SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
DECEMBER 19, 1996
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST.
(Exact name of registrant as specified in charter)
NEW YORK 333-11961 25-0659306
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
ONE MELLON BANK CENTER, 500 GRANT STREET, PITTSBURGH,
PENNSYLVANIA 15258
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 412-234-5222
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events
Mellon Bank, N.A. (the "Transferor") sold $440,000,000 of Mellon Bank Premium
Finance Loan Master Trust Class A Floating Rate Asset Backed Certificates,
Series 1996-1 and $25,000,000 of Mellon Bank Premium Finance Loan Master Trust
Class B Floating Rate Asset Backed Certificates, Series 1996-1 on December 19,
1996 pursuant to a Pooling and Servicing Agreement dated as of December 1, 1996
and the Series 1996-1 Supplement thereto (collectively, the "Pooling and
Servicing Agreement") dated December 1, 1996 each among the Transferor, AFCO
Credit Corporation as servicer, AFCO Acceptance Corporation as servicer, Premium
Financing Specialists, Inc., as back-up servicer, Premium Financing Specialists
of California, Inc., as back-up servicer and The First National Bank of
Chicago, as trustee, the
Class A Underwriting Agreement (the "Class A Underwriting Agreement") dated
December 12, 1996 between CS First Boston Corporation, as Representative of the
Several Underwriters (the "Underwriter") and the Transferor and the Class B
Underwriting Agreement (the "Class B Underwriting Agreement" and together with
the Class A Underwriting Agreement, the "Underwriting Agreements") dated
December 12, 1996 between the Underwriter and the Transferor. This Current
Report on Form 8-K is being filed to file a copy of the Pooling and Servicing
Agreement, the Underwriting Agreements, the Receivables Purchase Agreement and
the Certificateholders Statement relating to the Monthly Period ending December
31, 1996.
Capitalized terms not defined herein have the meanings assigned in the
Pooling and Servicing Agreement attached hereto as Exhibits 4.1 and 4.2.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
EXHIBIT NO.
1.1 Class A Underwriting Agreement
1.2 Series 1996-1 Supplement
4.1 Pooling and Servicing Agreement
4.2 Series 1996-1 Supplement
4.3 Receivables Purchase Agreement
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
(Registrant)
By: AFCO Credit Corporation, on behalf
of Mellon Bank Premium Finance
Loan Master Trust
Date: January 15, 1997 By: /S/ FREDERICK B. OLLETT, III
------------------------------
Name: Frederick B. Ollett, III
Title: Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
1.1 Class A Underwriting Agreement
1.2 Series 1996-1 Supplement
4.1 Pooling and Servicing Agreement
4.2 Series 1996-1 Supplement
4.3 Receivables Purchase Agreement
19.1 Certificateholders Statement
EXHIBIT 1.1
$440,000,000
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
CLASS A FLOATING RATE ASSET BACKED
CERTIFICATES, SERIES 1996-1
CLASS A UNDERWRITING AGREEMENT
December 12, 1996
CS FIRST BOSTON CORPORATION
as Representative of the
Several Underwriters
55 East 52nd Street
Park Avenue Plaza
New York, New York 10055
Ladies and Gentlemen:
Section 1. Introductory. AFCO Credit Corporation, a New York
corporation ("AFCO Credit"), and AFCO Acceptance Corporation, a California
corporation ("AFCO Acceptance" and together with AFCO Credit, the "Originators"
and in their capacity as servicer, the "Servicer") propose to convey commercial
insurance premium finance loans (the "Receivables") from time to time to Mellon
Bank, N.A., a national banking association organized under the laws of the
United States of America (the "Transferor"). The Transferor proposes to convey
such Receivables to the Mellon Bank Premium Finance Loan Master Trust (the
"Trust"), and proposes to cause the Trust to sell to the Underwriters named in
Schedule I hereto (the "Underwriters"), for whom you are acting as
representative (the "Representative"), $440,000,000 aggregate initial principal
amount of Class A Floating Rate Asset Backed Certificates, Series 1996-1 (the
"Class A Certificates"), in the Trust, the terms of which are described in the
Prospectus (as defined below). It is understood that Transferor is currently
entering into a Class B Underwriting Agreement dated the date hereof (the "Class
B Underwriting Agreement") among the Transferor and the Underwriters named on
Schedule I thereto (the "Class B Underwriters") providing for the sale of
$25,000,000 aggregate initial principal amount of Class B Floating Rate Asset
Backed Certificates, Series 1996-1 (the "Class B Certificates"). The Class A
Certificates and the Class B Certificates are referred to herein collectively as
the "Certificates." This Agreement and the Class B Underwriting Agreement are
referred to herein collectively as the "Underwriting Agreements."
The Receivables will be conveyed by the Originators to the Transferor
pursuant to the Receivables Purchase Agreement dated as of December 1, 1996 (the
"Receivables Purchase Agreement") between the Originators and the Transferor.
The Receivables will be conveyed by the Transferor to the Trust in exchange for
the Certificates pursuant to a Pooling and Servicing Agreement, dated as of
December 1, 1996 (the "P&S") and the Series 1996-1 Supplement thereto (the
"Series Supplement") and together with the P&S, (the "Pooling and Servicing
Agreement") dated as of December 1, 1996, each among the Transferor, the
Servicer, Premium Financing Specialists, Inc., a Missouri corporation ("PFSI"),
as back-up servicer and Premium Financing Specialists of California, Inc., a
California corporation ("PFSIC"), as back-up servicer (PFSI and PFSIC are
collectively referred to as the "Back-up Servicer") and The First National Bank
of Chicago, a national banking association, as trustee (the "Trustee"). In
addition, the Transferor, Servicer, Trustee, Alpine Securitization Corp., a
Delaware Corporation ("Alpine") (the "Collateral Interest Holder") and Credit
Suisse as Agent (the "Agent") will enter into a Loan Agreement to be dated as of
the Closing Date (the "Loan Agreement") pursuant to which the Collateral
Interest Holder will acquire $35,000,000 aggregate initial principal amount of
the Collateral Interest (the "Collateral Interest"), which will act as Credit
Enhancement for the Certificates.
