the Trust's rights in, to or under such Receivable or
its proceeds are impaired or the proceeds of such Receivable are not
available for any reason to the Trust free and clear of any Lien or
(B) the Lien upon the subject Receivable (1) arises in favor of the
United States of America or any State or any agency or instrumentality
thereof and involves taxes or liens arising under Title IV of ERISA or
(2) has been consented to by Transferor; then, upon the earlier to
occur of the discovery of such breach or event by Transferor or
Servicer or receipt by Transferor of written notice of such breach
given by Trustee, each Receivable arising under the Account under
which such Receivable arises shall be automatically removed from the
Trust on the terms are conditions set forth in subsection 2.4(d)(iii).
(ii) Removal After Cure Period. In the event of a breach of (i)
any of the representations and warranties set forth in subsection
2.4(b)(i), 2.4(b)(ii), 2.4(b)(iv) and 2.1(f) (i) as a result of any
such breach the related Account becomes a Defaulted Account or the
Trust's rights in, to or under the Receivable or its proceeds are
impaired or the proceeds of such Receivable are not available for any
reason to the Trust free and clear of any Lien, then, upon the
expiration of 60 days (or such longer period as may be agreed to by
Trustee in its sole discretion, but in no event later than 120 days)
from the earlier to occur of the discovery of any such event by either
Transferor or Servicer, or receipt by Transferor of written notice of
any such event given by Trustee or (ii) the covenants or agreements
contained in subsection 2.1(f)(ii), then upon the expiration of 15
days from the earlier to occur of the discovery of any such event by
either Transferor or Servicer, or receipt by Transferor of written
notice of any such event given by Trustee, each Receivable arising
under the Account under which such Receivable arises shall be removed
from the Trust on the terms and conditions set forth in subsection
2.4(d)(iii); provided that no such removal shall be required to be
made if, on any day within such applicable period, such
representations and warranties with respect to such Receivable shall
then be true and correct in all material respects as if such
Receivable had been created on such day.
(iii) Procedures for Removal. When the provisions of subsection
2.4(d)(i) or 2.4(d)(ii) require removal of Receivables arising under
an Account, Transferor shall accept reassignment of each Receivable
arising under such Account (a "Transferor Ineligible Account") by
directing Servicer to deduct the Aggregate Receivable Balance of each
Receivable arising under an Ineligible Account from the Aggregate
Receivables in the Trust (to the extent previously included therein)
as of such date. On and after the date of such removal, the principal
portion of each Receivable arising under an Ineligible Account shall
be deducted from the aggregate amount of Principal Receivables used in
the calculation of any Investor Percentage, the Transferor Percentage
or the Transferor Interest. If the exclusion of a Receivable arising
under an Ineligible Account from the calculation of the Transferor
Interest would cause the Transferor Interest to be reduced below zero
or would otherwise not be permitted by law, Transferor shall promptly,
and in no event later than 10 Business Days after such event, make a
deposit in the Collection Account (for allocation as Principal
Collections received on the day of deposit) in immediately available
funds prior to the next succeeding Transfer Date in an amount equal to
the amount by which the Transferor Interest would be reduced below
zero. Upon the removal of any Transferor Ineligible Receivable (and
the mailing of any deposit required above), the Trust shall
automatically and without further action be deemed to transfer, assign
and otherwise convey to Transferor, without recourse, representation
or warranty, all the right, title and interest of the Trust in and to
such each Receivable arising under such Ineligible Account, all monies
due or to become due with respect to each Receivable arising under
such Ineligible Account and all proceeds of each Receivable arising
under such Ineligible Account and Recoveries relating to such
Transferor Ineligible Receivable. Each reassigned Receivable shall be
treated by the Trust as collected in full as of the date on which it
was transferred. Trustee shall execute such documents and instruments
of transfer or assignment and take other actions as shall reasonably
be requested by Transferor to evidence the conveyance of such
Receivable arising under such Ineligible Account pursuant to this
subsection 2.4(d)(iii). The obligation of Transferor set forth in this
subsection 2.4(d)(iii), shall constitute the sole remedy respecting
any breach of the representations and warranties set forth in the
above-referenced subsections with respect to such Receivable available
to the Holders or Trustee on behalf of the Holders.
(iv) Proceeds Held by Servicer. For the purposes of subsection
2.4(d)(i) above, proceeds of a Receivable shall not be deemed to be
impaired hereunder solely because such proceeds are held by Servicer
(if Servicer is an Originator).
(e) Reassignment of Trust Portfolio. If any of the representations and
warranties set forth in subsection 2.4(a) is not true and correct in any
material respect when made and such breach has a material adverse effect upon
the interest of the Holders in the Receivables, then either Trustee or the
Holders of Investor Certificates evidencing Undivided Interests aggregating more
than 50% of the Aggregate Investor Interest, by notice then given in writing to
Transferor (and to Trustee and Servicer, if given by the Investor Holders), may
direct Transferor to accept reassignment of all Principal Receivables within 60
days of such notice (or within such longer period as may be specified in such
notice), and Transferor shall accept reassignment of such Principal Receivables
on a Distribution Date specified by Transferor (such Distribution Date, the
"Reassignment Date") occurring within such applicable period on the terms and
conditions set forth below; provided that no such reassignment shall be required
to be made if, at any time during such applicable period, the representations
and warranties contained in subsection 2.4(a) shall then be true and correct in
all material respects. Transferor shall deposit on the Transfer Date (in New
York Clearing House, next day funds) preceding the Reassignment Date an amount
equal to the reassignment deposit amount for such Receivables in the
Distribution Account or Series Account, as provided in the related Supplement,
for distribution to the Investor Holders pursuant to Article XII. The
reassignment deposit amount with respect to each Series for such reassignment,
unless otherwise stated in the related Supplement, shall be equal to (i) the
Investor Interest of such Series at the end of the day on the last day of the
Monthly Period preceding the Reassignment Date, less the amount, if any,
previously allocated for payment of principal to such Holders on the related
Distribution Date in the Monthly Period in which the Reassignment Date occurs,
plus (ii) an amount equal to all interest accrued but unpaid on the Investor
Certificates of such Series at the applicable interest rate through such last
day, less the amount if any, previously allocated for payment of interest to the
Holders of such Series on the related Distribution Date in the Monthly Period in
which the Reassignment Date occurs. Payment of the reassignment deposit amount
with respect to each Series, and all other amounts in the Distribution Account
or the applicable Series Account in respect of the preceding Monthly Period,
shall be considered a prepayment in full of the Receivables represented by the
Investor Certificates. On the Distribution Date following the Transfer Date on
which such amount has been deposited in full into the Distribution Account or
the applicable Series Account, the Receivables and all monies due or to become
due with respect to such Receivables and all proceeds of the Receivables and
Recoveries relating to such Receivables shall be released to Transferor after
payment of all amounts otherwise due hereunder on or prior to such dates and
Trustee shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, representation or warranty, as shall be prepared by
and as are reasonably requested by Transferor to vest in Transferor, or its
designee or assignee, all right, title and interest of the Trust in and to the
Receivables, all monies due or to become due with respect to such Receivables
and all proceeds of the Receivables and Recoveries and relating to such
Receivables. If Trustee or the Investor Holders give notice directing Transferor
to accept reassignment as provided above, the obligation of Transferor to accept
reassignment of the Receivables and pay the reassignment deposit amount pursuant
to this subsection 2.4(e) shall constitute the sole remedy respecting a breach
of the representations and warranties contained in clause (ii) or (viii) of
subsection 2.4(a) available to the Investor Holders or Trustee on behalf of the
Investor Holders.
SECTION 2.5 Covenants of Transferor. Transferor hereby covenants that:
(a) Receivables to be General Intangibles. Transferor will take no
action to cause any Receivable to be anything other than a general intangible as
defined under the UCC of the Commonwealth of Pennsylvania.
(b) Security Interests. Except for the conveyances hereunder,
Transferor shall not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Receivable,
whether now existing or hereafter created, or any interest therein; Transferor
shall immediately notify Trustee of the existence of any Lien on any Receivable;
and Transferor shall defend the right, title and interest of the Trust in, to
and under the Receivables, whether now existing or hereafter created, against
all claims of third parties claiming through or under Transferor; provided that
nothing in this subsection 2.5(b) shall prevent or be deemed to prohibit
Transferor from suffering to exist upon any of the Receivables any Liens for
municipal or other local taxes if such taxes shall not at the time be due and
payable or if Transferor shall currently be contesting the validity thereof in
good faith by appropriate proceedings and shall have set aside on its books
adequate reserves with respect thereto.
(c) Receivable Allocations.
(i) If Transferor is unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this
Agreement (including by reason of the application of the provisions of
Section 9.2 or an order by any Federal governmental agency having
regulatory authority over Transferor or any court of competent
jurisdiction that Transferor not transfer any additional Principal
Receivables to the Trust) then, in any such event: (A) Transferor
agrees to allocate and pay to the Trust, after the date of such
inability, all Principal Collections, and all amounts which would have
constituted Principal Collections but for Transferor's inability to
transfer such Receivables (up to an aggregate amount equal to the
amount of Principal Receivables in the Trust on such date); (B)
Transferor agrees to have such amounts applied as Collections in
accordance with Article IV; and (C) for only so long as all Collections
and all amounts which would have constituted Collections are allocated
and applied in accordance with clauses (A) and (B), Principal
Receivables (and all amounts which would have constituted Principal
Receivables but for Transferor's inability to transfer Receivables to
the Trust) that are written off as uncollectible in accordance with
this Agreement shall continue to be allocated in accordance with
Article IV, and all amounts that would have constituted Principal
Receivables but for Transferor's inability to transfer Receivables to
the Trust shall be deemed to be Principal Receivables for the purpose
of calculating (i) the applicable Investor Percentage with respect to
any Series and (ii) the Aggregate Investor Percentage thereunder. The
parties hereto agree that Finance Charge Receivables, whenever created,
accrued in respect of Principal Receivables that have been conveyed to
the Trust, or that would have been conveyed to the Trust but for the
above described inability to transfer such Receivables, shall continue
to be a part of the Trust notwithstanding any cessation of the transfer
of additional Principal Receivables to the Trust and Collections with
respect thereto shall continue to be allocated and paid in accordance
with Article IV.
(ii) If Transferor accepts reassignment of an Ineligible
Receivable pursuant to subsection 2.4(d), then, in any such event,
Transferor agrees to account for payments received with respect to such
Ineligible Receivable separately from its accounting for Collections on
Principal Receivables retained by the Trust. If payments received from
or on behalf of an Obligor are not specifically applicable either to an
Ineligible Receivable of such Obligor reassigned to Transferor or to
the Receivables of such Obligor retained in the Trust, then Transferor
agrees to allocate payments proportionately based on the total amount
of Principal Receivables of such Obligor retained in the Trust and the
total amount owing by such Obligor on any Ineligible Receivables
reassigned to Transferor, and the portion allocable to any Principal
Receivables retained in the Trust shall be treated as Collections and
deposited in accordance with the provisions of Article IV.
(d) Conveyance of Receivables. Transferor shall not convey, assign,
exchange or otherwise transfer the Receivables to any Person prior to the
termination of this Agreement pursuant to Article XII, except as provided in
Section 2.1; provided that Transferor shall not be prohibited hereby from
conveying, assigning, exchanging or otherwise transferring the Receivables in
connection with a transaction complying with the provisions of Section 7.2.
(e) On each Determination Date Transferor shall deliver to each Rating
Agency an Insurer Schedule, dated as of such Determination Date.
SECTION 2.6 Removal of Accounts. (a) Subject to the conditions set
forth below, Transferor may, but shall not be obligated to, designate Accounts
for deletion and removal ("Removed Accounts") from the Trust; provided that
Transferor shall not make more than one such designation in any Monthly Period.
On or before the fifth Business Day (the "Removal Notice Date") prior to the
date on which the designated Removed Accounts will be reassigned by Trustee to
Transferor (the "Removal Date"), Transferor shall give Trustee and Servicer
written notice that the Removed Accounts are to be reassigned to Transferor.
(b) Transferor shall be permitted to designate and require
reassignment to it of the Receivables from Removed Accounts only upon
satisfaction of the following conditions:
(i) the removal of any Receivables of any Removed Accounts on
any Removal Date shall not, in the reasonable belief of Transferor, (a)
cause a Pay Out Event to occur; provided that for the purposes of this
subsection 2.6(b)(i), the Receivables of each Removed Accounts shall be
considered to have been removed as of the Removal Date, (b) cause
Transferor Interest as a percentage of the aggregate amount of
Principal Receivables to be less than the Minimum Transferor Interest
on such Removal Date, (c) cause the aggregate amount of Principal
Receivables to be less than the Minimum Aggregate Principal
Receivables, or (d) result in the failure to make any payment specified
in the related Supplement with respect to any Series;
(ii) on or prior to the Removal Date, Transferor shall have
delivered to Trustee for execution a written assignment substantially
in the form of Exhibit F (the "Reassignment") and, within five Business
Days thereafter, Transferor shall have delivered to Trustee a computer
file or microfiche list containing a true and complete list of all
Removed Accounts identified by account number and the aggregate amount
of the Receivables in such Removed Accounts as of the Removal Date,
which computer file or microfiche list shall as of the Removal Date
modify and amend and be made a part of this Agreement;
(iii) Transferor shall represent and warrant that no selection
procedures believed by Transferor to be materially adverse to the
interests of the Holders were utilized in selecting the Removed
Accounts to be removed from the Trust;
(iv) on or before the tenth Business Day prior to the Removal
Date, each Rating Agency shall have received notice of such proposed
removal of the Removed Accounts, and none of the Rating Agencies shall
have informed the Transferor that the then current rating or the
Certificate will be withdrawn or downgraded as a result of such
removal;
(v) on any Removal Notice Date, the amount of the Principal
Receivables of the Removed Accounts to be reassigned to Transferor on
the related Removal Date shall not equal or exceed 5% of the aggregate
amount of the Principal Receivables on such Removal Date; provided,
that if any Series has been paid in full, the Principal Receivables in
such Removed Accounts may approximate the Initial Investor Interest of
such Series; and
(vi) Transferor shall have delivered to Trustee an Officer's
Certificate confirming the items set forth in clauses (i) through (v).
Upon satisfaction of the above conditions, Trustee shall execute and
deliver the Reassignment to Transferor, and the Receivables in such Removed
Accounts shall no longer constitute a part of the Trust.
ARTICLE III ADMINISTRATION AND SERVICING
SECTION 3.1 Acceptance of Appointment as Servicer and Back-up
Servicer.
(a) The Transferor hereby appoints AFCO Credit and AFCO Acceptance to
act as Servicer under this Agreement and AFCO Credit and AFCO Acceptance hereby
agree to such appointment. The Transferor hereby appoints PFS to act as Back-up
Servicer under this Agreement and to act as Successor Servicer under this
Agreement upon removal of the Servicer pursuant to Section 10.2 and PFS hereby
agrees to such appointment. Back-up Servicer hereby agrees to, upon its
appointment as Successor Servicer, perform all of the duties of the Servicer
under this Agreement. The Investor Holders and Credit Enhancement Provider of
each Series, by their acceptance of the related Certificates and the issuance of
the Credit Enhancement, consent to AFCO Credit and AFCO Acceptance acting as
Servicer and PFS acting as Back-up Servicer.
(b) Servicer shall service and administer the Receivables and shall
collect payments due under the Receivables in accordance with its customary and
usual servicing procedures for servicing insurance premium finance receivables
comparable to the Receivables and in accordance with the Guidelines and shall
have full power and authority, acting alone or through any party properly
designated by it hereunder, to do any and all things in connection with such
servicing and administration which it may deem necessary or desirable. Without
limiting the generality of the foregoing and subject to Section 10.1, Servicer
is hereby authorized and empowered (i) to make withdrawals from the Collection
Account as set forth in this Agreement, (ii) unless such power and authority is
revoked by Trustee on account of the occurrence of a Servicer Default pursuant
to Section 10.1, to instruct Trustee to make withdrawals and payments, from the
Finance Charge Account, the Excess Funding Account and any Series Account, in
accordance with such instructions as set forth in this Agreement, (iii) unless
such power and authority is revoked by Trustee on account of the occurrence of a
Servicer Default pursuant to Section 10.1, to instruct Trustee in writing, as
set forth in this Agreement, (iv) to execute and deliver, on behalf of the Trust
for the benefit of the Holders, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivables and (v) as long as the Originators
are Servicer, to make any filing, reports, notices, applications, registrations
with, and to seek any consents or authorizations from the Securities and
Exchange Commission and any state securities authority on behalf of the Trust as
may be necessary or advisable to comply with any Federal or state securities or
reporting requirements. In the event the Originators are no longer Servicer, the
Back-up Servicer shall supply to Transferor all necessary information for the
preparation of the documents referred to in clause (v) and the Transferor shall
make such filings, reports, notices, applications, registrations with, and seek
any such consents or authorizations from the Securities and Exchange Commission
and any state securities authority on behalf of the Trust as may be necessary or
advisable and comply with any such Federal or state securities or reporting
requirements. Trustee agrees that it shall promptly follow the instructions of
Servicer to withdraw funds from the Excess Funding Account, the Finance Charge
Account or any Series Account and to take any action required under any Credit
Enhancement at such time as required under this Agreement. Trustee shall execute
at Servicer's written request such documents prepared by Transferor and
acceptable to Trustee as may be necessary or appropriate to enable Servicer to
carry out its servicing and administrative duties hereunder.