Capitalized terms used herein (including in the Introductory hereto)
that are not otherwise defined shall have the meanings ascribed thereto in the
Pooling and Servicing Agreement.
Section 2. Representations and Warranties of Transferor. (a)
Transferor represents and warrants to, and agrees with, each Underwriter as set
forth in this Section 2. Certain terms used in this Section 2 are defined in
paragraph (i) below.
(i) Transferor meets the requirements for use of Form S-3
under the Securities Act and has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (Registration
No. 333-11961) including a related preliminary prospectus, on such Form
for the registration under the Securities Act, of the Certificates.
Transferor may have filed one or more amendments thereto, including the
related preliminary prospectus, each of which has previously been
furnished to the Representative. Transferor will next file with the
Commission (A) prior to the effectiveness of such registration
statement, a further amendment thereto (including the form of final
prospectus relating to the Class A Certificates) or (B) after
effectiveness of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b)(1) or 424(b)(4) under the
Securities Act. In the case of clause (B), Transferor has included in
such registration statement, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the
Securities Act and the rules thereunder to be included in the
Prospectus with respect to the Class A Certificates and the offering
thereof. As filed, such amendment and form of final prospectus shall
include all Rule 430A Information, together with all other such
required information, with respect to the Class A Certificates and the
offering thereof and, except to the extent the Underwriters shall agree
in writing to a modification, shall be in all substantive respects in
the form furnished to the Representative prior to the Execution Time
or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond
that contained in the latest preliminary prospectus which has
previously been furnished to the Representative) as Transferor has
advised the Representative, prior to the Execution Time, will be
included or made therein. If the Registration Statement contains the
undertakings specified by item 512(a) of Regulation S-K, the
Registration Statement, at the Execution Time, meets the requirements
set forth in Rule 415(a)(1)(x).
The terms that follow, when used in this Agreement, have the
meanings indicated. The term "Effective Date" means each date that the
Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" means the date and
time that this Agreement is executed and delivered by the parties
hereto. "Preliminary Prospectus" means any preliminary prospectus
referred to in the preceding paragraph and any preliminary prospectus
included in the Registration Statement which, at the Effective Date,
omits Rule 430A Information. "Prospectus" means the form of prospectus
relating to the Class A Certificates that is first filed with the
Commission pursuant to Rule 424(b) or, if no filing pursuant to Rule
424(b) is required, means the prospectus relating to the Class A
Certificates included in the Registration Statement at the Effective
Date. "Registration Statement" means the registration statement
referred to in the preceding paragraph and any registration statement
required to be filed under the Securities Act or rules thereunder,
including incorporated documents, exhibits and financial statements, in
the form in which it has or shall become effective and, in the event
any post-effective amendment thereto becomes effective prior to the
Closing Date, shall also mean such registration statement as so
amended. Such term shall include Rule 430A Information deemed to be
included therein at the Effective Date as provided by Rule 430A. "Rule
424," "Rule 430A," "Rule 415" and "Regulation S-K" refer to such rules
or regulations under the Securities Act. "Rule 430A Information" means
information with respect to the Class A Certificates and the offering
thereof permitted to be omitted from the Registration Statement when it
becomes effective pursuant to Rule 430A. Any reference herein to the
Registration Statement, or the Prospectus shall be deemed to refer to
and include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), on or before the Effective
Date of the Registration Statement or the issue date of the Prospectus,
as the case may be; and any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statement
or Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of the Prospectus, as the
case may be, deemed to be incorporated therein by reference.
(ii) On the Effective Date, the Registration Statement did or
will comply in all material respects with the applicable requirements
of the Securities Act and the rules thereunder; on the Effective Date
and when the Prospectus is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Prospectus (as amended and
together with any supplements thereto) did or will comply in all
material respects with the applicable requirements of the Securities
Act and the rules thereunder; on the Effective Date, the Registration
Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(as amended and together with any supplements thereto) will not,
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which
they were made, not misleading; provided, however, that Transferor
makes no representations or warranties as to the information contained
in or omitted from the Registration Statement or the Prospectus (or any
supplements thereto) in reliance upon and in conformity with
information furnished in writing to Transferor by any Underwriter
specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplements thereto).
(iii) Transferor is a national banking association duly
organized, validly existing and in good standing under the laws of the
United States, and has all requisite power, authority and legal right
to own its properties and conduct its business as described in the
Registration Statement and the Prospectus and to execute, deliver and
perform the transactions contemplated by the Underwriting Agreements,
the Pooling and Servicing Agreement, the Receivables Purchase Agreement
and the Loan Agreement (collectively the "Specified Agreements"), and
to authorize the authentication, execution and issuance of the
Certificates and the issuance of the Collateral Interest.
(iv) 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, except where failure to obtain such
qualification or such license would not materially adversely affect the
conduct of its business.
(v) The execution, delivery and performance by Transferor of
the Specified Agreements, the issuance of the Certificates and the
Collateral Interest and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized
by all necessary action or proceedings.
(vi) Transferor has duly and validly authorized the
conveyance of the Receivables to the Trust.
(vii) The execution, delivery and performance by Transferor of
the Specified Agreements, the issuance of the Certificates and the
Collateral Interest and the fulfillment of the terms hereof and thereof
will not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time
or both) a default under, or (other than the Lien of the Pooling and
Servicing Agreement) result in the creation or imposition of any Lien
under any material 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.
(viii) The execution, delivery and performance by Transferor
of the Specified Agreements, the issuance of the Certificates and the
Collateral Interest and the fulfillment of the terms hereof and
thereof, will not conflict with or violate any Requirements of Law
applicable to Transferor.
(ix) There are no proceedings or investigations
pending or, to the best knowledge of Transferor,
threatened against Transferor before any court, regulatory
body, administrative agency, arbitrator or other tribunal or
governmental instrumentality (A) asserting the invalidity of any
Specified Agreement or the Certificates or the Collateral Interest, (B)
seeking to prevent the issuance of the Certificates or the Collateral
Interest or the consummation of any of the transactions contemplated by
the Specified Agreements, (C) 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
any Specified Agreement, (D) seeking any determination or ruling that
would materially and adversely affect the validity or enforceability of
any Specified Agreements or the Certificates or the Collateral
Interest, or (E) seeking to affect adversely the income tax attributes
of the Trust, as described in the Prospectus under the heading "U.S.
Federal Income Tax Consequences"; and there are no contracts or
documents of Transferor that are required to be filed as exhibits to
the Registration Statement by the Securities Act or by the rules and
regulations of the Commissioner promulgated under the Securities Act
(the "Rules and Regulations") that have not been so filed.
(x) All approvals, authorizations, consents, orders and other
actions of any Person or of any governmental body or official required
in connection with the execution and delivery of the Specified
Agreements, the issuance of the Certificates and the Collateral
Interest and the performance of the transactions contemplated hereby
and thereby and the fulfillment of the terms hereof and thereof, have
been obtained.
(xi) Transferor has delivered to the Representative complete
and correct copies of (A) publicly available portions of the
Consolidated Reports of Condition and Income of Transferor for the
years ended December 31, 1993, 1994 and 1995, as submitted to the
Comptroller of the Currency; and (B) the December 31, 1993, 1994 and
1995, audited consolidated balance sheets of Mellon Bank Corporation
which are included in respectively Mellon Bank Corporation's 1993, 1994
and 1995 Annual Reports to Stockholders. Except as otherwise set forth
therein, or in other subsequent filings with the Commission, (x) there
has been no material adverse change in the condition (financial or
otherwise) of Transferor and (y) there have been no transactions
entered into by Transferor, other than those in the ordinary course of
its business, that are material with respect to Transferor.
(xii) Any taxes, fees and other governmental charges in
connection with the execution, delivery and performance of the
Specified Agreements and the Certificates and the Collateral Interest
shall have been paid by Transferor or will be paid by Transferor at or
prior to the Closing Date to the extent then due.
(xiii) The Certificates, when validly authenticated, issued
and delivered in accordance with the Pooling and Servicing Agreement
and sold to the Underwriters as provided herein and to the Class B
Underwriters pursuant to the Class B Underwriting Agreement, will be
duly and validly issued and outstanding and entitled to the benefits of
the Pooling and Servicing Agreement, and, together with the Pooling and
Servicing Agreement, the Loan Agreement and the Collateral Interest
will conform in all material respects to the descriptions thereof and
the statements in relation thereto contained in the Prospectus.
(xiv) Assuming the due authorization, execution and delivery
thereof by the other parties thereto, the Specified Agreements
constitute the legal, valid and binding agreement of Transferor
enforceable against the Transferor in accordance with its respective
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting enforcement of creditors' rights generally and by
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(xv) On the Closing Date, Transferor will have good and
marketable title to the Receivables and other property transferred by
it to the Trust pursuant to the Pooling and Servicing Agreement, free
and clear of Liens (other than the Lien of the Pooling and Servicing
Agreement), and will not have assigned to any Person (other than the
Trustee) any of its right, title or interest in any of such Receivables
or such other property or in the Pooling and Servicing Agreement, and
the Underwriters and the Class B Underwriters will have good and
marketable title to Certificates, free and clear of all Liens when
validly authenticated, issued and delivered in accordance with the
Pooling and Servicing Agreement and sold to the Underwriters as
provided herein and to the Class B Underwriters pursuant to the Class B
Underwriting Agreement.
(xvi) At the time of each transfer of Receivables by
Transferor to the Trust after the Closing Date, Transferor will have
good and marketable title to all Receivables and the other property
being transferred by it to the Trust on such day, free and clear of
Liens (other than the Lien of the Pooling and Servicing Agreement), and
will not have sold to any Person (other than the Trustee) any of its
right, title or interest in any of such Receivables or such other
property.
(xvii) Neither Transferor nor the Trust is an "investment
company" or "controlled" by an "investment company" as such terms are
defined in the Investment Company Act.
(xviii) As of the Closing Date each of the representations and
warranties of Transferor deemed made pursuant to the Pooling and
Servicing Agreement will be true and correct, and, as of each other
date on which Transferor is deemed, pursuant to the terms of the
Pooling and Servicing Agreement, to make any of the representations and
warranties set forth therein, and in Officer's Certificates of
Transferor delivered on each such date pursuant to the Pooling and
Servicing Agreement, will be true and correct and the Underwriters may
rely on such representations and warranties as if they were set forth
herein in full.
(b) Any Officer's Certificate signed by any officer of Transferor and
delivered to the Representative or its counsel shall be deemed a representation
and warranty of Transferor to the Underwriters as to the matters covered
thereby.
Section 3. Purchase and Sale. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, Transferor agrees to cause the Trust to sell to
each Underwriter, and each Underwriter agrees, severally and not jointly, except
as set forth in Section 9 below, to purchase the respective initial principal
amount of Class A Certificates set forth opposite such Underwriter's name in
Schedule I hereto, at a purchase price of 99.653125% of the aggregate principal
amount thereof.
The Class A Certificates will initially be represented by one or more
certificates representing $440,000,000 aggregate initial principal amount, each
of which will be registered in the name of Cede & Co., the nominee of The
Depository Trust Company ("DTC") (such certificates, the "DTC Certificates").
The interests of beneficial owners of the DTC Certificates will be represented
by book entries on the records of DTC and participating members thereof.
Definitive certificates evidencing the Class A Certificates will be available
only under the limited circumstances specified in the Pooling and Servicing
Agreement.
Delivery of the DTC Certificates shall be made to the accounts of the
several Underwriters at the office of DTC, 55 Water Street, 49th Floor, New
York, New York 10004, against payment by the several Underwriters of the
purchase price therefor to or upon the order of Transferor in immediately
available funds at the office of Stroock & Stroock & Lavan, New York, New York
at 10:00 a.m., New York time, on December 19, 1996, or at such other time not
later than seven full business days thereafter as Transferor and the
Underwriters determine, such time being herein referred to as the "Closing
Date". The certificates evidencing the DTC Certificates will be made available
for checking at the office of Stroock & Stroock & Lavan at Seven Hanover Square,
New York, New York 10004, at least 24 hours prior to the Closing Date.