(c) If Transferor is unable for any reason to transfer Receivables to
the Trust in accordance with the provisions of this Agreement (including by
reason of the application of the provisions of Section 9.2 or the order of any
Federal governmental agency having regulatory authority over Transferor or any
court of competent jurisdiction that Transferor not transfer any additional
Principal Receivables to the Trust) then, in any such event, (A) Servicer agrees
to allocate, after such date, all Collections with respect to Principal
Receivables, and all amounts which would have constituted Collections with
respect to Principal Receivables but for Transferor's inability to transfer such
Receivables (up to an aggregate amount equal to the aggregate amount of
Principal Receivables in the Trust as of such date) in accordance with
subsection 2.5(c); (B) Servicer agrees to apply such amounts as Collections in
accordance with Article IV, and (C) for only so long as all Collections and all
amounts which would have constituted Collections are allocated and applied in
accordance with clauses (A) and (B) above, Principal Receivables and all amounts
which would have constituted Principal Receivables but for Transferor's
inability to transfer Receivables to the Trust that are written off as
uncollectible in accordance with this Agreement shall continue to be allocated
in accordance with Article IV and all amounts which would have constituted
Principal Receivables but for Transferor's inability to transfer Receivables to
the Trust shall be deemed to be Principal Receivables for the purpose of
calculating the applicable Investor Percentage thereunder. The parties hereto
agree that Finance Charge Receivables, whenever created, accrued in respect of
Principal Receivables which have been conveyed to the Trust, or which would have
been conveyed to the Trust but for the above described inability to transfer
such Receivables, shall continue to be a part of the Trust notwithstanding any
cessation of the transfer of additional Principal Receivables to the Trust and
Collections with respect thereto shall continue to be allocated and paid in
accordance with Article IV.
(d) If Transferor accepts reassignment of an Ineligible Receivable
pursuant to subsection 2.4(d) then, in any such event, Servicer agrees to
account for payments received with respect to such Ineligible Receivable
separately from its accounting for Collections on Principal Receivables retained
by the Trust. If payments received from or on behalf of an Obligor are not
specifically applicable either to an Ineligible Receivable of such Obligor
reassigned to Transferor or to Receivables of such Obligor retained in the
Trust, then Servicer agrees to allocate payments proportionately based on the
total amount of Principal Receivables of such Obligor retained in the Trust and
the total amount owing by such Obligor on any Ineligible Receivables purchased
by Transferor, and the portion allocable to any Principal Receivables retained
in the Trust shall be treated as Collections and deposited in accordance with
the provisions of Article IV.
(e) Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by Servicer in connection
with servicing other premium finance loans.
(f) Servicer shall maintain fidelity bond coverage insuring against
losses through wrongdoing of its officers and employees who are involved in the
servicing of premium finance loans covering such actions and in such amounts as
Servicer believes to be reasonable from time to time.
The relationship of the Servicer (and of any Successor Servicer other
than the Trustee) to the Trustee under this Agreement is intended by the parties
to be that of independent contractor and not that of a joint venture, partner or
agent of the Trustee, including any act of the Servicer performed in the name of
the Trustee.
SECTION 3.2 Servicing Compensation and Back-up Servicing Compensation.
As compensation for its servicing activities hereunder and reimbursement for its
expenses as set forth in the immediately following paragraph, Servicer shall be
entitled to receive a servicing fee (the "Servicing Fee") prior to the
termination of the Trust pursuant to Section 12.1. The Servicing Fee shall be
payable, with respect to each Series, at the times and in the amounts set forth
in the related Supplement. The Servicing Fee shall be allocated between the
Investor Certificates (the "Investor Servicing Fee") and Transferor (the
"Transferor Servicing Fee").
As compensation for its agreement to act as a back-up servicer under
this Agreement, Back-up Servicer shall be entitled to receive a back-up
servicing fee prior to the earlier of (x) the termination of the Trust pursuant
to Section 12.1 and (y) the first date on which the Back-up Servicer is
Servicer. The Back-up Servicing Fee shall be payable by the Transferor.
So long as the Servicer is one of the Originators, Servicer's expenses
include the amounts due to Trustee pursuant to Section 11.5 and the reasonable
fees and disbursements of independent public accountants and all other expenses
incurred by Servicer in connection with its activities hereunder; provided that
Servicer shall not be liable for any liabilities, costs or expenses of the
Trust, the Investor Holders or the Certificate Owners arising under any tax law,
including any Federal, state or local income or franchise taxes or any other tax
imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith). Servicer shall be
required to pay such expenses for its own account and shall not be entitled to
any payment therefor other than the Monthly Servicing Fee. In the event that
Servicer is not one of the Originators, the Transferor will assume the
obligation to pay the fees, expenses and disbursements of the accountants and
Trustee referred to in the second preceding sentence.
SECTION 3.3 Representations and Warranties of Servicer. Each of AFCO
Credit and AFCO Acceptance, as initial Servicer, hereby makes, and any Successor
Servicer by its appointment hereunder shall make the following representations
and warranties on which Trustee has relied in accepting the Receivables in trust
and in authenticating the Certificates issued on the Initial Closing Date:
(a) Organization and Good Standing. Such Servicer or Successor
Servicer, as applicable, is duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has full corporate
power, authority and legal right to own its properties and conduct its premium
finance loan business as such properties are presently owned and as such
business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement.
(b) Due Qualification. Such Servicer or Successor Servicer, as
applicable, is qualified to do business as a foreign corporation in good
standing in any state where the conduct of its business (including the servicing
of the Receivables as required by this Agreement) would require such
qualification and has obtained all licenses and approvals (including any
licenses or approvals under the Licensing Laws of a Permitted State) necessary
in order to service the Receivables as required under Federal, state or local
law. If after the Initial Closing Date either such Servicer or Successor
Servicer, as applicable, shall be required by any Requirement of Law (including
any Licensing Law of a Permitted State) to so qualify or register or obtain such
license or approval, then it shall do so as soon as possible.
(c) Due Authorization. The execution, delivery and performance of this
Agreement have been duly authorized by such Servicer or Successor Servicer, as
applicable, by all necessary corporate action on the part of such Servicer or
Successor Servicer, as applicable, and this Agreement will remain, from the time
of its execution, an official record of each of such Servicer or Successor
Servicer, as applicable.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of such Servicer or Successor Servicer, as applicable,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereinafter in effect, affecting the enforcement of
creditors' rights in general and the rights of creditors of national banking
associations and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity).
(e) No Violation. The execution and delivery of this Agreement by such
Servicer or Successor Servicer, as applicable, and the performance of the
transactions contemplated by this Agreement and the fulfillment of the terms
hereof applicable to such Servicer or Successor Servicer, as applicable, will
not conflict with, violate, result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse of time or
both) a default under, any Requirement of Law applicable to such Servicer or
Successor Servicer, as applicable, or any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which such Servicer or Successor
Servicer, as applicable, is a party or by which it is bound.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of such Servicer or Successor Servicer, as applicable,
threatened against such Servicer or Successor Servicer, as applicable, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this Agreement,
seeking any determination or ruling that, in the reasonable judgment of
Servicer, would materially and adversely affect the performance by such Servicer
or Successor Servicer, as applicable, of their obligations under this Agreement,
or seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of this Agreement.
(g) Compliance with Requirements of Law. Such Servicer or Successor
Servicer, as applicable, shall duly satisfy all obligations on its part to be
fulfilled under or in connection with each Receivable and the related Account,
will maintain in effect all qualifications required under Requirements of Law in
order to service properly each Receivable and the related Account and will
comply in all material respects with all other Requirements of Law in connection
with servicing each Receivable and the related Account the failure to comply
with which would have a material adverse effect on the Holders or any Credit
Enhancement Provider.
SECTION 3.4 Reports and Records for Trustee. (a) Daily Reports. On
each Business Day, Servicer, with prior notice, shall prepare and make available
at the office of Servicer for inspection by Trustee a record setting forth (i)
the aggregate amount of Collections processed by Servicer on the preceding
Business Day and (ii) the aggregate amount of Receivables as of the close of
business on the preceding Business Day; provided that Servicer shall be required
to so report the information provided in clause (i) only at such times as
Servicer is required to make deposits, payments and withdrawals on a daily
basis, rather than on each Transfer Date, as permitted in Section 4.3(a).
(b) Monthly Servicer's Certificate. Unless otherwise stated in the
related Supplement with respect to any Series, on each Determination Date
Servicer shall forward, as provided in Section 13.5, to Trustee, the Paying
Agent, any Credit Enhancement Provider and each Rating Agency, a certificate of
a Servicing Officer in the form of Exhibit B (which includes the Schedule
thereto specified as such in each Supplement) as to such matters as are set
forth in Exhibit B.
SECTION 3.5 Annual Servicer's Certificate. On or before March 31 of
each calendar year, beginning with March 31, 1997, Servicer will deliver, as
provided in Section 13.5, to Trustee, any Credit Enhancement Provider and each
Rating Agency, an Officer's Certificate substantially in the form of Exhibit C
stating that (a) a review of the activities of Servicer during the twelve-month
period ending on December 31 of the immediately prior calendar year, or for the
initial period, from the Closing Date until December 31, 1996, and of its
performance under this Agreement was made under the supervision of the officer
signing such certificate and (b) to the best of such officer's knowledge, based
on such review, Servicer has fully performed all its obligations under this
Agreement throughout such period, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. In the event that Back-up Servicer
becomes Servicer, the Officer's Certificate that such Successor Servicer
delivers to the Trustee pursuant to this Section 3.5, which relates to the year
in which Back-up Servicer became Servicer, will only relate to the portion of
the year that Back-up Servicer acted as Servicer. A copy of such certificate may
be obtained by any Investor Holder by a request in writing to Trustee addressed
to the Corporate Trust Office.
SECTION 3.6 Annual Independent Accountants' Servicing Report. (a) On
or before March 31 of each calendar year, beginning with March 31, 1997,
Servicer shall cause a firm of nationally recognized independent certified
public accountants (who may also render other services to Servicer or
Transferor) to furnish, as provided in Section 13.5, a report to Trustee, any
Credit Enhancement Provider and each Rating Agency, to the effect that such firm
has examined certain documents and records relating to the servicing of
Receivables under this Agreement, compared the information contained in
Servicer's certificates delivered pursuant to this Agreement during the period
covered by such report with such documents and records and that, on the basis of
such examination, such firm is of the opinion (assuming the accuracy of any
reports generated by Servicer's third party agents) that such servicing was
conducted in compliance with this Agreement during the period covered by such
report (which shall be the prior calendar year, or the portion thereof falling
after the Initial Closing Date), except for such exceptions, errors or
irregularities as such firm shall believe to be immaterial to the financial
statements of the Servicer and such other exceptions, errors or irregularities
as shall be set forth in such reports. Unless otherwise provided with respect to
any Series in the related Supplement, a copy of such report may be obtained by
any Investor Holder by a request in writing to Trustee addressed to the
Corporate Trust Office.
(b) On or before March 31 of each calendar year, beginning with March
31, 1997, Servicer shall cause a firm of nationally recognized independent
certified public accountants (who may also render other services to Servicer or
Transferor) to furnish, as provided in Section 13.5, a report, prepared using
generally accepted auditing standards, to Trustee and each Rating Agency to the
effect that they have compared the mathematical calculations of each amount set
forth in the monthly certificates forwarded by Servicer pursuant to subsection
3.4(b) during the period covered by such report (which shall be the prior
calendar year, or the portion thereof falling after the Initial Closing Date),
with Servicer's computer reports which were the source of such amounts and that
on the basis of such comparison, such firm is of the opinion that such amounts
are in agreement, except for such exceptions as it believes to be immaterial to
the financial statements of the Servicer and such other exceptions as shall be
set forth in such report. A copy of such report may be obtained by any Investor
Holder by a request in writing to Trustee addressed to the Corporate Trust
Office.
SECTION 3.7 Tax Treatment. Transferor has structured this Agreement
and the Investor Certificates with the intention that the Investor Certificates
will qualify under applicable Federal, state, local and foreign tax law as
indebtedness. Transferor, Servicer, each Investor Holder, and each Certificate
Owner, agree to treat and to take no action inconsistent with the treatment of
the Investor Certificates (or beneficial interest therein) as indebtedness for
purposes of Federal, state, local and foreign income or franchise taxes and any
other tax imposed on or measured by income. Each Investor Holder, by acceptance
of its Certificate and each Certificate Owner, by acquisition of a beneficial
interest in a Certificate, agree to be bound by the provisions of this Section
3.7. Nothing contained in the foregoing or elsewhere in this Agreement shall,
however, be deemed to prohibit Transferor to make any election that may in the
future be available to it under the Internal Revenue Code to have the Trust or
any Series treated as a "financial asset securitization investment trust" (or
similar entity), so long as prior to the effectiveness of that election
Transferor delivers to Trustee an Opinion of Counsel to the effect that the
election (a) will not cause the Trust to be classified, for Federal income tax
purposes, as an association (or publicly traded partnership) taxable as a
corporation and (b) will not cause or constitute an event in which gain or loss
would be recognized by any Investor Holder.
SECTION 3.8 Notices to Transferor. Servicer or any Successor Servicer
pursuant to Section 10.2 shall deliver or make available to Transferor each
certificate and report required to be prepared, forwarded or delivered
thereafter pursuant to Sections 3.4, 3.5 and 3.6.
SECTION 3.9 Reports to the Commission. Servicer shall, on behalf of
the Trust, cause to be filed with the Securities and Exchange Commission any
periodic reports required to be filed under the provisions of the Securities
Exchange Act of 1934 and the rules and regulations of the Securities and
Exchange Commission thereunder. Transferor shall, at the expense of Servicer,
cooperate in any reasonable request of Servicer in connection with such filings.
SECTION 3.10 Covenants of Servicer. (a)(i) The Servicer shall
maintain, with respect to each Receivable originated on or before February 1,
1997, each Originator's first priority perfected security interest in the
Unearned Premiums securing such Receivables and with respect to each Receivable
originated after February 1, 1997, the Trust's first priority perfected security
interest in the Unearned Premiums securing such Receivables, (ii) Servicer shall
not impair the rights of the Certificateholders in any Receivable, (iii)
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and shall follow such collection procedures as it follows with respect to
all comparable insurance premium finance loans that it services and (iv)
Servicer will not voluntarily increase or decrease the number or amount of any
scheduled payment, or the principal balance of a Receivable or the annual
percentage rate of a Receivable, or extend, rewrite or otherwise modify the
payment terms; provided, however, Servicer may (i) extend the term of any
Receivable, but not past the maturity date of the related insurance policies and
(ii) change the installment due date in the related Premium Finance Agreement
one time during the term of a Receivable, provided that such a change does not
result in extending the maturity of such Receivable for more than 30 days or
past the maturity date of the related insurance policies.
(b) Removal After Cure Period. In the event of a breach of any of the
covenants set forth in (i) subsections 3.10(a)(ii), (iii) and (iv) and as a
result of such breach the related Account becomes a Defaulted Account or the
Trust's rights in, to or under such Receivable in such Account or its proceeds
are impaired or the proceeds of such Receivable in such Account are not
available for any reason to the Trust free and clear of any Lien, then, upon the
expiration of 60 days (or such longer period as may be agreed to by the Trustee
in its sole discretion, but in no event later than 120 days) from the earlier to
occur of the discovery of any such event by either Transferor or Servicer, or
receipt by Servicer of written notice of any such event given by Trustee or (ii)
subsection 3.10(a)(i), then, upon the expiration of 15 days from the earlier to
occur of the discovery of any such event by either Transferor or Servicer, or
receipt by Servicer of written notice of any such event given by Trustee, then
each Receivable arising under the Account under which such Receivable arises
shall be removed from the Trust on the terms and conditions set forth in Section
3.10(c).
(c) Procedures for Removal. When the provisions of subsection 3.10(b)
require removal of a Receivable, Servicer shall accept assignment of Receivables
arising under an Account (a "Servicer Ineligible Account" and together with any
Transferor Ineligible Accounts, "Ineligible Account") by depositing into the
Collection Account on the applicable Determination Date an amount equal to the
principal portion of each Receivable arising under such Servicer Ineligible
Account and deducting such amount from the Principal Receivables in the Trust
(to the extent previously included therein). Deposits of any amounts into the
Collection Account pursuant to this subsection 3.10(c) shall be treated for all
purposes of this Agreement as Principal Collections. Upon the removal of
Receivables arising under such Servicer Ineligible Account (and the mailing of
any deposit required above), the Trust shall automatically and without further
action be deemed to transfer, assign, and otherwise convey to Servicer, without
recourse, representation or warranty, all the right, title and interest of the
Trust in and to each Receivable arising under such Servicer Ineligible Account,
all monies due or to become due with respect to each Receivable arising under
such Servicer Ineligible Account and all proceeds of such Servicer Ineligible
Receivable and Recoveries relating to such Servicer Ineligible Receivable. Such
reassigned Receivables shall be treated by the Trust as collected in full as of
the date on which it was transferred. Trustee shall execute such documents and
instruments of transfer or assignment and take other actions as shall reasonably
be requested by Servicer to evidence the conveyance of each Receivable arising
under such Servicer Ineligible Account pursuant to this subsection 3.10(c). The
obligation of Servicer set forth in this subsection 3.10(c), shall constitute
the sole remedy respecting any breach set forth in the above-referenced
subsections with respect to such Receivable available to the Holders or Trustee
on behalf of the Holders.