Section 4. Offering by the Underwriters. (a) It is understood that the
Underwriters propose to offer the Class A Certificates for sale to the public as
set forth in the Prospectus.
(b) Each Underwriter agrees that if it is a foreign broker dealer not
eligible for membership in the National Association of Securities Dealers, Inc.
(the "NASD"), it will not effect any transaction in the Class A Certificates
within the United States or induce or attempt to induce the purchase of or sale
of the Class A Certificates within the United States, except that it shall be
permitted to make sales to other Underwriters or to its United States
affiliates; provided that such sales are made in compliance with an exemption of
certain foreign brokers or dealers under Rule 15a-6 under the Exchange Act and
in conformity with the Rules of Fair Practice of the NASD as such Rules apply to
non-NASD brokers or dealers.
(c) Each Underwriter represents and agrees that (i) it has not offered
or sold and, prior to the expiry of the period of six months from the Closing
Date, will not offer or sell any Class A Certificates to Persons in the United
Kingdom except to Persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom for the purposes of the
Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 of the
United Kingdom with respect to anything done by it in relation to the Class A
Certificates in, from or otherwise involving the United Kingdom; (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue of the Class A
Certificates to a Person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995
of the United Kingdom or is a Person to whom the document may otherwise lawfully
be issued or passed on.
Section 5. Certain Agreements of Transferor. Transferor covenants and
agrees with the several Underwriters that:
(a) Transferor will use its best efforts to cause the Registration
Statement, and any amendment thereto, if not effective at the Execution Time, to
become effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required under
Rule 424(b), Transferor will file the Prospectus, properly completed, pursuant
to Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Underwriters of such timely filing. Transferor will promptly
advise the Underwriters (i) when the Registration Statement, and any amendment
thereto, shall have become effective, (ii) when the Prospectus, and any
supplement thereto, shall have been filed with the Commission pursuant to Rule
424(b), (iii) of any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or threat of
any proceeding for that purpose and (v) of the receipt by Transferor of any
notification with respect to the suspension of the qualification of the Class A
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. Transferor will not file any amendment of the
Registration Statement or supplement to the Prospectus unless a copy has been
furnished to the Representative for its review prior to such filing. Transferor
will use its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the lifting thereof.
(b) If, at any time when a Prospectus relating to the Class A
Certificates is required to be delivered under the Securities Act, any event
occurs as a result of which such Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or if it shall be
necessary at any time to amend or supplement such Prospectus to comply with the
Securities Act or the Exchange Act or the Rules and Regulations thereunder,
Transferor promptly will prepare and file with the Commission an amendment or
supplement that will effect such compliance. Neither the consent of any
Underwriter to, nor the delivery by any Underwriter of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6 hereof.
(c) As soon as practicable, but not later than the Availability Date
(as defined below), Transferor will cause the Trustee to make generally
available to the Holders of the Class A Certificates and to the Representative
an earnings statement with respect to the Trust covering a period of at least 12
months beginning after the Effective Date that will satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 under the Securities Act. For
the purpose of the preceding sentence, "Availability Date" means the 45th day
after the end of the fourth fiscal quarter following the fiscal quarter that
includes the Effective Date, except that, if such fourth fiscal quarter is the
last quarter of Transferor's fiscal year, "Availability Date" means the 90th day
after the end of such fourth fiscal quarter.
(d) Transferor will furnish to the Underwriters copies of the
Registration Statement as originally filed and each amendment thereto (in each
case at least three of which will be signed and will include all exhibits), each
related Preliminary Prospectus, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as the Underwriters may reasonably request. Transferor will furnish
or cause to be furnished to the Representative copies of all reports on Form SR
required by Rule 463 under the Securities Act.
(e) Transferor will arrange for the qualification of the Class A
Certificates for sale under the laws of such jurisdictions in the United States
as the Underwriters may reasonably designate and will continue such
qualifications in effect so long as required for the distribution of the Class A
Certificates, provided that Transferor shall not be obligated to qualify to do
business nor become subject to service of process generally, but only to the
extent required for such qualification, in any jurisdiction in which it is not
currently so qualified, and will arrange for the determination of the legality
of the Class A Certificates for purchase by institutional investors.
(f) So long as any of the Class A Certificates are outstanding,
Transferor will deliver or cause to be delivered to the Underwriters (i) copies
of each report mailed to the Trustee or the Series 1996-1 Holders, as soon as
such report is mailed to the Trustee or such Holders, (ii) the annual statement
as to compliance and the annual statement of a firm of independent public
accountants furnished to the Trustee pursuant to Sections 3.5 and 3.6 of the
Pooling and Servicing Agreement, as soon as such statements are furnished to the
Trustee, (iii) copies of all documents required to be filed with the Commission
pursuant to the Exchange Act or any order of the Commission thereunder, and (iv)
such other information concerning Transferor, the Certificates or the Trust as
the Underwriters may reasonably request from time to time.
(g) Transferor will pay all expenses incident to the performance of
its obligations under this Agreement, including without limitation, (i) expenses
of preparing, printing, reproducing and distributing the Registration Statement
and each amendment thereto, the preliminary prospectuses, the Prospectus
(including any amendments and supplements thereto), the Receivables Purchase
Agreement, the Pooling and Servicing Agreement, the Loan Agreement and the Class
A Certificates, (ii) the fees and disbursements of the Trustee and its counsel,
(iii) the fees and disbursements of the independent public accountants of
Transferor and, to the extent previously agreed, fees and disbursements of
counsel to Transferor, (iv) the fees charged by Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Ratings Service, a division of The McGraw Hill
Companies, Inc. ("Standard & Poor's" and together with Moody's, the "Rating
Agencies") in connection with the rating of the Class A Certificates and the
Collateral Interest, as applicable, (v) the fees of DTC in connection with the
book-entry registration of the DTC Certificate, (vi) to the extent previously
agreed, the fees and expenses of Stroock & Stroock & Lavan in its roles as
underwriters' counsel and special counsel to Transferor and (vii) expenses
incurred in distributing preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters, and will reimburse
the Underwriters for any expenses (including reasonable fees and disbursements
of counsel) incurred by the Underwriters pursuant to Section 5(e) hereof in
connection with the qualification of the Class A Certificates for sale and
determination of their eligibility for investment under the laws of such
jurisdictions in the United States as the Underwriters may designate.