SECTION 3.11 Representations and Warranties of Back-up Servicer. PFS,
as initial Back-up Servicer, hereby makes, and any successor Back-up Servicer by
its appointment hereunder shall make the following representations and
warranties on which Trustee has relied in accepting the Receivables in trust and
in authenticating the Certificates issued on the Initial Closing Date:
(a) Organization and Good Standing. The Back-up Servicer is duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and has full corporate power, authority and legal right to own
its properties and conduct its premium finance loan business as such properties
are presently owned and as such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement.
(b) Due Qualification. The Back-up Servicer is qualified to do
business as a foreign corporation in good standing in any state where the
conduct of its business (including the servicing of insurance premium finance
contracts in the Permitted States) would require such qualification and has
obtained all licenses and approvals (including any licensing or approvals under
the Licensing Laws of a Permitted State) necessary in order to service the
Receivables as required under Federal, state or local law. If the Back-up
Servicer shall be required by any Requirement of Law (including any Licensing
Law of a Permitted State) to so qualify or register or obtain such license or
approval, then it shall do so as soon as possible.
(c) Due Authorization. The execution, delivery and performance of this
Agreement has been duly authorized by Back-up Servicer by all necessary
corporate action on the part of Back-up Servicer and this Agreement will remain,
from the time of its execution, an official record of Back-up Servicer.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of Back-up Servicer, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereinafter
in effect, affecting the enforcement of creditors' rights in general and the
rights of creditors of national banking associations and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(e) No Violation. The execution and delivery of this Agreement by
Back-up Servicer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof applicable to Back-up
Servicer, will not conflict with, violate, result in any breach of any of the
material terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under, any Requirement of Law applicable to Back-up
Servicer, or any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which Back-up Servicer, is a party or by which it is bound.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of Back-up Servicer, threatened against Back-up
Servicer, before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, seeking any determination or ruling that, in the reasonable judgment
of Back-up Servicer, would materially and adversely affect the performance by
Back-up Servicer, of its obligations under this Agreement, or seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement.
ARTICLE IV RIGHTS OF HOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS
SECTION 4.1 Rights of Holders. Each Series of Investor Certificates
shall represent Undivided Interests in the Trust, including the benefits of any
Credit Enhancement issued with respect to such Series and the right to receive
the Collections and other amounts at the times and in the amounts specified in
this Article IV to be deposited in the Investor Accounts and any other Series
Account (if so specified in the related Supplement) or to be paid to the
Investor Holders of such Series. The aggregate interest represented by such
Certificates in the Principal Receivables at any time shall not exceed an amount
equal to the Investor Interest at such time. Transferor shall own the remaining
undivided interest in the Trust, including the right to receive the Collections
and other amounts at the times and in the amounts specified in this Article IV
to be paid on account of the Transferor Interest. Transferor' s aggregate
interest in the Principal Receivables at any time shall not exceed the
Transferor Interest at such time and Transferor shall not have any interest in
the Investor Accounts, except as provided in this Agreement, or the benefits of
any Credit Enhancement issued with respect to any Series.
SECTION 4.2 Establishment of Accounts. (a) The Collection Account.
Servicer, for the benefit of the Holders, shall establish and maintain in the
name of Trustee, on behalf of the Trust, a non-interest bearing segregated
account (the "Collection Account") bearing a designation clearly indicating that
the funds deposited therein are held in trust for the benefit of the Holders, or
shall cause such Collection Account to be established and maintained, with an
office branch of (i) a depository institution or trust company (which may
include Trustee, Servicer or an Affiliate of Servicer) organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia and with deposit insurance provided by BIF or SAIF; provided that at
all times the certificates of deposit, short-term deposits or commercial paper
or the long-term unsecured debt obligations (other than such obligation whose
rating is based on collateral or on the credit of a Person other than such
institution or trust company) of such depository institution or trust company
shall have a credit rating from Moody's and Standard & Poor's of at least P-1
and A-1, respectively, in the case of the certificates of deposit, short-term
deposits or commercial paper, or a rating from Moody's of at least Aa3 and from
Standard & Poor's of at least AA- in the case of the long-term unsecured debt
obligations, or (ii) a depository institution, which may include Trustee, which
is acceptable to each Rating Agency (any of the foregoing being a "Qualified
Institution"); provided further that upon the insolvency of Servicer, the
Collection Account shall not be permitted to be maintained with Servicer.
Pursuant to authority granted to it pursuant to subsection 3.1(b), Servicer
shall have the revocable power to withdraw funds from the Collection Account for
the purposes of carrying out its duties hereunder.
(b) The Finance Charge and Excess Funding Accounts. Trustee, for the
benefit of the Investor Holders, shall establish and maintain with Trustee in
the name of the Trust two segregated trust accounts (the "Finance Charge
Account" and the "Excess Funding Account," respectively) bearing a designation
clearly indicating that the funds therein are held for the benefit of the
Investor Holders, or shall cause such Finance Charge Account or Excess Funding
Account to be established and maintained with an office or branch of a Qualified
Institution. Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Finance Charge Account and the Excess Funding
Account and in all proceeds thereof. The Finance Charge Account and the Excess
Funding Account shall be under the sole dominion and control of Trustee for the
benefit of the Investor Holders. Pursuant to authority granted to it hereunder,
Servicer shall have the revocable power to instruct Trustee to withdraw funds
from the Finance Charge Account and to withdraw or instruct the Person
maintaining the Excess Funding Account to withdraw, as the case may be, funds
from the Excess Funding Account, in each case for the purpose of carrying out
Servicer's duties hereunder. Trustee at all times shall maintain accurate
records reflecting each transaction in the Finance Charge Account and, if
maintained with Trustee, the Excess Funding Account, and that funds held therein
shall at all times be held in trust for the benefit of the Investor Holders.
(c) The Distribution Account. Trustee, for the benefit of the Investor
Holders, shall cause to be established and maintained in the name of the Trust,
a non-interest bearing segregated demand deposit trust account (the
"Distribution Account") bearing a designation clearly indicating that the funds
deposited therein are held in trust for the benefit of the Investor Holders, or
shall cause such Distribution Account to be established and maintained with an
office or branch of a Qualified Institution (other than Transferor). Trustee
shall possess all right, title and interest in all funds on deposit from time to
time in the Distribution Account and in all proceeds thereof. The Distribution
Account shall be under the sole dominion and control of Trustee for the benefit
of the Investor Holders.
(d) Series Accounts. If so provided in the related Supplement,
Trustee, for the benefit of the Investor Holders, shall cause to be established
and maintained in the name of the Trust, one or more Series Accounts. Each such
Series Account shall bear a designation clearly indicating that the funds
deposited therein are held for the benefit of the Investor Holders of such
Series. Each such Series Account will be a trust account, if so provided in the
related Supplement and will have the other features and be applied as set forth
in the related Supplement.
(e) Administration of the Finance Charge and Excess Funding Accounts.
Funds on deposit in the Excess Funding Account and the Finance Charge Account
shall at all times be invested by Trustee at the written direction of Servicer
in Permitted Investments. Any such investment shall mature and such funds shall
be available for withdrawal on or prior to the Transfer Date related to the
Monthly Period in which such funds are processed for collection, or if so
specified in the related Supplement, immediately preceding a Distribution Date.
Trustee shall maintain for the benefit of the Investor Holders possession of the
negotiable instruments or securities evidencing the Permitted Investments
described in clause (a) of the definition thereof from the time of purchase
thereof until the time of sale or maturity; provided, that no such investment
shall be disposed of prior to its maturity date. At the end of each month, all
interest and earnings (net of losses and investment expenses) on funds on
deposit in the Excess Funding Account, the Finance Charge Account and, unless
otherwise specified in the related Supplement, each Series Account shall be
deposited by Trustee in a separate deposit account with a Qualified Institution
in the name of Servicer, or a Person designated in writing by Servicer, which
shall not constitute a part of the Trust, or shall otherwise be turned over by
Trustee to Servicer not less frequently than monthly. Subject to the
restrictions set forth above, Servicer, or a Person designated in writing by
Servicer, of which Trustee shall have received written notification thereof,
shall have the authority to instruct Trustee with respect to the investment of
funds on deposit in the Excess Funding Account and the Finance Charge Account.
For purposes of determining the availability of funds or the balances in the
Finance Charge Account and the Excess Funding Account for any reason under this
Agreement, all investment earnings on such funds shall be deemed not to be
available or on deposit.
SECTION 4.3 Collections and Allocations. (a) Collections. Except as
provided below, Servicer shall deposit all Collections in the Collection Account
as promptly as possible after the Date of Processing of such Collections, but in
no event later than the second Business Day following such Date of Processing.
Servicer shall allocate such amounts to each Series of Investor
Certificates and to the Holder of the Transferor Interest in accordance with
this Article IV and shall withdraw the required amounts from the Collection
Account or pay such amounts to the Holder of the Transferor Interest in
accordance with this Article IV, in both cases as modified by any Supplement.
Servicer shall make such deposits or payments on the date indicated therein by
wire transfer or as otherwise provided in the Supplement for any Series of
Certificates with respect to such Series.
Notwithstanding anything in this Agreement to the contrary, for so
long as, and only so long as, the Originators shall remain Servicer hereunder,
and (a) (i) Servicer provides to Trustee a letter of credit or other credit
enhancement covering collection risk of Servicer acceptable to the Rating
Agencies, and (ii) Transferor shall not have received a notice from any Rating
Agency that reliance on such a letter of credit or other credit enhancement
would result in the lowering of such Rating Agency's then-existing rating of the
Investor Certificates, or (b) the certificate of deposit or unsecured short-term
debt obligations of Transferor are rated P-1 by Moody's (or, if neither such
certificates of deposit nor such obligations of Transferor are rated by Moody's,
and so long as Moody's has not notified Servicer that reliance upon Mellon Bank
Corporation's ratings for this purpose would result in a lowering of Moody's
then-existing rating of the Investor Certificates, then the counterparty risk or
long-term unsecured debt of Mellon Bank Corporation are rated at least A2 by
Moody's), at least A-1 by Standard & Poor's and insured by BIF or SAIF, Servicer
need not deposit Collections into the Collection Account, the Excess Funding
Account, the Finance Charge Account or any Series Account, as provided in any
Supplement, or make payments to Transferor, on or before the second Business Day
following the Date of Processing of such Receivables as provided in this Article
IV, but may make such deposits, payments and withdrawals on each Transfer Date
or as specified in the related Supplement in an amount equal to the net amount
of such deposits, payments and withdrawals which would have been made but for
the provisions of this paragraph.
Notwithstanding anything else in this Agreement to the contrary, with
respect to any Monthly Period, whether Servicer is required to make quarterly,
monthly or daily deposits into the Collection Account, the Finance Charge
Account, the Excess Funding Account or any Series Account, as provided in any
Supplement, (i) Servicer will only be required to deposit Collections into the
Collection Account, the Finance Charge Account, the Excess Funding Account or
any Series Account up to the required amount to be deposited into any such
deposit account or, without duplication, distributed on or prior to the related
Distribution Date to Investor Holders or to any Credit Enhancement Provider
pursuant to the terms of any Supplement or agreement relating to such Credit
Enhancement, and (ii) if at any time prior to such Distribution Date the amount
of Collections deposited in the Collection Account exceeds the amount required
to be deposited pursuant to clause (i), Servicer may withdraw the excess from
the Collection Account.
(b) Allocations for Transferor Interest. Throughout the existence of
the Trust, unless otherwise stated in any Supplement, Servicer shall allocate to
Transferor an amount equal to the product of (A) the applicable Transferor
Percentage and (B) the aggregate amount of Collections allocated to Principal
Receivables and Finance Charge Receivables in respect of each Monthly Period.
Notwithstanding anything in this Agreement to the contrary, unless otherwise
stated in any Supplement, Servicer need not deposit this amount or any other
amounts so allocated to Transferor pursuant to any Supplement into the
Collection Account and shall pay, or be deemed to pay, such amounts as collected
to Transferor.
SECTION 4.4 Shared Principal Collections. On each Distribution Date,
(a) Servicer shall allocate Shared Principal Collections to each Principal
Sharing Series, pro rata, in proportion to the Principal Shortfalls, if any,
with respect to each such Series, and any remainder may, at the option of
Transferor, be applied as principal with respect to any Variable Interest and
(b) Servicer shall withdraw from the Collection Account or applicable Series
Account and pay to Transferor an amount equal to the excess, if any, of (x) the
aggregate amount for all outstanding Series of Collections of Principal
Receivables which the related Supplements or this Agreement specify are to be
treated as "Shared Principal Collections" for such Distribution Date over (y)
the aggregate amount for all outstanding Principal Sharing Series which the
related Supplements specify are "Principal Shortfalls" for such Distribution
Date; provided that, to the extent that, on any Distribution Date the Transferor
Interest (determined after giving effect to any transfer of Principal
Receivables to the Trust on such date) is less than or equal to zero, Servicer
shall not distribute such Shared Principal Collections to Transferor, but shall
deposit such funds in the Excess Funding Account.
SECTION 4.5 Excess Finance Charge Collections. On each Distribution
Date, (a) for each Group, Servicer shall apply the aggregate amount for all
outstanding Series in such Group of the amounts which the related Supplements
specify are to be treated as "Excess Finance Charge Collections" for such
Distribution Date to each Series in such Group, pro rata, in proportion to the
Finance Charge Shortfalls, if any, with respect to each such Series, and (b)
Servicer shall withdraw (or shall instruct Trustee to withdraw) from the
Collection Account and pay to Transferor an amount equal to the excess, if any,
of (x) the aggregate amount for all outstanding Series in a Group of the amounts
which the related Supplements specify are to be treated as "Excess Finance
Charge Collections" for such Distribution Date over (y) the aggregate amount for
all outstanding Series in such Group which the related Supplements specify are
"Finance Charge Shortfalls," for such Distribution Date; provided that the
sharing of Excess Finance Charge Collections among Series in a Group will
continue only until such time, if any, at which Transferor shall deliver to
Trustee an Officer's Certificate to the effect that, in the reasonable belief of
Transferor, the continued sharing of Excess Finance Charge Collections among
Series in any Group would have adverse regulatory implications with respect to
Transferor. Following the delivery by Transferor of such an Officer's
Certificate to Trustee, there will not be any further sharing of Excess Finance
Charge Collections among Series in any Group.
[THE REMAINDER OF ARTICLE IV IS RESERVED AND
SHALL BE SPECIFIED IN ANY SUPPLEMENT WITH
RESPECT TO ANY SERIES.]
ARTICLE V [ARTICLE V IS RESERVED AND SHALL BE SPECIFIED
IN THE SUPPLEMENT WITH RESPECT TO ANY SERIES.]
ARTICLE VI THE CERTIFICATES
SECTION 6.1 The Certificates. Subject to Sections 6.10 and 6.13, the
Investor Certificates of each Series and any Class thereof may be issued in
bearer form (the "Bearer Certificates") with attached interest coupons and a
special coupon (collectively, the "Coupons") or in fully registered form (the
"Registered Certificates"), and shall be substantially in the form of the
exhibits with respect thereto attached to the related Supplement. The Investor
Certificates shall, upon issue pursuant hereto or to Section 6.9 or Section
6.10, be executed and delivered by Transferor to Trustee for authentication and
redelivery as provided in Sections 2.1 and 6.2. Any Investor Certificate shall
be issuable in a minimum denomination of $1,000 Undivided Interest and integral
multiples thereof, unless otherwise specified in any Supplement. Each
Certificate shall be executed by manual or facsimile signature on behalf of
Transferor by its President or any Vice President. Certificates bearing the
manual or facsimile signature of the individual who was, at the time when such
signature was affixed, authorized to sign on behalf of Transferor or Trustee
shall not be rendered invalid, notwithstanding that such individual has ceased
to be so authorized prior to the authentication and delivery of such
Certificates or does not hold such office at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein, executed by or on
behalf of Trustee by the manual signature of a duly authorized signatory, and
such certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication
except Bearer Certificates which shall be dated the applicable Issuance Date as
provided in the related Supplement.