(h) On or before the Closing Date, Transferor shall cause the
Originators' books and records (including any computer records) to be marked
relating to the Receivables to be transferred to the Trust, to show the transfer
to the Trust of such Receivables, and from and after the Closing Date Transferor
shall not take any action inconsistent with the transfer to the Trust of such
Receivables, other than as permitted by the Pooling and Servicing Agreement.
(i) For a period of 30 days from the date hereof, none of Transferor or
any of its affiliates or any trust formed by it or any of its affiliates will,
without the prior written consent of the Underwriters, directly or indirectly,
offer, sell or contract to sell or announce the offering of, in a public or
private transaction, any other collateralized securities similar to the Class A
Certificates (other than the Class B Certificates and the Collateral Interest)
representing interests in insurance premium finance loans.
(j) So long as any Class A Certificates are outstanding, Transferor
will cause to be delivered to the Underwriters a reliance letter relating to
each Opinion of Counsel delivered to the Trustee or any Rating Agency by counsel
to Transferor pursuant to the Pooling and Servicing Agreement at the time such
opinion is delivered.
(k) To the extent, if any, that the rating provided with respect to the
Class A Certificates by any Rating Agency is conditional upon the furnishing of
documents or the taking of any other actions by Transferor, Transferor shall
furnish such documents and take any such other actions as may be required.
Section 6. Conditions of the Obligations of the Underwriters. The
obligation of the Underwriters to purchase and pay for the Class A Certificates
will be subject to the accuracy of the representations and warranties on the
part of Transferor herein as of the Execution Time and the Closing Date, to the
accuracy of the statements of the officers of the Originators and Transferor
made pursuant to the provisions hereof, to the performance by the Transferor of
their respective obligations hereunder and to the following additional
conditions precedent:
(a) (i) On the date of this Agreement, the Underwriters and Transferor
shall have received a letter, dated the date of delivery thereof (which, if the
Effective Time is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective Time is
subsequent to the execution and delivery of this Agreement, shall be prior to
the filing of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to the Effective Time), of KPMG Peat Marwick
("Peat Marwick") confirming that they are independent public accountants within
the meaning of the Securities Act and the Rules and Regulations, substantially
in the form of the draft to which the Underwriters have previously agreed and
otherwise in form and substance satisfactory to the Underwriters and counsel for
the Underwriters, and (ii) on the Closing Date, the Underwriters and Transferor
shall have received a letter, dated as of the Closing Date, from Peat Marwick
updating the letter referred to in clause (i) above, in form and substance
satisfactory to the Underwriters and counsel for the Underwriters.
(b) If the Registration Statement has not become effective prior to
the Execution Time, unless the Underwriters agree in writing to a later time,
the Registration Statement shall have become effective not later than 10:00 a.m.
New York time on the date of this Agreement (or the next day, if this Agreement
is executed after the close of business on the date hereof); if filing of the
Prospectus, or any supplements thereto, is required pursuant to Rule 424(b), the
Prospectus shall have been filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
any of the Originators or Transferor which, in the judgment of the Underwriters
materially impairs the investment quality of the Class A Certificates; (ii) any
downgrading in the rating of any debt securities of Mellon Bank Corporation or
any of its direct or indirect subsidiaries by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Securities Act), or any public announcement that any such organization has
under surveillance or review its rating of any such debt securities (other than
an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of Transferor on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by Federal, New
York or Pennsylvania authorities; or (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the judgment of the Underwriters, the effect of and such
outbreak, escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the Class
A Certificates.
(d) The Representative shall have received:
(1) The favorable opinion or opinions of internal counsel of
Transferor and/or of Reed Smith Shaw & McClay, counsel to Transferor,
dated the Closing Date and satisfactory in form and substance to the
Representative and its counsel, and in the aggregate substantially to
the effect that:
(i) Transferor has been duly organized as an
association licensed as a national banking association and is
validly existing and in good standing under the laws of the
United States, is duly qualified to do business and is in good
standing under the laws of each jurisdiction other than where
the failure to be so qualified would not have a material
adverse effect on Transferor's business, and has full
corporate power and authority to own its properties, to
conduct its business as described in the Registration
Statement and the Prospectus, to enter into and perform its
obligations under the Specified Agreements, to execute the
Certificates and to consummate the transactions contemplated
hereby and thereby;
(ii) each of the Specified Agreements and the
Certificates have each been duly authorized, executed and
delivered by Transferor;
(iii) neither the execution and delivery of the
Specified Agreements, nor the issuance or delivery of the
Certificates, nor the consummation of any of the transactions
contemplated herein or therein, nor the fulfillment of the
terms of the Certificates or the Specified Agreements, will
conflict with or violate, result in a material breach of or
constitute a default under (A) any Requirements of Law
applicable to Transferor or any statute or regulation
currently applicable to the Trust, (B) any term or provision
of any order known to such counsel to be currently applicable
to Transferor or the Trust of any court, regulatory body,
administrative agency or governmental body having jurisdiction
over Transferor or the Trust, as the case may be, or (C) any
term or provision of any indenture or other agreement or
instrument known to such counsel to which Transferor or the
Trust is a party or by which either of them or any of their
properties are bound (provided that the opinion provided
pursuant to this paragraph may exclude the indemnification and
contribution provisions of the Underwriting Agreements);
(iv) except as otherwise disclosed in the Prospectus
(and any supplements thereto) or the Registration Statement,
there is no pending or, to the best knowledge of such
counsel, threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator with respect to the Trust, the Certificates, the
Specified Agreements or any of the transactions contemplated
therein or with respect to Transferor which, taking into
account the likelihood of the outcome, the damages or other
relief sought and other relevant factors, would have a
material adverse effect on the holders of the Certificates or
upon the ability of Transferor to perform its obligations
under the Specified Agreements; and any statements included
in the Registration Statement and the Prospectus (and any
amendments or supplements thereto) describing (A) legal
proceedings relating to Transferor and (B) the Premium
Finance Agreements in each case fairly summarize the matters
therein described;
(v) such counsel has no reason to believe that at
the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus (and any amendments or supplements thereto as of
the Closing Date) includes any untrue statement of a material
fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading (other than, in both cases,
financial and statistical information contained or required
to be contained therein as to which such counsel need express
no belief) (such belief may be limited to the sections of the
Prospectus under the headings "Prospectus
Summary--Transferor," "Prospectus Summary--Servicer,"
"Maturity Assumptions (limited to the penultimate paragraph
thereof)," "Business of the Originators," and "The
Receivables" and the parallel sections of the Registration
Statement; and
(vi) no approval, authorization, consent, order,
registration, filing, qualification, license or permit of or
with any court or governmental agency or body is required for
the consummation by Transferor or the Trust of the
transactions contemplated in or the performance of any of its
duties and obligations under the Specified Agreements, except
such as have been obtained under the Securities Act and such
as may be required under the blue sky laws of any
jurisdiction inside the United States in connection with the
purchase and distribution of the Class A Certificates by the
Underwriters and such as may be required under insurance
premium finance or similar laws.
In rendering such opinion counsel may rely as to
matters of fact, to the extent deemed proper and as stated
therein, on certificates of responsible officers of the
Trust, Transferor and public officials. References to the
Prospectus in this paragraph (d) include any supplements
thereto.
(2) The favorable opinion of Stroock & Stroock & Lavan,
counsel for the Underwriters and special counsel to Transferor, dated
the Closing Date and to the effect that:
(i) the Certificates, when executed, authenticated
and delivered as specified in the Pooling and Servicing
Agreement, and delivered against payment of the consideration
specified herein, will be duly and validly issued and
outstanding and entitled to the benefits of the Pooling and
Servicing Agreement;
(ii) the Receivables Purchase Agreement constitutes
the legal, valid and binding agreement of each of the
Originators and the Transferor, enforceable in accordance
with its terms, subject (a) to the effect of bankruptcy,
insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally and
court decisions with respect thereto, (b) to the
understanding that no opinion is expressed as to the
application of equitable principles in any proceeding,
whether at law or in equity, and (c) to limitations of public
policy under applicable securities laws as to rights of
indemnity and contribution thereunder;
(iii) each of the Pooling and Servicing Agreement
and the Loan Agreement constitutes the legal, valid and
binding agreement of Transferor, enforceable in accordance
with its terms, subject (a) to the effect of bankruptcy,
insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally and
court decisions with respect thereto, (b) to the
understanding that no opinion is expressed as to the
application of equitable principles in any proceeding,
whether at law or in equity, and (c) to limitations of public
policy under applicable securities laws as to rights of
indemnity and contribution thereunder;
(iv) the Registration Statement has become effective
under the Securities Act, and, to the best of their knowledge
and information, no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, and the
Registration Statement and the Prospectus, and each amendment
or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects
with the requirements of the Securities Act and the Rules and
Regulations.
(v) Such counsel has participated in conferences
with representatives of the Transferor, the Originators and
the Representative, at which the contents of the Registration
Statement, the Prospectus and related matters were discussed
and, although such counsel is not passing upon and do not
assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration
Statement and the Prospectus (except to the extent set forth
in paragraph (ix) below), on the basis of the foregoing
(relying as to materiality to a large extent upon the
opinions of officers and other representatives of the
Transferor and the Originators), no facts have come to such
counsel's attention which would lead such counsel to believe
that the Registration Statement at the time it became
effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein no
misleading or that the Prospectus, on the date hereof,
includes an untrue statement of a material fact or omits to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading (other than, in the case
of both the Registration Statement and the Prospectus, the
financial statements and other financial and statistical
information contained therein or incorporated by reference
therein, as to which, in each case, no view shall be
expressed);
(vi) the Certificates, the Receivables Purchase
Agreement and the Pooling and Servicing Agreement each
conform in all material respects with the description thereof
contained in the Registration Statement and the Prospectus;
(vii) the Pooling and Servicing Agreement is not
required to be qualified under the Trust Indenture Act of
1939, as amended;
(viii) the Trust is not an "investment company"
within the meaning of the Investment Company Act;
(ix) the statements in the Registration Statement
under the heading "Certain Legal Aspects of the
Receivables-Transfer of Receivables", "U.S. Federal Income
Tax Consequences" and "ERISA Considerations" to the extent
that they constitute statements of matters of law or legal
conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material
respects;
(x) the Receivables constitute "general intangibles"
as defined in the Uniform Commercial Code in the State of New
York;
(xi) (x) the Certificates will properly be treated
as indebtedness for federal income tax purposes and (y) the
Trust will not be classified as an association or a publicly
traded partnership taxable as a corporation for federal
income tax purposes; and
(xii) such other opinions as the Rating Agencies may
require.
In rendering such opinion, Stroock & Stroock & Lavan may rely on the
opinions of Reed Smith Shaw & McClay and internal counsel to Transferor and
Originators, as to the matters dealt with in such opinions.