SECTION 6.2 Authentication of Certificates. On the Initial Closing
Date, Trustee shall authenticate and deliver the initial Series of Investor
Certificates, upon the written order of Transferor, to the underwriters for the
sale of the Book-Entry Certificates evidenced by such Investor Certificates, and
against payment to Transferor of the Initial Investor Interest (net of any
purchase or underwriting discount). Upon the receipt of such payment and the
issuance of the Investor Certificates, such Investor Certificates shall be fully
paid and nonassessable. Upon an Issuance as provided in Section 6.9 and the
satisfaction of certain other conditions specified therein, Trustee shall
authenticate and deliver the Investor Certificates of additional Series (with
the designation provided in the related Supplement), upon the order of
Transferor, to the Persons designated in such Supplement. Upon the order of
Transferor, the Certificates of any Series shall be duly authenticated by or on
behalf of Trustee, in authorized denominations. If specified in the related
Supplement for any Series, Trustee shall authenticate and deliver outside the
United States the Global Certificate that is issued upon original issuance
thereof, upon the written order of Transferor, to the Depository against payment
of the purchase price therefor. If specified in the related Supplement for any
Series, Trustee shall authenticate Book-Entry Certificates that are issued upon
original issuance thereof, upon the written order of Transferor, to a Clearing
Agency or its nominee as provided in Section 6.10 against payment of the
purchase price thereof.
SECTION 6.3 Registration of Transfer and Exchange of Certificates. (a)
Trustee shall cause to be kept at the office or agency to be maintained by a
transfer agent and registrar (the "Transfer Agent and Registrar"), in accordance
with the provisions of Section 11.16, a register (the "Certificate Register") in
which, subject to such reasonable regulations as it may prescribe, the Transfer
Agent and Registrar shall provide for the registration of the Investor
Certificates of each Series (unless otherwise provided in the related
Supplement) and of transfers and exchanges of the Investor Certificates as
herein provided. Trustee is the initial Transfer Agent and Registrar. If any
Investor Certificate is issued as a Global Certificate, Trustee may, or if and
so long as any Series of Investor Certificates are listed on the Luxembourg
Stock Exchange and such exchange shall so require, Trustee shall appoint a
co-transfer agent and co-registrar in Luxembourg or another European city. Any
reference in this Agreement to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context otherwise requires.
Trustee shall be permitted to resign as Transfer Agent and Registrar upon 30
days' written notice to Servicer. In the event that Trustee shall no longer be
the Transfer Agent and Registrar, Trustee shall appoint a successor Transfer
Agent and Registrar.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Transfer Agent and Registrar, Transferor shall execute,
subject to the provisions of subsection 6.3(c), and Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Certificates in authorized denominations of like aggregate Undivided
Interests; provided, that the provisions of this paragraph shall not apply to
Bearer Certificates.
At the option of an Investor Holder, Investor Certificates may be
exchanged for other Investor Certificates of the same Series in authorized
denominations of like aggregate Undivided Interests, upon surrender of the
Investor Certificates to be exchanged at any such office or agency. At the
option of any Holder of Registered Certificates, Registered Certificates may be
exchanged for other Registered Certificates of the same Series in authorized
denominations of like aggregate Undivided Interests in the Trust, upon surrender
of the Registered Certificates to be exchanged at any office or agency of the
Transfer Agent and Registrar maintained for such purpose. At the option of a
Holder of a Bearer Certificate, subject to applicable laws and regulations
(including the Bearer Rules), Bearer Certificates may be exchanged for other
Bearer Certificates or Registered Certificates of the same Series in authorized
denominations of like aggregate Undivided Interests in the Trust, in the manner
specified in the Supplement for such Series, upon surrender of the Bearer
Certificates to be exchanged at an office or agency of the Transfer Agent and
Registrar located outside the United States. Each Bearer Certificate surrendered
pursuant to this Section 6.3 shall have attached thereto (or be accompanied by)
all unmatured Coupons, provided that any Bearer Certificate so surrendered after
the close of business on the Record Date preceding the relevant Distribution
Date after the related Series Termination Date need not have attached the
Coupons relating to such Distribution Date.
Whenever any Investor Certificates of any Series are so surrendered
for exchange, Transferor shall execute, and Trustee shall authenticate and
(unless the Transfer Agent and Registrar is different than Trustee, in which
case the Transfer Agent and Registrar shall) deliver, the Investor Certificates
of such Series which the Holder making the exchange is entitled to receive.
Every Investor Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in a form
satisfactory to Trustee and the Transfer Agent and Registrar duly executed by
the Holder thereof or his attorney-in-fact duly authorized in writing.
The preceding provisions of this Section 6.3 notwithstanding, Trustee
or the Transfer Agent and Registrar, as the case may be, shall not be required
to register the transfer of or exchange any Investor Certificate of any Series
for a period of 15 days preceding the due date for any payment with respect to
the Investor Certificates of such Series.
Unless otherwise provided in the related Supplement, no service charge
shall be made for any registration of transfer or exchange of Certificates, but
the Transfer Agent and Registrar may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
All Investor Certificates (together with any Coupons attached to
Bearer Certificates) surrendered for registration of transfer and exchange shall
be canceled by the Transfer Agent and Registrar and disposed of in a manner
satisfactory to Trustee. Trustee shall cancel and destroy the Global
Certificates upon its exchange in full for Definitive Certificates and shall
deliver a certificate of destruction to Transferor. Such certificate shall also
state that a certificate or certificates of each Foreign Clearing Agency to the
effect referred to in Section 6.13 was received with respect to each portion of
the Global Certificate exchanged for Definitive Certificates.
Transferor shall execute and deliver to Trustee or the Transfer Agent
and Registrar, as applicable, Bearer Certificates and Registered Certificates in
such amounts and at such times as are necessary to enable Trustee to fulfill its
responsibilities under this Agreement and the Certificates.
(b) Except as provided in Section 6.9 or 7.2 or this subsection
6.3(b), Transferor shall not transfer the Transferor Interest or any interest
therein. Transferor may from time to time transfer a portion of the Transferor
Interest by causing the issuance of one or more Certificates (each a
"Supplemental Certificate"), the terms of which shall be defined in a Supplement
(which Supplement shall be subject to Section 13.1(a) to the extent that it
amends any of the terms of this Agreement), to be delivered to or upon the order
of Transferor (or the Holder of a Supplemental Certificate, in the case of the
transfer or exchange thereof, as provided below), upon satisfaction of the
following conditions:
(i) the Transferor Interest shall not be less than the Minimum
Transferor Interest, in each case as of the date of, and after giving
effect to, such exchange;
(ii) the Rating Agency Condition shall have been satisfied
with respect to such exchange (or transfer or exchange as provided
below); and
(iii) Transferor shall have delivered to Trustee and each
Rating Agency a Tax Opinion, dated the date of such exchange (or
transfer or exchange as provided below), with respect thereto.
Any Supplemental Certificate may be transferred or exchanged only upon
satisfaction of the conditions set forth in clauses (ii) and (iii).
(c) Unless otherwise provided in the related Supplement, registration
of transfer of Registered Certificates containing a legend relating to the
restrictions on transfer of such Registered Certificates (which legend shall be
set forth in the Supplement relating to such Investor Certificates) shall be
effected only if the conditions set forth in such related Supplement are
satisfied.
Whenever a Registered Certificate containing the legend set forth in
the related Supplement is presented to the Transfer Agent and Registrar for
registration of transfer, the Transfer Agent and Registrar shall promptly seek
instructions from Servicer (or Transferor, if the Back-up Servicer is Servicer)
regarding such transfer. The Transfer Agent, Registrar and Trustee shall be
entitled to receive written instructions signed by a Servicing Officer (or an
officer of Transferor, if the Back-up Servicer is Servicer) prior to registering
any such transfer or authenticating new Registered Certificates, as the case may
be. Servicer shall indemnify the Transfer Agent and Registrar and Trustee and
hold each of them harmless against any loss, liability or expense incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by them in reliance on any such written
instructions furnished pursuant to this subsection 6.3(c).
(d) The Transfer Agent and Registrar will maintain at its expense in
the Borough of Manhattan, the City of New York (and subject to this Section 6.3,
if specified in the related Supplement for any Series, any other city designated
in such Supplement) an office or offices or any agency or agencies where
Investor Certificates of such Series may be surrendered for registration of
transfer or exchange.
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate (together, in the case of Bearer Certificates, with
all unmatured Coupons, if any, appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer Agent and Registrar and
Trustee such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to Trustee that such Certificate
has been acquired by a bona fide purchaser, Transferor shall execute and Trustee
shall authenticate and (unless the Transfer Agent and Registrar is different
from Trustee, in which case the Transfer Agent and Registrar shall) deliver (in
compliance with applicable law), in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and aggregate Undivided Interest. In connection with the issuance of any
new Certificate under this Section 6.4, Trustee or the Transfer Agent and
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of Trustee and the Transfer Agent and
Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section 6.4 shall constitute complete and indefeasible evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
SECTION 6.5 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the Person
in whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Article V (as described in
any Supplement) and for all other purposes whatsoever, and neither Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary; provided that in determining
whether the holders of Investor Certificates evidencing the requisite Undivided
Interests have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Investor Certificates owned by Transferor, Servicer
or any Affiliate thereof shall be disregarded and deemed not to be outstanding,
except that, in determining whether Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Investor Certificates which a Responsible Officer knows to be so owned
shall be so disregarded. Investor Certificates so owned that have been pledged
in good faith shall not be disregarded as outstanding, if the pledgee
establishes to the satisfaction of Trustee the pledgee's right so to act with
respect to such Investor Certificates and that the pledgee is not Transferor,
Servicer or an Affiliate thereof.
In the case of a Bearer Certificate, Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the bearer
of a Bearer Certificate or Coupon as the owner of such Bearer Certificate or
Coupon for the purpose of receiving distributions pursuant to Article IV and
Article XII and for all other purposes whatsoever, and neither Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary.
SECTION 6.6 Appointment of Paying Agent. (a) The Paying Agent shall
make distributions to Investor Holders from the appropriate account or accounts
maintained for the benefit of Holders as specified in this Agreement or the
related Supplement for any Series pursuant to Articles IV and V. Any Paying
Agent shall have the revocable power to withdraw funds from such appropriate
account or accounts for the purpose of making distributions referred to above.
Trustee (or Servicer (or Transferor, if Back-up Servicer is Servicer) if Trustee
is the Paying Agent) may revoke such power and remove the Paying Agent, if
Trustee (or Servicer (or Transferor, if Back-up Servicer is Servicer) if Trustee
is the Paying Agent) determines in its sole discretion that the Paying Agent
shall have failed to perform its obligations under this Agreement in any
material respect or for other good cause. Trustee (or Servicer (or Transferor,
if Back-up Servicer is Servicer) if Trustee is the Paying Agent) shall notify
each Rating Agency of the removal of any Paying Agent. The Paying Agent, unless
the Supplement with respect to any Series states otherwise, shall initially be
Trustee. If any form of Investor Certificate is issued as a Global Certificate,
or if and so long as any Series of Investor Certificates are listed on the
Luxembourg Stock Exchange and such exchange shall so require, Trustee shall
appoint a co-paying agent in Luxembourg or another European city. Trustee shall
be permitted to resign as Paying Agent upon 30 days' written notice to Servicer.
In the event that Trustee shall no longer be the Paying Agent, Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The provisions of Sections 11.1, 11.2 and 11.3 shall apply to Trustee
also in its role as Paying Agent, for so long as Trustee shall act as Paying
Agent. Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
If specified in the related Supplement for any Series, so long as the
Investor Certificates of such Series are outstanding, Transferor shall maintain
a co-paying agent in New York City (for Registered Certificates only) or any
other city designated in such Supplement which, if and so long as any Series of
Investor Certificates is listed on the Luxembourg Stock Exchange or other stock
exchange and such exchange so requires, shall be in Luxembourg or the location
required by such other stock exchange.
(b) Trustee shall cause the Paying Agent (other than itself) to
execute and deliver to Trustee an instrument in which such Paying Agent shall
agree with Trustee that such Paying Agent will hold all sums, if any, held by it
for payment to the Holders in trust for the benefit of the Holders entitled
thereto until such sums shall be paid to such Holders and shall agree, and if
Trustee is the Paying Agent it hereby agrees, that it shall comply with all
requirements of the Internal Revenue Code regarding the withholding by Trustee
of payments in respect of Federal income taxes due from Certificate Owners.
SECTION 6.7 Access to List of Holders' Names and Addresses. Trustee
shall furnish or cause to be furnished by the Transfer Agent and Registrar to
Servicer or the Paying Agent, within five Business Days after receipt by Trustee
of a request therefor from Servicer or the Paying Agent, respectively, in
writing, a list in such form as Servicer or the Paying Agent may reasonably
require, of the names and addresses of the Investor Holders as of the most
recent Record Date for payment of distributions to Investor Holders. Unless
otherwise provided in the related Supplement, Holders of the Investor
Certificates evidencing Undivided Interests aggregating not less than 10% of the
Investor Interest of the Investor Certificates of any Series (the "Applicants")
may apply in writing to Trustee, and if such application states that the
Applicants desire to communicate with other Investor Holders of any Series with
respect to their rights under this Agreement or under the Investor Certificates
and is accompanied by a copy of the communication which such Applicants propose
to transmit, then Trustee, after having been adequately indemnified by such
Applicants for its costs and expenses, shall afford or shall cause the Transfer
Agent and Registrar to afford such Applicants access during normal business
hours to the most recent list of Holders held by Trustee and shall give Servicer
notice that such request has been made, within five Business Days after the
receipt of such application. Such list shall be as of a date no more than 45
days prior to the date of receipt of such Applicants' request. Every Holder, by
receiving and holding a Certificate, agrees with Trustee that neither Trustee,
the Transfer Agent and Registrar, nor any of their respective agents shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders hereunder, regardless of the source from
which such information was obtained.
SECTION 6.8 Authenticating Agent. (a) Trustee may appoint one or more
authenticating agents with respect to the Certificates which shall be authorized
to act on behalf of Trustee in authenticating the Certificates in connection
with the issuance, delivery, registration of transfer, exchange or repayment of
the Certificates. Whenever reference is made in this Agreement to the
authentication of Certificates by Trustee or Trustee's certificate of
authentication, such reference shall be deemed to include authentication on
behalf of Trustee by an authenticating agent and a certificate of authentication
executed on behalf of Trustee by an authenticating agent. Each authenticating
agent must be acceptable to Transferor.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of Trustee or
such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to Trustee and to Transferor. Trustee may at any time
terminate the agency of an authenticating agent by giving notice of termination
to such authenticating agent and to Transferor. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time an authenticating
agent shall cease to be acceptable to Trustee or Transferor, Trustee promptly
may appoint a successor authenticating agent. Any successor authenticating agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. No successor authenticating agent
shall be appointed unless acceptable to Trustee and Transferor.
(d) Trustee agrees to pay each authenticating agent from time to time
reasonable compensation for its services under this Section 6.8, and Trustee
shall be entitled to be reimbursed and Servicer shall reimburse Trustee for such
reasonable payments actually made, subject to the provisions of Section 11.5.
(e) The provisions of Sections 11.1, 11.2 and 11.3 shall be applicable
to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.8, the
Certificates may have endorsed thereon, in lieu of Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
"This is one of the certificates described in the Pooling
and Servicing Agreement.
------------------------------------
as Authenticating Agent for Trustee,
By:_________________________________
Authorized Officer."
SECTION 6.9 New Issuances. (a) Upon request by Transferor from time to
time, Trustee shall issue to Transferor under Section 6.1, for execution and
redelivery to Trustee for authentication under Section 6.2, one or more new
Series of Investor Certificates. Any such Series shall be substantially in the
form specified in the related Supplement and shall bear, upon its face, the
designation for such Series to which it belongs, as selected by Transferor.
Except as specified in any Supplement for a related Series, all Investor
Certificates of any Series shall rank pari passu and be equally and ratably
entitled as provided herein to the benefits hereof (except that the Credit
Enhancement provided for any Series shall not be available for any other Series)
without preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Agreement and the related Supplement.
(b) Transferor may require Trustee to issue to Transferor under
Section 6.1, for execution and redelivery to Trustee for authentication under
Section 6.2, one or more newly issued Series of Investor Certificates or in
connection with a Paired Series, interests in such Series, in exchange for a
reduction in the Transferor Interest (any such transaction, an "Issuance").
Transferor may initiate an Issuance by notifying Trustee, in writing at least
three days in advance (an "Issuance Notice") of the date upon which the Issuance
is to occur (an "Issuance Date"). Any Issuance Notice shall state the
designation of any Series (and Class thereof, if applicable) to be issued on the
Issuance Date and, with respect to each such Series, its Initial Investor
Interest (or the method for calculating such Initial Investor Interest), the
applicable interest rate (or the method for allocating interest payments or
other cash flows to such Series), if any, and the Credit Enhancement Provider,
if any, with respect to such Series. On the Issuance Date, Trustee shall
authenticate and deliver any such Series of Investor Certificates only upon
delivery to it of the following: (1) a Supplement satisfying the criteria set
forth in subsection 6.9(c) executed by Transferor and specifying the Principal
Terms of such Series, (2) the applicable Credit Enhancement, if any, (3) the
agreement, if any, pursuant to which the Credit Enhancement Provider agrees to
provide the Credit Enhancement, if any, (4) a Tax Opinion, (5) evidence that the
Rating Agency Condition has been satisfied with respect to the Issuance, and (6)
an Officer's Certificate signed by a Vice President (or any more senior officer)
of Transferor, that on the Issuance Date after giving effect to such Issuance,
the Transferor Interest would be at least equal to the Minimum Transferor
Interest. Upon satisfaction of such conditions, Trustee shall issue as provided
above, such Series of Investor Certificates, dated the Issuance. There is no
limit to the number of Issuances that may be performed under this Agreement.