(3) The favorable opinion of Reed Smith Shaw & McClay, counsel
to Transferor, dated the Closing Date and satisfactory in form and
substance to the Representative and its counsel, and substantially to
the effect that:
(i) the Receivables constitute "general intangibles"
as defined in the Uniform Commercial Code in effect in the
State of Pennsylvania;
(ii) Uniform Commercial Code financing statements
with respect to the Investor Interest in the Receivables and
the proceeds thereof have been filed in the office of the
Secretary of the Commonwealth of Pennsylvania. No other
filings or other actions, with respect to the Trustee's
interest in the Receivables transferred and to be transferred
by Transferor to the Trust, are necessary to perfect the
interest of the Trustee in the Receivables, and the proceeds
thereof, against third parties, except that appropriate
continuation statements must be filed at five-year intervals;
and
(iii) in the event that a court were to conclude
that the assignment of the Receivables, all documents and
instruments relating thereto and all proceeds thereof to the
Trustee pursuant to the Pooling and Servicing Agreement was
not a sale, the Pooling and Servicing Agreement, together
with the filing of the financing statements referred to in
paragraph (ii) above, create a first priority perfected
security interest in the Receivables transferred and to be
transferred by Transferor to the Trust, all documents and
instruments relating thereto and all proceeds thereof, prior
to any security interests which may be perfected under
Pennsylvania law by the filing of financing statements (in
rendering such opinion counsel may take such exceptions as
are appropriate and reasonably acceptable under the
circumstances).
(4) The favorable opinion or opinions of internal counsel of
each of the Originators and/or of Reed Smith Shaw & McClay, counsel to
Originators, dated the Closing Date and satisfactory in form and
substance to the Representative and its counsel, and in the aggregate
substantially to the effect that:
(i) each of the Originators has been duly organized
and licensed as a corporation and is validly existing and in
good standing under the laws of New York and California,
respectively, is duly qualified to do business and is in good
standing under the laws of each jurisdiction where it
conducts its business other than where the failure to be so
qualified would not have a material adverse effect on
Originator's business, and has full corporate power and
authority to own its properties, to conduct its business as
described in the Registration Statement and the Prospectus,
to enter into and perform its obligations under the Specified
Agreements to which it is a party and to consummate the
transactions contemplated hereby and thereby;
(ii) each of the Specified Agreements to which it is
a party has been duly authorized, executed and delivered by
each Originator, as the case may be;
(iii) neither the execution and delivery of the
Specified Agreements to which it is a party, nor the
consummation of any of the transactions contemplated herein
or therein, nor the fulfillment of the terms of the Specified
Agreements, will conflict with or violate, result in a
material breach of or constitute a default under (A) any
Requirements of Law applicable to either of the Originators
or any statute or regulation currently applicable, (B) any
term or provision of any order known to such counsel to be
currently applicable to either of the Originators of any
court, regulatory body, administrative agency or governmental
body having jurisdiction over either of the Originators, as
the case may be, or (C) any term or provision of any
indenture or other agreement or instrument known to such
counsel to which either of the Originators is a party or by
which either of them or any of their properties are bound;
(iv) except as otherwise disclosed in the Prospectus
(and any supplements thereto) or the Registration Statement,
there is no pending or, to the best knowledge of such
counsel, threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator with respect to the Specified Agreements to which
the Originators are a party or any of the transactions
contemplated herein or therein or with respect to the
Originators which would have a material adverse effect on the
Certificates or the Trust or upon the ability of either of
the Originators to perform its obligations under the
Specified Agreements; and the statements included in the
Registration Statement, and the Prospectus (and any
supplements thereto) describing (A) legal proceedings
relating to the Originators and (B) the insurance premium
finance loan agreements, regulation of premium finance
companies and state insurance guaranty funds in each case
fairly summarize the matters therein described;
(v) such counsel has no reason to believe that at
the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus (and any supplements thereto as of the Closing
Date) includes any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading (other than, in both cases,
financial and statistical information contained or required
to be contained therein as to which such counsel need express
no belief) (such belief may be limited to the sections of the
Prospectus under the headings "Prospectus Summary -- Trust
Assets," "Business of the Originators," and "The
Receivables");
(vi) no approval, authorization, consent, order,
registration, filing, qualification, license or permit of or
with any court or governmental agency or body is required for
the consummation or performance by the Originators, the
Transferor, the Trustee or the Trust of the transactions
contemplated by, or performance of their respective
obligations under any of the Specified Agreements, except
such as have been obtained under the Securities Act and such
as may be required under the blue sky laws of any
jurisdiction inside the United States in connection with the
purchase and distribution of the Class A Certificates by the
Underwriters and such filings or other approvals (specified
in such opinion) as have been made or obtained; and
(vii) such counsel has been advised of the
Originators' standard operating procedures relating to the
Originators' acquisition of a perfected first priority
security interest in the unearned premiums securing the
obligations of the borrowers under insurance premium finance
agreements originated by Originators in the ordinary course
of the Originators' business. Assuming that the Originators'
standard operating procedures are followed with respect to
the perfection of security interests in the unearned premiums
relating to the Receivables (such counsel having no reason to
believe that the Originators has not or will not continue to
follow its standard operating procedures in connection with
the perfection of security interests in unearned premiums),
the Originator has acquired or will acquire a perfected first
priority security interest in the unearned premiums relating
to the Receivables.
In rendering such opinion counsel may rely as to matters of
fact, to the extent deemed proper and as stated therein, on
certificates of responsible officers of the Trust, Transferor and
public officials. References to the Prospectus in this paragraph (d)
include any supplements thereto.
(5) The favorable opinion or opinions of internal counsel of
Back-up Servicer and/or of Lathrop & Gage, L.C., counsel to Back-up
Servicer, dated the Closing Date and satisfactory in form and substance
to the Representative and its counsel, and in the aggregate
substantially to the effect that:
(i) Each of PFSI and PFSIC has been duly organized
and licensed as a corporation and is validly existing and in
good standing under the laws of its incorporation, is duly
qualified to do business and is in good standing under the
laws of its incorporation and has full corporate power and
authority to enter into and perform its obligations under the
Pooling and Servicing Agreement, and to consummate the
transactions contemplated thereby;
(ii) each of the Specified Agreements as to which it
is a party to have been duly authorized, executed and
delivered by the Back-up Servicer;
(iii) neither the execution of the Pooling and
Servicing Agreement nor the performance by the Back-up
Servicer of its obligations as a successor Servicer will
conflict with or violate, result in a material breach of or
constitute a default under (A) any Requirements of Law
applicable to Back-up Servicer, (B) any term or provision of
any order known to such counsel to be currently applicable to
Back-up Servicer of any court, regulatory body,
administrative agency or governmental body having
jurisdiction over Back-up Servicer, as the case may be, or
(C) any term or provision of any indenture or other agreement
or instrument known to such counsel to which Back-up Servicer
is a party or by which any of the Back-up Servicer's
properties are bound;
(iv) assuming the laws of the State of New York are
the same as the laws of the State of Missouri with respect to
PFSI, and California with respect to PFSIC, the Pooling and
Servicing Agreement constitutes the legal, valid and binding
obligation of PFSI and PFSIC, respectively, enforceable in
accordance with its respective terms, except that (y) the
enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights and
(z) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought; and
(v) no approval, authorization, consent, order,
registration, filing, qualification, license or permit of or
with any court or governmental agency or body is required for
the consummation or performance by the Back-up Servicer of
the transactions contemplated by, or performance of its
obligations under the Pooling and Servicing Agreement
(including the performance of the Back-up Servicer of the
obligations of the Servicer under the Pooling and Servicing
Agreement), except such as have been made or obtained (as
specified in such opinion).