(c) In conjunction with an Issuance, the parties hereto shall execute
a Supplement, which shall specify the relevant terms with respect to any newly
issued Series of Investor Certificates, which may include: (i) its name or
designation, (ii) an Initial Investor Interest or the method of calculating the
Initial Investor Interest, (iii) the method of determining any adjusted Investor
Interest, if applicable, (iv) the applicable interest rate (or formula for its
determination), (v) the Closing Date, (vi) each rating agency rating such
Series, (vii) the name of the Clearing Agency, if any, (viii) the rights of
Transferor that have been transferred to the Holders of such Series pursuant to
such Issuance (including any rights to allocations of Collections of Finance
Charge Receivables and Principal Receivables), (ix) the interest payment date or
dates and the date or dates from which interest shall accrue, (x) the periods
during which or dates on which principal will be paid or accrued, (xi) the
method of allocating Collections with respect to Principal Receivables for such
Series and, if applicable, with respect to other Series and the method by which
the principal amount of Investor Certificates of such Series shall amortize or
accrete and the method for allocating Collections with respect to Finance Charge
Receivables and Receivables in Defaulted Accounts, (xii) any other Collections
with respect to Receivables or other amounts available to be paid with respect
to such Series, (xiii) the names of any accounts to be used by such Series and
the terms governing the operation of any such account and use of moneys therein,
(xiv) the Series Servicing Fee and the Series Servicing Fee Percentage, (xv) the
Minimum Transferor Interest and, the Series Termination Date, (xvi) the terms of
any Credit Enhancement with respect to such Series, and the Credit Enhancement
Provider, if applicable, (xvii) the base rate applicable to such Series, (xviii)
the terms on which the Certificates of such Series may be repurchased or
remarketed to other investors, (xix) any deposit into any account provided for
such Series, (xx) the number of Classes of such Series, and if more than one
Class, the rights and priorities of each such Class, (xxi) the priority of any
Series with respect to any other Series, (xxii) the rights, if any, of
Transferor that have been transferred to the holders of such Series, (xxiii) the
Minimum Aggregate Principal Receivables, (xxiv) whether such Series will be part
of a Group, (xxv) whether such Series will or may be a Paired Series and the
Series with which it will be paired, if applicable and (xxvi) any other relevant
terms of such Series (including whether or not such Series will be pledged as
collateral for an issuance of any other securities, including commercial paper)
(all such terms, the "Principal Terms" of such Series). The terms of such
Supplement may modify or amend the terms of this Agreement solely as applied to
such new Series.
(d) Upon satisfaction of the above conditions, Transferor may also
cause Trustee to enter into one or more agreements pursuant to which Trustee
shall sell purchased interests in the Receivables and other Trust Assets to one
or more purchasers. Such agreement(s) shall specify terms similar to Principal
Terms for any such purchased interests and may grant the purchaser(s) of such
interests, or an agent or other representative of such purchaser(s), notice and
consultation rights with respect to any rights or actions of Trustee.
SECTION 6.10 Book-Entry Certificates. Unless otherwise provided in any
related Supplement, the Investor Certificates, upon original issuance, shall be
issued in the form of typewritten Certificates representing the Book-Entry
Certificates, to be delivered to the depository specified in such Supplement
(the "Depository") for the Clearing Agency or Foreign Clearing Agency for such
Series. The Investor Certificates of each Series shall, unless otherwise
provided in the related Supplement, initially be registered on the Certificate
Register in the name of the nominee of the Clearing Agency or Foreign Clearing
Agency. No Certificate Owner will receive a definitive certificate representing
such Certificate Owner's interest in the related Series of Investor
Certificates, except as provided in Section 6.12. Unless and until definitive,
fully registered Investor Certificates of any Series ("Definitive Certificates")
have been issued to Certificate Owners pursuant to Section 6.12:
(i) the provisions of this Section 6.10 shall be in full force
and effect with respect to each such Series;
(ii) Transferor, Servicer, the Paying Agent, the Transfer Agent
and Registrar and Trustee may deal with the Clearing Agency and the
Clearing Agency Participants for all purposes (including the making of
distributions on the Investor Certificates of each such Series) as the
authorized representatives of the Certificate Owners;
(iii) to the extent that the provisions of this Section 6.10
conflict with any other provisions of this Agreement, the provisions
of this Section 6.10 shall control with respect to each such Series;
and
(iv) the rights of Certificate Owners of each such Series shall
be exercised only through the Clearing Agency or Foreign Clearing
Agency and the applicable Clearing Agency Participants and shall be
limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency or Foreign Clearing Agency
and/or the Clearing Agency Participants. Pursuant to the Depository
Agreement applicable to a Series, unless and until Definitive
Certificates of such Series are issued pursuant to Section 6.12, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Investor Certificates to such Clearing
Agency Participants.
SECTION 6.11 Notices to Clearing Agency. Whenever notice or other
communication to the Holders is required under this Agreement, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant to
Section 6.12, Trustee shall give all such notices and communications specified
herein to be given to Holders of the Investor Certificates to the Clearing
Agency or Foreign Clearing Agency for distribution to Holders of Investor
Certificates.
SECTION 6.12 Definitive Certificates. If (i) (A) Transferor advises
Trustee in writing that the Clearing Agency or Foreign Clearing Agency is no
longer willing or able to discharge properly its responsibilities under the
applicable Depository Agreement, and (B) Trustee or Transferor is unable to
locate a qualified successor, (ii) Transferor, at its option, advises Trustee in
writing that it elects to terminate the book-entry system through the Clearing
Agency or Foreign Clearing Agency with respect to any Series of Certificates or
(iii) after the occurrence of a Servicer Default, Certificate Owners of a Series
representing beneficial interests aggregating not less than 50% of the Investor
Interest of such Series advise Trustee and the applicable Clearing Agency or
Foreign Clearing Agency through the applicable Clearing Agency Participants in
writing that the continuation of a book-entry system through the applicable
Clearing Agency or Foreign Clearing Agency is no longer in the best interests of
the Certificate Owners, Trustee shall notify all Certificate Owners of such
Series, through the applicable Clearing Agency Participants, of the occurrence
of any such event and of the availability of Definitive Certificates to
Certificate Owners of such series requesting the same. Upon surrender to Trustee
of the Investor Certificates of such Series by the applicable Clearing Agency or
Foreign Clearing Agency, accompanied by registration instructions from the
applicable Clearing Agency or Foreign Clearing Agency for registration, Trustee
shall issue the Definitive Certificates of such Series. Neither Transferor nor
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates of such Series all references
herein to obligations imposed upon or to be performed by the applicable Clearing
Agency or Foreign Clearing Agency shall be deemed to be imposed upon and
performed by Trustee, to the extent applicable with respect to such Definitive
Certificates, and Trustee shall recognize the Holders of the Definitive
Certificates of such series as Holders of such Series hereunder.
SECTION 6.13 Global Certificate; Euro-Certificate Exchange Date. If
specified in the related Supplement for any Series, the Investor Certificates
may be initially issued in the form of a single Temporary Global Certificate
(the "Global Certificate") in bearer form, without interest coupons, in the
denomination of the Initial Investor Interest and substantially in the form
attached to the related Supplement. Unless otherwise specified in the related
Supplement, the provisions of this Section 6.13 shall apply to such Global
Certificate. The Global Certificate will be authenticated by Trustee upon the
same conditions, in substantially the same manner and with the same effect as
the Definitive Certificates. The Global Certificate may be exchanged in the
manner described in the related Supplement for Registered or Bearer Certificates
in definitive form.
SECTION 6.14 Meetings of Holders. To the extent provided by the
Supplement for any Series issued in whole or in part in Bearer Certificates,
Servicer or Trustee may at any time call a meeting of the Holders of such
Series, to be held at such time and at such place as Servicer or Trustee, as the
case may be, shall determine, for the purpose of approving a modification of or
amendment to, or obtaining a waiver of, any covenant or condition set forth in
this Agreement with respect to such Series or in the Certificates of such
Series, subject to Section 13.1.
ARTICLE VII MATTERS RELATING TO TRANSFEROR
SECTION 7.1 Liability of Transferor. Transferor shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by Transferor.
SECTION 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, Transferor. (a) Transferor shall not consolidate with or merge
into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the Person formed by such consolidation or into which
Transferor is merged or the Person which acquires by conveyance or
transfer the properties and assets of Transferor substantially as an
entirety shall be, if Transferor is not the surviving entity,
organized and existing under the laws of the United States of America
or any State or the District of Columbia, and shall be a national
banking association, state banking corporation or other entity which
is not subject to the bankruptcy laws of the United States of America
and shall expressly assume, by an agreement supplemental hereto,
executed and delivered to Trustee, in form satisfactory to Trustee,
the performance of every covenant and obligation of Transferor, as
applicable hereunder and shall benefit from all the rights granted to
Transferor, as applicable hereunder. To the extent that any right,
covenant or obligation of Transferor, as applicable hereunder, is
inapplicable to the successor entity, such successor entity shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor entity. In
furtherance hereof, in applying this Section 7.2 to a successor
entity, Section 9.2 shall be applied by reference to events of
involuntary liquidation, receivership or conservatorship applicable to
such successor entity as shall be set forth in the officer's
certificate described in subsection 7.2(a)(ii);
(ii) Transferor shall have delivered to Trustee an Officer's
Certificate signed by a Vice President (or any more senior officer) of
Transferor stating that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 7.2
and that all conditions precedent herein provided for relating to such
transaction have been complied with and an Opinion of Counsel that
such supplemental agreement is legal, valid and binding; and
(iii) Transferor shall have delivered notice to each Rating
Agency of such consolidation, merger, conveyance or transfer.
(b) The obligations of Transferor hereunder shall not be assignable
nor shall any Person succeed to the obligations of Transferor hereunder except
as described in subsection (a).
SECTION 7.3 Limitation on Liability. The directors, officers,
employees or agents of Transferor shall not be under any liability to the Trust,
Trustee, the Holders, any Credit Enhancement Provider or any other Person
hereunder or pursuant to any document delivered hereunder, it being expressly
understood that all such liability is expressly waived and released as a
condition of, and as consideration for, the execution of this Agreement and any
Supplement and the issuance of the Certificates; provided that this provision
shall not protect the officers, directors, employees, or agents of Transferor
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. Except as
provided in Section 7.4, Transferor shall not be under any liability to the
Trust, Trustee, the Holders, any Credit Enhancement Provider or any other Person
for any action taken or for refraining from the taking of any action in its
capacity as Transferor pursuant to this Agreement whether arising from express
or implied duties under this Agreement; provided, however, that this provision
shall not protect Transferor against any liability which would otherwise be
imposed by reason of any breach of representation or covenant, willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. Transferor and
any director, officer, employee or agent may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder.
SECTION 7.4 Liabilities. Notwithstanding any other provision herein,
including Section 7.3, Transferor shall indemnify and hold harmless any injured
party from and against any reasonable loss, liability, expense, damage or injury
arising out of or based upon the arrangement created by this Agreement or any
Supplement, as though this Agreement or such Supplement created a partnership
under the Delaware Uniform Partnership Law in which Transferor was a general
partner; provided that Transferor shall not indemnify the Trust, the Investor
Holders or the Certificate Owners as to any losses, claims or damages incurred
by any of them in their capacities as investors, including losses incurred as a
result of Defaulted Accounts or Receivables which are written off as
uncollectible; and provided, further, that Transferor shall not indemnify the
Trust, the Investor Holders or the Certificate Holders for any liabilities,
costs or expenses of the Trust, the Investor Holders or the Certificate Owners
arising under any tax law, including any Federal, state, local or foreign
income, withholding or franchise taxes or any other tax imposed on or measured
by income (or any interest or penalties with respect thereto or arising from a
failure to comply therewith) required to be paid by the Trust, the Investor
Holders or the Certificate Owners in connection herewith to any taxing
authority. Any such indemnification shall not be payable from the assets of the
Trust. The provisions of this indemnity shall run directly to and be enforceable
by an injured party subject to the limitations hereof.
ARTICLE VIII OTHER MATTERS RELATING TO SERVICER
SECTION 8.1 Liability of Servicer. Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by Servicer in such capacity herein.
SECTION 8.2 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Servicer shall not consolidate with or merge into any
other Person or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(i) the Person formed by such consolidation or into which
Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of Servicer substantially as an
entirety shall be a Person organized and existing under the laws of
the United States of America or any State or the District of Columbia,
and, if Servicer is not the surviving entity, shall expressly assume,
by an agreement supplemental hereto, executed and delivered to Trustee
in form satisfactory to Trustee, the performance of every covenant and
obligation of Servicer hereunder (to the extent that any right,
covenant or obligation of Servicer, as applicable hereunder, is
inapplicable to the successor entity, such successor entity shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor entity);
(ii) Servicer shall have delivered to Trustee an Officer's
Certificate that such consolidation, merger, conveyance or transfer
and such supplemental agreement comply with this Section 8.2 and that
all conditions precedent herein provided for relating to such
transaction have been complied with and an Opinion of Counsel that
such supplemental agreement is legal, valid and binding with respect
to Servicer; and
(iii) Servicer shall have delivered notice to the Rating
Agency of such consolidation, merger, conveyance or transfer.
SECTION 8.3 Limitation on Liability of Servicer and Others. The
directors, officers, employees or agents of Servicer shall not be under any
liability to the Trust, Trustee, the Holders, any Credit Enhancement provider or
any other Person hereunder or pursuant to any document delivered hereunder, it
being expressly understood that all such liability is expressly waived and
released as a condition of, and as consideration for, the execution of this
Agreement and any Supplement and the issuance of the Certificates; provided that
this provision shall not protect the directors, officers, employees and agents
of Servicer against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder. Except
as provided in Section 8.4 with respect to the Trust and Trustee, its officers,
directors, employees and agents, Servicer shall not be under any liability to
the Trust, Trustee, its officers, directors, employees and agents, the Holders,
any Credit Enhancement Provider or any other Person for any action taken or for
refraining from the taking of any action in its capacity as Servicer pursuant to
this Agreement or any Supplement; provided that this provision shall not protect
Servicer against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of its reckless disregard of its obligations and duties hereunder
or under any Supplement. Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. Servicer shall not be under any obligation to appear
in, prosecute or defend any legal action which is not incidental to its duties
to service the Receivables in accordance with this Agreement which in its
reasonable opinion may involve it in any expense or liability.
SECTION 8.4 Servicer Indemnification of the Trust and Trustee.
Servicer shall indemnify and hold harmless the Trust and Trustee, its officers,
directors, employees and agents, from and against any reasonable loss,
liability, expense, damage or injury suffered or sustained by reason of any acts
or omissions or alleged acts or omissions of Servicer with respect to activities
of the Trust or Trustee pursuant to this Agreement or any Supplement, including,
but not limited to any judgment, award, settlement, reasonable attorneys' fees
and other costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding or claim; provided that (a) Servicer
shall not indemnify Trustee if such acts, omissions or alleged acts or omissions
constitute or are caused by fraud, negligence, or willful misconduct by Trustee,
(b) Servicer shall not indemnify the Trust, the Investor Holders or the
Certificate Owners for any liabilities, costs or expenses of the Trust with
respect to any action taken by Trustee at the request of the Investor Holders,
(c) Servicer shall not indemnify the Trust, the Investor Holders or the
Certificate Owners as to any losses, claims or damages incurred by any of them
in their capacities as investors, including losses incurred as a result of
Defaulted Accounts or Receivables which are written off as uncollectible and (d)
that Servicer shall not indemnify the Trust, the Investor Holders or the
Certificate Owners for any liabilities, costs or expenses of the Trust, the
Investor Holders or the Certificate Owners arising under any tax law, including
any Federal, state, local or foreign income or franchise taxes or any other tax
imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid by
the Trust, the Investor Holders or the Certificate Owners in connection herewith
to any taxing authority. Any such indemnification shall not be payable from the
assets of the Trust. The provisions of this indemnity shall run directly to and
be enforceable by an injured party subject to the limitations hereof.
SECTION 8.5 Servicer Not to Resign. Servicer shall not resign from the
obligations and duties hereby imposed on it except upon determination that (i)
the performance of its duties hereunder is no longer permissible under
applicable law and (ii) there is no reasonable action which Servicer could take
to make the performance of its duties hereunder permissible under applicable
law. Any such determination permitting the resignation of Servicer shall be
evidenced as to clause (i) by an Opinion of Counsel to such effect delivered to
Trustee. No such resignation shall become effective until Trustee or a Successor
Servicer shall have assumed the responsibilities and obligations of Servicer in
accordance with Section 10.2. If Trustee is unable within 120 days of the date
of such determination to appoint a Successor Servicer, Trustee shall serve as
Successor Servicer hereunder until such time as Trustee shall appoint a
Successor Servicer and such Successor Servicer shall have assumed the
responsibilities and obligations of Servicer in accordance with Section 10.2.
SECTION 8.6 Access to Certain Documentation and Information Regarding
the Receivables. Servicer shall provide Trustee access to the documentation
regarding the Accounts and the Receivables when Trustee is required in
connection with the enforcement of the rights of the Investor Holders, or by
applicable law, to review such documentation, such access being afforded without
charge but only upon reasonable request, during normal business hours, subject
to Servicer's normal security and confidentiality procedures and at offices
designated by Servicer. Nothing in this Section 8.6 shall derogate from the
obligation of Transferor, Trustee or Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, and the failure of
Servicer to provide access as provided in this Section 8.6 as a result of such
obligations shall not constitute a breach of this Section 8.6.
SECTION 8.7 Delegation of Duties. In the ordinary course of business,
Servicer may at any time delegate any duties hereunder to any Person who agrees
to conduct such duties in accordance with the Guidelines. Any such delegations
shall not relieve Servicer of its liability and responsibility with respect to
such duties, and shall not constitute a resignation within the meaning of
Section 8.5 hereof. If any such delegation is to a party other than an Affiliate
of Transferor notification thereof shall be given to each Rating Agency.
SECTION 8.8 Examination of Records. Servicer shall clearly and
unambiguously identify each Eligible Receivable arising under each Eligible
Account (including any Additional Receivables) conveyed to the Trust pursuant to
Section 2.1(b) in its computer or other records to reflect that the Receivables
arising in such Account have been conveyed to the Trust pursuant to this
Agreement. Servicer shall, prior to the sale or transfer to a third party of any
receivable held in its custody, examine its computer and other records to
determine that such receivable is not a Receivable.
SECTION 8.9 Merger or Consolidation of, or Assumption of the
Obligations of, Back-up Servicer. Back-up Servicer shall not consolidate with or
merge into any other Person or convey or transfer its properties and assets
substantially as an entirety to any Person, unless:
(i) the Person formed by such consolidation or into which
Back-up Servicer is merged or the Person which acquires by conveyance
or transfer the properties and assets of Back-up Servicer
substantially as an entirety shall be a Person organized and existing
under the laws of the United States of America or any State or the
District of Columbia, and, if Back-up Servicer is not the surviving
entity, shall expressly assume, by an agreement supplemental hereto,
executed and delivered to Trustee in form satisfactory to Trustee, the
performance of every covenant and obligation of Back-up Servicer
hereunder (to the extent that any right, covenant or obligation of
Back-up Servicer, as applicable hereunder, is inapplicable to the
successor entity, such successor entity shall be subject to such
covenant or obligation, or benefit from such right, as would apply, to
the extent practicable, to such successor entity);
(ii) Back-up Servicer shall have delivered to Trustee an
Officer's Certificate that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section 8.9
and that all conditions precedent herein provided for relating to such
transaction have been complied with and an Opinion of Counsel that
such supplemental agreement is legal, valid and binding with respect
to Back-up Servicer; and
(iii) Back-up Servicer shall have delivered notice to the
Rating Agency of such consolidation, merger, conveyance or transfer.
SECTION 8.10 Back-up Servicer Not to Resign. The Back-up Servicer
shall not resign from its obligations and duties under this Agreement, except
upon the assumption of such duties and obligations by a successor Back-up
Servicer and the Rating Agency Condition having been satisfied with respect to
the appointment of such successor Back-up Servicer.
ARTICLE IX TRUST PAY OUT EVENTS
SECTION 9.1 Trust Pay Out Events. Each of the following events (each,
a "Trust Pay Out Event") shall constitute a Pay Out Event with respect to all
Series of Certificates, immediately upon the occurrence of such event, and
without any notice or other action on the part of Trustee or the Investor
Holders:
(a) Transferor or any Originator shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
all or substantially all of its property, or a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against Transferor or any Originator; or Transferor or any
Originator shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable insolvency
or reorganization statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations; or Transferor or any
Originator shall become unable for any reason to transfer Receivables to the
Trust in accordance with the provisions of this Agreement or to the Transferor
in accordance with the provisions of the Receivables Purchase Agreement,
respectively; or
(b) the Trust shall become an "investment company" within the meaning
of the Investment Company Act;
(c) if (i) 90 days after the Back-up Servicer is legally unable to act
as Back-up Servicer or has otherwise been released from its obligations under
this Agreement no successor Back-up Servicer has been appointed or (ii) the
Back-up Servicer is Servicer and has been given a Termination Notice pursuant to
Section 10.1 and a successor Back-up Servicer has not been appointed within 90
days; or
(d) the Servicer or any Successor Servicer is not in compliance with
the Licensing Laws of any state in which the stated address contained in any of
the Receivables is located for a period of __ days.
SECTION 9.2 Additional Rights Upon the Occurrence of Certain Events.
(a) If Transferor shall consent to the appointment of a conservator or receiver
or liquidator for the winding-up or liquidation of its affairs, or a decree or
order of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator or receiver or liquidator for the
winding-up or liquidation of its affairs shall have been entered against
Transferor (an "Insolvency Event"), Transferor shall on the day of such
Insolvency Event (the "Appointment Day") immediately cease to transfer Principal
Receivables to the Trust and shall promptly give notice to Trustee of such
Insolvency Event. Notwithstanding any cessation of the transfer to the Trust of
additional Principal Receivables, Finance Charge Receivables, whenever created,
accrued in respect of Principal Receivables which have been transferred to the
Trust shall continue to be a part of the Trust, and Collections with respect
thereto shall continue to be allocated and paid in accordance with Article IV.
Within 15 days of the Appointment Day, Trustee shall (i) publish a notice in an
Authorized Newspaper that an Insolvency Event has occurred and that Trustee
intends to sell, dispose of or otherwise liquidate the Receivables in a
commercially reasonable manner and (ii) send written notice to the Investor
Holders describing the provisions of this Section 9.2 and requesting
instructions from such Holders. Unless within 90 days from the day notice
pursuant to clause (i) is first published, Trustee shall have received written
instructions of Holders of Investor Certificates evidencing more than 50% of the
Investor Interest of each Series issued and outstanding (or, if any such Series
has two or more Classes, each Class) to the effect that such Holders disapprove
of the liquidation of the Receivables and wish to continue having Principal
Receivables transferred to the Trust as before such Insolvency Event, Trustee
shall sell, dispose of or otherwise liquidate the Receivables in a commercially
reasonable manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids. Trustee may obtain a prior determination for
any such conservator, receiver or liquidator that the terms and manner of any
proposed sale, disposition or liquidation are commercially reasonable. The
provisions of Sections 9.1 and 9.2 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to subsection (a) shall be treated as Collections on the
Receivables and shall be allocated and deposited in accordance with the
provisions of Article IV; provided, that Trustee shall determine conclusively in
its sole discretion the amount of such proceeds which are allocable to Finance
Charge Receivables and the amount of such proceeds which are allocable to
Principal Receivables. Unless Trustee receives written instructions from
Investor Holders as provided in subsection (a), on the day following the last
Distribution Date in the Monthly Period during which such proceeds are
distributed to the Investor Holders of each Series, the Trust shall terminate.
(c) Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Article IX with respect to competitive bids.
ARTICLE X SERVICER DEFAULTS
SECTION 10.1 Servicer Defaults. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by Servicer to make any payment, transfer or deposit
or to give instructions or notice to Trustee pursuant to Article IV or to
instruct Trustee to make any required drawing, withdrawal, or payment under any
Credit Enhancement on or before the date occurring ten Business Days after the
date such payment, transfer, deposit withdrawal or drawing or such instruction
or notice is required to be made or given, as the case may be, under the terms
of this Agreement;
(b) failure on the part of Servicer duly to observe or perform in any
respect any other covenants or agreements of Servicer set forth in this
Agreement, which has a material adverse effect on the Investor Holders of any
Series and which continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to Servicer by Trustee, or to Servicer and Trustee by the
Holders of Investor Certificates evidencing Undivided Interests aggregating not
less than 25% of the Investor Interest of any Series adversely affected thereby
and continue to materially adversely affect such Investor Holders for such
period; or Servicer shall delegate its duties under this Agreement, except as
permitted by Section 8.7;
(c) any representation, warranty or certification made by Servicer in
this Agreement or in any certificate delivered pursuant to this Agreement shall
prove to have been incorrect when made, which has a material adverse effect on
the Investor Holders of any Series and 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
Servicer by Trustee, or to Servicer and Trustee by the Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 25% of the
Investor Interest of any Series adversely affected thereby and continues to
materially adversely affect such Investor Holders for such period; or
(d) Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to Servicer or of
or relating to all or substantially all of its property, or a decree or order of
a court or agency or supervisory authority having jurisdiction in the premises
for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidating of its affairs, shall
have been entered against Servicer, and such decree or order shall have remained
in force undischarged or unstayed for a period of 60 days; or Servicer shall
admit in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or reorganization
statute, make any assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations;
then, so long as such Servicer Default shall not have been remedied,
either Trustee, or the Holders of Investor Certificates evidencing Undivided
Interests aggregating more than 50% of the Aggregate Investor Interest, by
notice then given in writing to Servicer (and to Trustee if given by the
Investor Holders) (a "Termination Notice"), may terminate all of the rights and
obligations of Servicer as Servicer under this Agreement.
After receipt by Servicer of such Termination Notice, and on the date
that a Successor Servicer shall have been appointed by Trustee pursuant to
Section 10.2, all authority and power of Servicer under this Agreement shall
pass to and be vested in a Successor Servicer; and Trustee is hereby authorized
and empowered (upon the failure of Servicer to cooperate) to execute and
deliver, on behalf of Servicer, as attorney-in-fact or otherwise, all documents
and other instruments upon the failure of Servicer to execute or deliver such
documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purpose of such transfer of servicing
rights and obligations. Servicer agrees to cooperate with Trustee and such
Successor Servicer in effecting the termination of the responsibilities and
rights of Servicer to conduct servicing hereunder including the transfer to such
Successor Servicer of all authority of Servicer to service the Receivables
provided for under this Agreement, including all authority over all Collections
which shall on the date of transfer be held by Servicer for deposit, or which
have been deposited by Servicer, in the Collection Account, the Finance Charge
Account, the Excess Funding Account, and any Series Account, or which shall
thereafter be received with respect to the Receivables, and in assisting the
Successor Servicer and in enforcing all rights to Unearned Premiums applicable
to the Trust. Servicer shall promptly transfer its electronic records or
electronic copies thereof relating to the Receivables to the Successor Servicer
in such electronic form as the Successor Servicer may reasonably request and
shall promptly transfer to the Successor Servicer all other records,
correspondence and documents necessary for the continued servicing of the
Receivables in the manner and at such times as the Successor Servicer shall
reasonably request. To the extent that compliance with this Section 10.1 shall
require Servicer to disclose to the Successor Servicer information of any kind
which Servicer reasonably deems to be confidential, the Successor Servicer shall
be required to enter into such customary licensing and confidentiality
agreements as Servicer shall deem necessary to protect its interests. Servicer
shall, on the date of any servicing transfer, transfer all of its rights and
obligations under the Credit Enhancement with respect to any Series to the
Successor Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to in subsection 10.1(a) for a period of 30 Business Days or under
subsection 10.1(b) or (c) for a period of 60 Business Days, shall not constitute
a Servicer Default if such delay or failure could not be prevented by the
exercise of reasonable diligence by Servicer and such delay or failure was
caused by an act of God or the public enemy, acts of declared or undeclared war,
public disorder, rebellion, riot or sabotage, epidemics, landslides, lightning,
fire, hurricanes, tornadoes, earthquakes, nuclear disasters or meltdowns,
floods, power outages or similar causes. The preceding sentence shall not
relieve Servicer from using its best efforts to perform its obligations in a
timely manner in accordance with the terms of this Agreement and Servicer shall
provide Trustee, any Credit Enhancement Provider, Transferor and the Holders of
Investor Certificates with an Officer's Certificate giving prompt notice of such
failure or delay by it, together with a description of the cause of such failure
or delay and its efforts so to perform its obligations.
SECTION 10.2 Trustee to Act, Appointment of Successor. (a) On and
after the receipt by Servicer of a Termination Notice pursuant to Section 10.1,
Servicer shall continue to perform all servicing functions under this Agreement
until the date specified in the Termination Notice or otherwise specified by
Trustee in writing or, if no such date is specified in such Termination Notice,
or otherwise specified by Trustee, until a date mutually agreed upon by Servicer
and Trustee. Trustee shall notify each Rating Agency of such removal of
Servicer. At the time Servicer shall cease to act as Servicer pursuant to this
Section 10.2 or Section 8.5, the Back-up Servicer (or, if for a period of 90
days from such time there is no Back-up Servicer, the Trustee) without any
further action by any Person shall automatically be appointed as successor
servicer (the "Successor Servicer"). Notwithstanding the above, if the Back-up
Servicer is legally unable to act as Successor Servicer on the date of the
removal of Servicer, Servicer shall not be removed and shall continue to act as
Servicer until the Trust Termination Date. Prior to the termination of the
Servicer pursuant to Section 10.2 or the resignation of Servicer pursuant to
Section 8.5, Servicer shall have the right to remove Back-up Servicer and
appoint a new Back-up Servicer at any time as long as the Rating Agency
Condition is satisfied with respect to such action.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to Servicer with respect to servicing functions under
this Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on Servicer by the terms and provisions
hereof, and all references in this Agreement to Servicer shall be deemed to
refer to the Successor Servicer. Any Successor Servicer, by its acceptance of
its appointment, will automatically agree to be bound by the terms and
provisions of each Credit Enhancement. Notwithstanding the above, or anything in
this Section to the contrary, the Trustee, if it becomes Servicer pursuant to
this Section, shall have no responsibility or obligation (i) to repurchase or
substitute any receivable, including any obligation of the Servicer under
Section 3.10, (ii) for any representation or warranty of the Servicer hereunder,
and (iii) for any act or omission of either a predecessor or successor Servicer
other than the Trustee. The Trustee may conduct any activity required of it as
Servicer hereunder through an Affiliate or through an agent. Neither the Trustee
nor any other Successor Servicer shall be deemed to be in default hereunder due
to any act or omission of a predecessor Servicer, including but not limited to
failure to timely deliver to the Trustee any Monthly Servicer's Certificate, any
funds required to be deposited to the Trust, or any breach of its duty to
cooperate with a transfer of servicing as required by Section 10.01.
(c) In connection with such appointment and assumption, Trustee shall
be entitled to such compensation, or may make such arrangements for the
compensation of the Successor Servicer out of Collections, as it and such
Successor Servicer shall agree; provided that no such compensation shall be in
excess of the Servicing Fee permitted to Servicer pursuant to Section 3.2 and
any other amounts payable to the Servicer hereunder. Transferor agrees that if
Servicer is terminated hereunder, it will agree to deposit the portion of the
Collections in respect of Finance Charge Receivables that it is entitled to
receive pursuant to Article IV to pay its share of the compensation of the
Successor Servicer. The Servicer being terminated shall bear all costs of a
Service Transfer, including but not limited to those of the Trustee reasonably
allocable to specific employees and overhead, legal fees and expenses,
accounting and financial consulting fees and expenses, and costs of amending the
Agreement, if necessary.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically cease and terminate upon termination of the
Trust pursuant to Section 12.1 and shall pass to and be vested in Transferor and
Transferor is hereby authorized and empowered to execute and deliver, on behalf
of the Successor Servicer, as attorney-in-fact or otherwise, all documents and
other instruments, and to do and accomplish all other acts or things necessary
or appropriate to effect the purposes of such transfer of servicing rights. The
Successor Servicer agrees to cooperate with Transferor in effecting the
termination of the responsibilities and rights of the Successor Servicer to
conduct servicing on the Receivables. The Successor Servicer shall transfer its
electronic records relating to the Receivables to Transferor in such electronic
form as Transferor may reasonably request and shall transfer all other records,
correspondence and documents to Transferor in the manner and at such times as
Transferor shall reasonably request. To the extent that compliance with this
Section 10.2 shall require the Successor Servicer to disclose to Transferor
information of any kind which the Successor Servicer deems to be confidential,
Transferor shall be required to enter into such customary licensing and
confidentiality agreements as the Successor Servicer shall deem necessary to
protect its interests.
SECTION 10.3 Notification to Holders. Within two Business Days after
Servicer becomes aware of any Servicer Default, Servicer shall give prompt
written notice thereof to Trustee and any Credit Enhancement Provider, and
Trustee shall give notice to the Investor Holders at their respective addresses
appearing in the Certificate Register. Upon any termination or appointment of a
Successor Servicer pursuant to this Article X, Trustee shall give prompt written
notice thereof to Investor Holders at their respective addresses appearing in
the Certificate Register.