(6) Reliance letters relating to each opinion rendered to the
Trustee or any Rating Agency by Reed, Smith, Shaw & McClay or any other
counsel to Transferor in connection with the rating of the
Certificates.
(7) The favorable opinion of internal counsel to the Trustee,
dated the Closing Date and satisfactory in form and substance to the
Representative and its counsel to the effect that:
(i) The Trustee has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the United States of America with full power and
authority (corporate and other) to own its properties and
conduct its business, as presently conducted by it, and to
enter into and perform its obligations under the Specified
Agreements to which it is a party and to issue the
Certificates and the Collateral Interest;
(ii) each of the Specified Agreements to which it is
a party has been duly authorized, executed and delivered by
the Trustee;
(iii) assuming the laws of the State of Illinois are
the same as the laws of the State of New York, the Specified
Agreements to which it is a party constitute the legal, valid
and binding obligation of the Trustee, enforceable in
accordance with their respective terms, except that (y) the
enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights and
(z) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(iv) the Certificates have been duly executed,
authenticated and delivered by the Trustee;
(v) neither the execution and delivery by the
Trustee of the Specified Agreements to which it is a party
nor the consummation of any of the transactions by the
Trustee contemplated thereby required the consent or approval
of, the giving of notice to, the registration with or the
taking of any other action with respect to, any governmental
authority or agency under any existing federal or state law
governing the banking or trust powers of the Trustee; and
(vi) the execution and delivery of the Specified
Agreements to which it is a party by the Trustee and the
performance by the Trustee of their respective terms do not
conflict with or result in a violation of (A) any law or
regulation of the United States of America or the State of
Illinois governing trust powers of the Trustee, (B) the
Articles of Association or By-Laws of the Trustee, or (C) to
the best of their knowledge, any indenture, lease, or other
material agreement to which the Trustee is a party or to
which its assets are subject.
(e) The Representative shall have received a certificate dated the
Closing Date of the President, any Vice President, the Treasurer or any
Assistant Treasurer, of Transferor in which such officer shall state that the
representations and warranties of Transferor in this Agreement are true and
correct, and that Transferor has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission, and subsequent to the date of
the most recent financial statements of Transferor delivered to the
Representative hereunder, there has been no material adverse change in the
condition, financial or otherwise, whether or not arising from transactions in
the ordinary course of business, of Transferor except as set forth in or
contemplated by the Registration Statement and the Prospectus.
(f) The Representative shall have received a certificate dated the
Closing Date of the President, any Vice President, the Treasurer or any
Assistant Treasurer, of each of the Originators in which such officer shall
state that the representations and warranties of each of the Originators in
Specified Agreements to which it is a party are true and correct, and that each
of the Originators has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to the Closing
Date.
(g) The Class A Certificates shall be rated "Aaa" by Moody's and "AAA"
by Standard & Poor's, and the Class B Certificates shall be rated at least "A2"
by Moody's and "A" by Standard & Poor's.
(h) The Representative shall have received evidence satisfactory to it
and its counsel that, on or before the Closing Date, UCC-1 financing statements
have been filed in the office of the Secretary of State of the State of New York
and the office of the Secretary of State of the State of California reflecting
the interest of the Transferor in the Receivables and the proceeds thereof and
the office of the Secretary of the Commonwealth of Pennsylvania reflecting the
interest of the Trust in the Receivables and the proceeds thereof.
(i) The Representative and Transferor shall have received from counsel
for the Collateral Interest Holder reasonably acceptable to the Representative
and Transferor, the favorable opinion or opinions, dated the Closing Date and
satisfactory in form and substance to the Representative, its counsel,
Transferor and its counsel, and in the aggregate substantially to the effect
that:
(1) The Collateral Interest Holder is a corporation duly
organized and validly existing under the laws of the State of Delaware
and has the corporate power and authority under the laws of the State
of Delaware to execute, deliver and perform its obligations under the
Loan Agreement;
(2) the Loan Agreement has been duly and validly authorized,
executed and delivered by the Collateral Interest Holder and
constitutes the legal, valid and legally binding obligation of the
Collateral Interest Holder enforceable against the Collateral Interest
Holder in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
liquidation, moratorium, readjustment of debt or other similar laws
affecting the enforcement of creditors' rights generally, as such laws
may be applied in the event of a bankruptcy, insolvency,
reorganization, liquidation, moratorium, readjustment of debt of, or
the appointment of a receiver with respect to the property of, or a
similar event applicable to the Collateral Interest Holder; and
(3) all consents, approvals, authorizations, licenses, rulings
or orders of or actions by any Delaware or federal governmental
authority and all filings, recordings or publications, if any, required
on the part of the Collateral Interest Holder in connection with the
execution, delivery or performance by the Collateral Interest Holder of
the Loan Agreement have been obtained or made and are in full force and
effect.
(j) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall not have
been any change, or any development involving a prospective change, in or
affecting the business or properties of the Trust any Originator or Transferor
the effect of which, in any case referred to above, is, in the judgment of the
Underwriters