SECTION 10.4 Waiver of Past Defaults. The Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66-2/3% of
the Investor Interest of each Series adversely affected by any default by
Servicer or Transferor may, on behalf of all Holders of such Series, waive any
default by Servicer or Transferor in the performance of its obligations
hereunder and its consequences, except a default in the failure to make any
required deposits or payments of interest or principal relating to such Series
pursuant to Article IV which default does not result from the failure of the
Paying Agent to perform its obligations to make any required deposits or
payments of interest and principal in accordance with Article IV. Upon any such
waiver of a past default, such default shall cease to exist, and any default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly so waived.
ARTICLE XI TRUSTEE
SECTION 11.1 Duties of Trustee. (a) Trustee, prior to the occurrence
of any Servicer Default and after the curing or waiver of all Servicer Defaults
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement, no duties shall be implied
against Trustee, and its permissive rights shall not be construed as duties. If
a Responsible Officer has received written notice that a Servicer Default has
occurred (which has not been cured or waived), Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and use the same degree of
care and skill in its exercise, as a prudent person would exercise or use under
the circumstances in the conduct of such person`s own affairs unless it is
acting as successor Service, in which case it shall use the same degree of care
and skill as required of the Servicer under this Agreement.
(b) Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
substantially conform to the requirements of this Agreement.
(c) Subject to subsection 11.1(a), no provision of this Agreement shall
be construed to relieve Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; provided that:
(i) Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of Trustee, unless it shall be proved that Trustee was
negligent in ascertaining the pertinent facts;
(ii) Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 50%
of the Investor Interest of any Series relating to the time, method and
place of conducting any proceeding for any remedy available to Trustee,
or exercising any trust or power conferred upon Trustee in relation to
such Series, under this Agreement; and
(iii) Trustee shall not be charged with knowledge of any
failure by Servicer referred to in clauses (a), (b) or (c) of Section
10.1 unless a Responsible Officer of Trustee obtains actual knowledge
of such failure or Trustee receives written notice of such failure from
Servicer or any Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 10% of the Investor Interest of any
Series adversely affected thereby.
(d) Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
Trustee to perform, monitor or be responsible for the manner of performance of,
any of the obligations of Servicer under this Agreement except during such time,
if any, as Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, Servicer in accordance with the terms of this
Agreement.
(e) Except for actions expressly authorized by this Agreement, Trustee
shall take no action reasonably likely to impair the interests of the Trust in
any Receivable now existing or hereafter created or to impair the value of any
Receivable now existing or hereafter created.
(f) Except as provided in this subsection 11.1(f), Trustee shall have
no power to vary the corpus of the Trust including the power to (i) accept any
substitute obligation for a Receivable initially assigned to the Trust under
Section 2.1, (ii) add any other investment, obligation or security to the Trust,
except for an addition permitted under Section 2.1(b) or (iii) withdraw from the
Trust any Receivables, except for a withdrawal permitted under Sections 2.6,
9.2, 10.2, 12.1 or 12.2 or subsections 2.4(d), 2.4(e) or Article IV.
(g) If the Paying Agent or the Transfer Agent and Registrar shall fail
to perform any obligation, duty or agreement in the manner or on the day
required to be performed by the Paying Agent or the Transfer Agent and
Registrar, as the case may be, under this Agreement, then, subject to subsection
11.1(d), Trustee shall be obligated promptly to perform such obligation, duty or
agreement in the manner so required.
(h) If Transferor has agreed to transfer any of its insurance premium
finance receivables (other than the Receivables) to another Person, upon the
written request of Transferor, Trustee shall enter into such intercreditor
agreements with the transferee of such receivables as are customary and
necessary to identify separately the rights, if any, of the Trust and such other
Person in Transferor's insurance premium finance receivables; provided that
Trustee shall not be required to enter into any intercreditor agreement which
could adversely affect the interests of the Holders and, upon the request of
Trustee, Transferor will deliver an Opinion of Counsel on any matters relating
to such intercreditor agreement, reasonably requested by Trustee.
SECTION 11.2 Certain Matters Affecting Trustee. Except as otherwise
provided in Section 11.1:
(a) Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accord with, any assignment of Receivables in
Supplemental Accounts, the initial report, the monthly Servicer's certificate,
the annual Servicer's certificate, the monthly payment instructions and
notification to Trustee, the monthly Holder's statement, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented to it pursuant to this Agreement by the proper
party or parties;
(b) Trustee may consult with counsel, and any Opinion of Counsel shall
be full and complete authorization and protection in respect of any action taken
or suffered or omitted by it hereunder in good faith and in accordance with such
Opinion of Counsel;
(c) Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement or any Credit Enhancement, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Holders or any Credit Enhancement
Provider, pursuant to the provisions of this Agreement, unless such Holders or
Credit Enhancement Provider shall have offered to Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve Trustee of
the obligations, upon the occurrence of any Servicer Default (which has not been
cured), to exercise such of the rights and powers vested in it by this Agreement
and any Credit Enhancement, and to use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs;
(d) Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) Trustee shall not be bound to make any investigation into the
facts of matters stated in any assignment of Receivables in Accounts as of the
Cut Off Date or any Reassignment of Removed Accounts, the initial report, any
daily Servicer's report, the monthly Servicer's certificate, the annual
Servicer's certificate, the monthly payment instructions and notification to
Trustee, the monthly Holder's statement, any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing so to do by Holders of
Investor Certificates evidencing Undivided Interests aggregating more than 50%
of the Investor Interest of any Series which could be adversely affected if
Trustee does not perform such acts;
(f) Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
(including any Registrar or Paying Agent) appointed with due care by it
hereunder; and
(g) except as may be required by subsection 11.1(a), Trustee shall not
be required to make any initial or periodic examination of any documents or
records related to the Receivables or the Accounts for the purpose of
establishing the presence or absence of defects, the compliance by Transferor
with its representations and warranties or for any other purpose.
SECTION 11.3 Trustee Not Liable for Recitals in Certificates. Trustee
assumes no responsibility for the correctness of the recitals contained herein
and in the Certificates (other than the certificate of authentication on the
Certificates). Except as set forth in Section 11.15, Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates)
or of any Receivable or related document. Trustee shall not be accountable for
the use or application by Transferor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to Transferor in respect of the Receivables or deposited in or withdrawn from
the Collection Account, the Excess Funding Account or the Finance Charge
Account, or any Series Account by Servicer.
SECTION 11.4 Trustee May Not Own Certificates. Trustee in its
individual capacity shall not, but in a fiduciary or any other capacity may,
become the owner of Investor Certificates. In connection with such ownership in
other than its individual capacity, Trustee shall have the same rights as it
would have if it were not Trustee.
SECTION 11.5 Servicer to Pay Trustee's Fees and Expenses. Servicer
shall pay to Trustee from time to time, and Trustee shall be entitled to
receive, reasonable compensation (which shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust) for all
services rendered by it in the execution of the Trust hereby created and in the
exercise and performance of any of the powers and duties hereunder of Trustee,
and, subject to Section 8.4, Servicer will pay or reimburse Trustee (without
reimbursement from any Investor Account, any Series Account or otherwise) upon
its request for all reasonable expenses, disbursements and advances incurred or
made by Trustee in accordance with any of the provisions of this Agreement
except any such expense, disbursement or advance as may arise from its own
negligence or bad faith and except as provided in the following sentence. If
Trustee is appointed Successor Servicer pursuant to Section 10.2, the provisions
of this Section 11.5 shall not apply to expenses, disbursements and advances
made or incurred by Trustee in its capacity as Successor Servicer.
The obligations of Servicer under this Section 11.5 shall survive the
termination of the Trust and the resignation or removal of Trustee.
SECTION 11.6 Eligibility Requirements for Trustee. Trustee hereunder
shall at all times be a corporation organized and doing business under the laws
of the United States of America or any state thereof authorized under such laws
to exercise corporate trust powers, having a long-term unsecured debt rating of
at least Baa3 by Xxxxx'x and BBB- by Standard & Poor's, having, in the case of
an entity that is subject to risk-based capital adequacy requirements,
risk-based capital of at least $50,000,000 or, in the case of an entity that is
not subject to risk-based capital adequacy requirements, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal or state authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 11.6, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. Trustee shall at all times be licensed or be
exempt from licensing under the Licensing Laws of each Permitted State. In case
at any time Trustee shall cease to be eligible in accordance with the provisions
of this Section 11.6, Trustee shall resign immediately in the manner and with
the effect specified in Section 11.7.
SECTION 11.7 Resignation or Removal of Trustee. (a) Trustee may at any
time resign and be discharged from the Trust hereby created by giving written
notice thereof to Servicer. Upon receiving such notice of resignation, Servicer
shall promptly appoint a successor trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time Trustee shall cease to be eligible in accordance
with the provisions of Section 11.6 hereof and shall fall to resign after
written request therefor by Transferor, or if at any time Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of Trustee or of its property shall be appointed, or any public officer
shall take charge or control of Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then Transferor may, but
shall not be required to, remove Trustee and promptly appoint a successor
trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to Trustee so removed and one copy to the successor trustee.
(c) Any resignation or removal of Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.7 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 11.8 hereof and any liability of Trustee arising hereunder
shall survive such appointment of a successor trustee.
SECTION 11.8 Successor Trustee. (a) Any successor trustee appointed as
provided in Section 11.7 hereof shall execute, acknowledge and deliver to
Transferor and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as Trustee herein. The predecessor Trustee
shall deliver to the successor trustee all documents and statements held by it
hereunder, and Transferor and the predecessor Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
(b) No successor trustee shall accept appointment as provided in this
Section 11.8 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 11.6.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section 11.8, such successor trustee shall mail notice of such
succession hereunder to all Holders at their addresses as shown in the
Certificate Register.
SECTION 11.9 Merger or Consolidation of Trustee. Any Person into which
Trustee may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which Trustee
shall be a party, or any Person succeeding to the corporate trust business of
Trustee, shall be the successor of Trustee hereunder, provided such Person shall
be eligible under Section 11.6, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
SECTION 11.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, Trustee shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as a
co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Holders, such title to the trust, or any part
thereof, and, subject to the other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 11.6 and no
notice to Holders of the appointment of any co-trustee or separate trustee shall
be required under Section 11.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon Trustee shall be conferred or imposed upon and exercised
or performed by Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without Trustee joining in such
act), except to the extent that under any laws of any jurisdiction in
which any particular act or acts are to be performed (whether as
Trustee hereunder or as successor to Servicer hereunder), Trustee
shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the
holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with Trustee or separately, as may
be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, Trustee. Every such
instrument shall be filed with Trustee and a copy thereof given to Servicer.
(d) Any separate trustee or co-trustee may at any time constitute
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 11.11 Tax Returns. If the Trust shall be required to file tax
returns, Servicer (or Transferor, if Back-up Servicer is Servicer) shall prepare
or cause to be prepared any tax returns required to be filed by the Trust and
shall remit such returns to Trustee for signature and, to the extent possible,
file such returns at least five days before such returns are due to be filed.
Trustee is hereby authorized to sign any such return on behalf of the Trust.
Servicer (or Transferor, if Back-up Servicer is Servicer) shall prepare or shall
cause to be prepared all tax information required by law to be distributed to
Holders and shall deliver such information to Trustee at least five days prior
to the date it is required by law to be distributed to Holders. Trustee, upon
request, shall furnish Servicer (or Transferor, if Back-up Servicer is Servicer)
with all such information known to Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust, and shall cause
such tax returns to be signed in the manner required by law. In no event shall
Trustee or Servicer (or Transferor, if Back-up Servicer is Servicer) be liable
for any liabilities, costs or expenses of the Trust, the Investor Holders or the
Certificate Owners arising under any tax law, including Federal, state, local or
foreign income or excise taxes or any other tax imposed on or measured by income
(or any interest or penalty with respect thereto or arising from a failure to
comply therewith).
SECTION 11.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or any Series
of Certificates may be prosecuted and enforced by Trustee without the possession
of any of the Certificates or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by Trustee shall be brought in its
own name as trustee. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
Trustee, its agents and counsel, be for the ratable benefit of any Series of
Holders in respect of which such judgment has been obtained.
SECTION 11.13 Suits for Enforcement. If a Servicer Default shall occur
and be continuing, Trustee, in its discretion may, subject to the provisions of
Section 10.1, proceed to protect and enforce its rights and the rights of any
Series of Holders under this Agreement by a suit, action or proceeding in equity
or at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the execution of any power
granted in this Agreement or for the enforcement of any other legal, equitable
or other remedy as Trustee, being advised by counsel, shall deem most effectual
to protect and enforce any of the rights of Trustee or any Series of Holders.
SECTION 11.14 Rights of Holders to Direct Trustee. Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 50% of the
Aggregate Investor Interest (or, with respect to any remedy, trust or power that
does not relate to all Series, 50% of the Aggregate Investor Interest of the
Investor Certificates of all Series to which such remedy, trust or power
relates) shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to Trustee, or exercising any trust or
power conferred on Trustee; provided that (a) subject to Section 11.1, Trustee
shall have the right to decline to follow any such direction if Trustee being
advised by counsel determines that the action so directed may not lawfully be
taken, or if Trustee in good faith shall, by a Responsible Officer or
Responsible Officers of Trustee, determine that the proceedings so directed
would be illegal or involve it in personal liability or be unduly prejudicial to
the rights of Holders not parties to such direction and (b) nothing in this
Agreement shall impair the right of Trustee to take any action deemed proper by
Trustee and which is not inconsistent with such direction of such Holders of
Investor Certificates.
SECTION 11.15 Representations and Warranties of Trustee. Trustee
represents and warrants that:
(i) Trustee is a banking corporation organized, existing and
authorized to engage in the business of banking under the laws of the
State of New York;
(ii) Trustee has full power, authority and right to execute,
deliver and perform this Agreement, and has taken all necessary action
to authorize the execution, delivery and performance by it of this
Agreement; and
(iii) this Agreement has been duly executed and delivered by
Trustee.
SECTION 11.16 Maintenance of Office or Agency. Trustee will maintain
at its expense in the Borough of Manhattan, the City of New York an office or
offices, or agency or agencies, where notices and demands to or upon Trustee in
respect of the Certificates and this Agreement may be served. Trustee initially
appoints the Corporate Trust Office as its office for such purposes in New York.
Trustee will give prompt written notice to Servicer and to Holders (or in the
case of Holders of Bearer Certificates, in the manner provided for in the
related Supplement) of any change in the location of the Certificate Register or
any such office or agency.
SECTION 11.17 Obligor Claims. In connection with any offset defenses,
or affirmative claim for recovery, asserted in legal actions brought by Obligors
under one or more Receivables based upon provisions therein or upon other rights
or remedies arising from any Requirements of Law applicable to the Receivables:
(a) The Trustee is the holder of the Receivables only as trustee on
behalf of the holders of the Certificates, and not as principal or in any
individual or personal capacity.
(b) The Trustee shall not be personally liable for, or obligated to
pay Obligors, any affirmative claims asserted thereby, or responsible to holders
of the Certificates for any offset defense amounts applied against Receivable
payments, pursuant to such legal actions.
(c) The Trustee will pay, solely from available Trust money,
affirmative claims for recovery by Obligors only pursuant to final judicial
orders or judgments, or judicially approved settlement agreements, resulting
from such legal actions.
(d) The Trustee will comply with judicial orders and judgments which
require its actions or cooperation in connection with Obligors' legal actions to
recover affirmative claims against holders of the Grantor Trust Certificates.
(e) The Trustee will cooperate with and assist the Transferor, the
Servicer, or holders of the Certificates in their defense of legal actions by
Obligors to recover affirmative claims if such cooperation and assistance is not
contrary to the interest of the Trustee as a party to such legal actions and if
the Trustee is satisfactorily indemnified for all liability, costs and expenses
arising therefrom.
(f) The Transferor hereby agrees to indemnify, hold harmless and
defend the Trustee from and against any and all liability, loss, costs and
expenses of the Trustee resulting from any affirmative claims for recovery
asserted or collected by Obligors under their Receivables.
SECTION 11.18 Liabilities to Obligors. No liability to any Obligor
under any of the Receivables arising out of any act or o mission to act of the
Servicer or any Transferor in servicing the Obligations is intended to be
assumed by the Trust or the Trustee under, or as a result of, this Agreement and
the transactions contemplated hereby and, to the maximum extent permitted and
valid under applicable provisions of law, the Trust and the Trustee expressly
disclaim such assumption.
ARTICLE XII TERMINATION
SECTION 12.1 Termination of Trust. (a) The respective obligations and
responsibilities of Transferor, Servicer and Trustee created hereby (other than
the obligation of Trustee to make payments to Holders as hereafter set forth)
shall terminate, except with respect to the duties described in Section 11.5 and
subsections 2.4(c) and 12.3(b), on the Trust Termination Date; provided that the
Trust shall not terminate on the date specified in clause (a) of the definition
of "Trust Termination Date" if each of Servicer and Transferor notify Trustee in
writing, not later than five Business Days preceding such date, that they desire
that the Trust not terminate on such date, which notice (such notice, a "Trust
Extension") shall specify the date on which the Trust shall terminate (such
date, the "Extended Trust Termination Date"); provided that the Extended Trust
Termination Date shall be not later than April 7, 2020. Servicer and Transferor
may on any date following the Trust Extension, so long as no Series of
Certificates is outstanding, deliver a notice in writing to Trustee changing the
Extended Trust Termination Date.
(b) All principal or interest with respect to any Series of Investor
Certificates shall be due and payable no later than the Series Termination Date
with respect to such Series. Unless otherwise provided in a Supplement, in the
event that the Investor Interest of any Series of Certificates is greater than
zero on its Series Termination Date (after giving effect to all transfers,
withdrawals, deposits and drawings to occur on such date and the payment of
principal to be made on such Series on such date), Trustee will sell or cause to
be sold, and pay the proceeds first, to all Holders of such Series pro rata in
final payment of all principal of and accrued interest on such Series of
Certificates, and second, as provided in the related Supplement, an amount of
Principal Receivables and the related Finance Charge Receivables (or interests
therein) up to 110% of the Investor Interest of such Series at the close of
business on such date (but in no event in excess of the applicable Investor
Percentages of Principal Receivables and Finance Charge Receivables on such
date). Trustee shall notify each Credit Enhancement Provider and each Rating
Agency of the proposed sale of such Receivables and shall provide each Credit
Enhancement Provider an opportunity to bid on such Receivables. Transferor shall
be permitted to purchase such Receivables in such case and shall have a right of
first refusal with respect thereto. Any proceeds of such sale in excess of such
principal and interest paid shall be paid to Transferor. Upon such Series
Termination Date with respect to the applicable Series of Certificates, final
payment of all amounts allocable to any Investor Certificates of such Series
shall be made in the manner provided in Section 12.3.
SECTION 12.2 Optional Purchase. (a) If so provided in any Supplement,
Transferor may, but shall not be obligated to, cause a final distribution to be
made in respect of the related Series of Certificates on a Distribution Date
specified in such Supplement by depositing into the Distribution Account or the
applicable Series Account, not later than the Transfer Date preceding such
Distribution Date, for application in accordance with Section 12.3, the amount
specified in such Supplement; provided that if the rating test referred to below
is not satisfied at the time of such deposit, no such event shall occur unless
Transferor shall deliver an Opinion of Counsel reasonably acceptable to Trustee
that such deposit into the Distribution Account as provided in the related
Supplement would not constitute a fraudulent conveyance of Transferor. For
purposes of the foregoing, the "rating test" will be deemed to have been
satisfied if (x) the short-term deposits of Transferor are rated at least P-3 by
Xxxxx'x, (y) the long-term unsecured debt obligations of Transferor are rated at
least Baa3 by Xxxxx'x or (z) the counterparty risk or long-term unsecured debt
of Mellon Bank Corporation is rated at least Baa3 by Xxxxx'x (but the rating
test may only be satisfied pursuant to this clause (z) so long as (1) neither
Transferor's short-term deposits nor Transferor's unsecured long-term debt
obligations are rated by Xxxxx'x and (2) Xxxxx'x has not notified Transferor
that reliance upon Mellon Bank Corporation's ratings for this purpose would
result in the lowering of Xxxxx'x then-existing rating of the Investor
Certificates).
(b) The amount deposited pursuant to subsection 12.2(a) shall be paid
to the Investor Holders of the related Series pursuant to Section 12.3 on the
related Distribution Date following the date of such deposit. All Certificates
of a Series which are purchased by Transferor pursuant to subsection 12.2(a)
shall be delivered by Transferor upon such purchase to, and be canceled by, the
Transfer Agent and Registrar and be disposed of in a manner satisfactory to
Trustee and Transferor. The Investor Interest of each Series which is purchased
by Transferor pursuant to subsection 12.2(a) shall, for the purposes of the
definition of "Transferor Interest," be deemed to be equal to zero on the
Distribution Date following the making of the deposit, and the Transferor
Interest shall thereupon be deemed to have been increased by the Investor
Interest of such Series.
SECTION 12.3 Final Payment with Respect to any Series. (a) Written
notice of any termination, specifying the Distribution Date upon which the
Investor Holders of any Series may surrender their Certificates for payment of
the final distribution with respect to such Series and cancellation, shall be
given (subject to at least two Business Days' prior notice from Servicer to
Trustee) by Trustee to Investor Holders of such Series mailed not later than the
fifth day of the month of such final distribution (or in the manner provided by
the Supplement relating to such Series) specifying (i) the Distribution Date
(which shall be the Distribution Date in the month (x) in which the deposit is
made pursuant to subsection 2.4(e), 9.2(a), 10.2(a), or subsection 12.2(a) of
this Agreement or such other section as may be specified in the related
Supplement, or (y) in which the related Series Termination Date occurs) upon
which final payment of such Investor Certificates will be made upon presentation
and surrender of such Investor Certificates at the office or offices therein
designated (which, in the case of Bearer Certificates, shall be outside the
United States), (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Investor
Certificates at the office or offices therein specified. Servicer's notice to
Trustee in accordance with the preceding sentence shall be accompanied by an
Officers' Certificate setting forth the information specified in Article V of
this Agreement covering the period during the then current calendar year through
the date of such notice and setting forth the date of such final distribution.
Trustee shall give such notice to the Transfer Agent and Registrar and the
Paying Agent at the time such notice is given to such Investor Holders.
(b) Notwithstanding the termination of the Trust pursuant to
subsection 12.1(a) or the occurrence of the Series Termination Date with respect
to any Series, all funds then on deposit in the Finance Charge Account, the
Excess Funding Account, the Distribution Account or any Series Account
applicable to the related Series shall continue to be held in trust for the
benefit of the Holders of the related Series and the Paying Agent or Trustee
shall pay such funds to the Holders of the related Series upon surrender of
their Certificates (which surrenders and payments, in the case of Bearer
Certificates, shall be made only outside the United States). In the event that
all of the Investor Holders of any Series shall not surrender their Certificates
for cancellation within six months after the date specified in the
above-mentioned written notice, Trustee shall give a second written notice (or,
in the case of Bearer Certificates, publication notice) to the remaining
Investor Holders of such Series upon receipt of the appropriate records from the
Transfer Agent and Registrar to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within one and
one-half years after the second notice with respect to a Series, all the
Investor Certificates of such Series shall not have been surrendered for
cancellation, Trustee may take appropriate steps or may appoint an agent to take
appropriate steps, to contact the remaining Investor Holders of such Series
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds in the Distribution Account or any Series Account held for the
benefit of such Investor Holders. Trustee and the Paying Agent shall pay to
Transferor upon request any monies held by them for the payment of principal or
interest which remains unclaimed for two years. After payment to Transferor,
Investor Holders entitled to the money must look to the Transferor for payment
as general creditors unless applicable abandoned property law designates another
Person.
(c) All Certificates surrendered for payment of the final distribution
with respect to such Certificates and cancellation shall be canceled by the
Transfer Agent and Registrar and be disposed of in a manner satisfactory to
Trustee and Transferor.
SECTION 12.4 Termination Rights of Transferor. Upon the termination of
the Trust pursuant to Section 12.1, and after payment of all amounts due
hereunder on or prior to such termination, Trustee shall execute a written
reconveyance substantially in the form of Exhibit G pursuant to which it shall
reconvey to Transferor (without recourse, representation or warranty) all right,
title and interest of the Trust in the Receivables, whether then existing or
thereafter created, all moneys due or to become due with respect to such
Receivables (including all accrued interest theretofore posted as Finance Charge
Receivables and Recoveries) and all proceeds of such Receivables and Unearned
Premiums relating to such Receivables, and all proceeds thereof, except for
amounts held by Trustee pursuant to subsection 12.3(b). Trustee shall execute
and deliver such instruments of transfer and assignment, in each case without
recourse, as shall be reasonably requested by Transferor to vest in Transferor
all right, title and interest which the Trust had in the Receivables.
ARTICLE XIII MISCELLANEOUS PROVISIONS
SECTION 13.1 Amendment. (a) This Agreement or any Supplement may be
amended in writing from time to time by Servicer, Back-up Servicer, Transferor
and Trustee, without the consent of any of Holders; provided that such action
shall not, as evidenced by an Opinion of Counsel for Transferor addressed and
delivered to Trustee, adversely affect in any material respect the interests of
any Investor Holder; provided further that the Rating Agency Condition shall
have been satisfied with respect to such action. This Agreement or any
Supplement may be amended in writing by Servicer, Back-up Servicer, Transferor
and Trustee, without the consent of any of the Holders to provide for additional
Credit Enhancement or substitute Credit Enhancement with respect to a Series, or
to change the definition of Eligible Account; provided that such action shall
not, in the reasonable belief of Transferor, as evidenced by an Officer's
Certificate, adversely affect in any material respect the interests of any
Investor Holders; provided further that the Rating Agency Condition shall have
been satisfied with respect to such action.
(b) This Agreement or any Supplement may also be amended in writing
from time to time by Servicer, Back-up Servicer, Transferor and Trustee with the
consent of the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 66-2/3% of the Investor Interest of each outstanding
Series adversely affected by such amendment for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or any Supplement or modifying in any manner the rights of
Investor Holders of any Series then issued and outstanding; provided that no
such amendment shall (i) reduce in any manner the amount of, or delay the timing
of, distributions which are required to be made on any Investor Certificates of
such Series without the consent of each Investor Holder of such Series, (ii)
change the definition of or the manner of calculating the Investor Interest or
the Investor Percentage of such Series without the consent of each Investor
Holder of such Series or (iii) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of each Investor Holder of
all Series adversely affected. Trustee may, but shall not be obligated to, enter
into any such amendment which affects Trustee's rights, duties or immunities
under this Agreement or otherwise.
(c) Notwithstanding anything in this Section 13.1 to the contrary, the
Supplement with respect to any Series may be amended on the terms and in
accordance with the procedures provided in such Supplement.
(d) Promptly after the execution of any such amendment (other than an
amendment pursuant to subsection (a)), Trustee shall furnish notification of the
substance of such amendment to each Investor Holder of each Series adversely
affected and to each Rating Agency providing a rating for such Series.
(e) It shall not be necessary for the consent of Investor Holders
under this Section 13.1 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Holders shall be subject to
such reasonable requirements as Trustee may prescribe.
(f) Any Supplement executed and delivered pursuant to Section 6.9 and
any amendments regarding the addition to or removal of Receivables from the
Trust as provided in Section 2.1(b) or 2.6, executed in accordance with the
provisions hereof, shall not be considered amendments to this Agreement for the
purpose of subsections 13.1(a) and (b).
(g) In connection with any amendment, Trustee may request an Opinion
of Counsel from Transferor or Servicer to the effect that the amendment complies
with all requirements of this Agreement.
SECTION 13.2 Protection of Right, Title and Interest to Trust. (a)
Servicer shall cause this Agreement, all amendments hereto and/or all financing
statements and continuation statements and any other necessary documents
covering the Holders and Trustee's right, title and interest to the Trust to be
promptly recorded, registered and filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required
by law fully to preserve and protect the right, title and interest of the
Holders or Trustee, as the case may be, hereunder to all property comprising the
Trust. Servicer shall deliver to Trustee file-stamped copies of, or filing
receipts for, any document recorded, registered or filed as provided above, as
soon as available following such recording, registration or filing. Transferor
shall cooperate fully with Servicer in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill the
intent of this subsection 13.2(a).
(b) Within 30 days after Transferor makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with subsection (a) seriously
misleading within the meaning of Section 9-402(7) of the UCC as in effect in the
Commonwealth of Pennsylvania, Transferor shall give Trustee notice of any such
change and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof.
(c) Each of Transferor and Servicer will give Trustee prompt written
notice of any relocation of any office from which it services Receivables or
keeps records concerning the Receivables or of its principal executive office
and whether, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement and shall file such
financing statements or amendments as may be necessary to continue the
perfection of the Trust's security interest in the Receivables and the proceeds
thereof. Each of Transferor and Servicer will at all times maintain each office
from which it services Receivables and its principal executive office within the
United States of America.
SECTION 13.3 Limitation on Rights of Holders. (a) The death or
incapacity of any Holder shall not operate to terminate this Agreement or the
Trust, nor shall such death or incapacity entitle such Holder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
(b) No Holder shall have any right to vote (except with respect to the
Investor Holders as provided in Section 13.1 hereof) or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Holders from time to
time as partners or members of an association; nor shall any Holder be under any
liability to any third person by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
(c) No Holder shall have any right by virtue of any provisions of this
Agreement to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Agreement, unless such Holder previously shall
have given written notice to Trustee, and unless the Holders of Certificates
evidencing Undivided Interests aggregating more than 50% of the Investor
Interest of any Series which may be adversely affected but for the institution
of such suit, action or proceeding, shall have made written request upon Trustee
to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and Trustee, for 60 days after its receipt of such notice, request and
offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Holder with every other Holder and Trustee, that no
one or more Holders shall have the right in any amount whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the Certificates,
or to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders.
For the protection and enforcement of the provisions of this Section 13.3, each
and every Holder and Trustee shall be entitled to such relief as can be given
either at law or in equity.
SECTION 13.4 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 13.5 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at, sent by facsimile to, sent by courier or mailed by
registered mail, return receipt requested, to (a) in the case of Transferor, to
Mellon Bank, N.A., One Mellon Bank Center, Suite 1910, 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000 Attention: Chief Financial Officer and
General Counsel, (b) in the case of Servicer, to AFCO Credit Corporation, 00
Xxxxxxx Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxxx X. Xxxxx,
III, Vice President and Chief Financial Officer, with a copy to Xxxxxx Xxxxxx,
Esq., Senior Vice President, General Counsel and Secretary, (c) in the case of
Trustee, to the Corporate Trust Office, (d) in the case of the Back-up Servicer
Premium Financing Specialists, Inc., (e) in the case of the Credit Enhancement
Provider for a particular Series, the address, if any, specified in the
Supplement relating to such Series and (f) in the case of the Rating Agency for
a particular Series, the address, if any, specified in the Supplement relating
to such Series; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party. Unless
otherwise provided with respect to any Series in the related Supplement any
notice required or permitted to be mailed to a Holder shall be given by first
class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register, or with respect to any notice required or permitted to be
made to the Holders of Bearer Certificates, by publication in the manner
provided in the related Supplement. If and so long as any Series or Class is
listed on the Luxembourg Stock Exchange and such Exchange shall so require, any
Notice to Investor Holders shall be published in an authorized newspaper of
general circulation in Luxembourg within the time period prescribed in this
Agreement. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Holder receives such notice.
SECTION 13.6 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or rights of the Holders thereof.
SECTION 13.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 8.2, this Agreement may not be
assigned by Servicer without the prior consent of Holders of Investor
Certificates evidencing Undivided Interests aggregating not less than 66-2/3% of
the Investor Interest of each Series on a Series by Series basis and notice to
each Rating Agency.
SECTION 13.8 Certificates Non-Assessable and Fully Paid. It is the
intention of the parties to this Agreement that the Holders shall not be
personally liable for obligations of the Trust, that the Undivided Interests
represented by the Certificates shall be non-assessable for any losses or
expenses of the Trust or for any reason whatsoever, and that Certificates upon
authentication thereof by Trustee pursuant to Sections 2.1 and 6.2 are and shall
be deemed fully paid.
SECTION 13.9 Further Assurances. Transferor and Servicer agree to do
and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by Trustee more fully to
effect the purposes of this Agreement, including the execution of any financing
statements or continuation statements relating to the Receivables for filing
under the provisions of the UCC of any applicable jurisdiction.
SECTION 13.10 No Waiver, Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of Trustee, any Credit Enhancement
Provider or the Investor Holders, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
SECTION 13.11 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
SECTION 13.12 Third Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Holders and, to the
extent provided in the related Supplement, to the Credit Enhancement Provider
named therein, and their respective successors and permitted assigns. Except as
otherwise provided in this Article XIII, no other Person will have any right or
obligation hereunder.
SECTION 13.13 Actions by Holders. (a) Wherever in this Agreement a
provision is made that an action may be taken or a notice, demand or instruction
given by Investor Holders, such action, notice or instruction may be taken or
given by any Investor Holder, unless such provision requires a specific
percentage of Investor Holders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Holder shall bind such Holder and every subsequent
holder of such Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done or omitted
to be done by Trustee or Servicer in reliance thereon, whether or not notation
of such action is made upon such Certificate.
SECTION 13.14 Rule 144A Information. For so long as any of the
Investor Certificates of any Series or any Class are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, each of
Transferor, Servicer, Trustee and the Enhancement Provider for such Series agree
to cooperate with each other to provide to any Investor Holders of such Series
or Class and to any prospective purchaser of Certificates designated by such an
Investor Holder upon the request of such Investor Holder or prospective
purchaser, any information required to be provided to such holder or prospective
purchaser to satisfy the condition set forth in Rule 144A(d)(4) under the
Securities Act.
SECTION 13.15 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 13.16 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
MELLON BANK, N.A., Transferor
By:_________________________
Name:
Title:
AFCO CREDIT CORPORATION, Servicer
By:_________________________
Name:
Title:
AFCO ACCEPTANCE CORPORATION, Servicer
By:_________________________
Name:
Title:
PREMIUM FINANCING SPECIALISTS, INC.,
Back-up Servicer
By:_________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO, Trustee
By:_________________________
Name:
Title:
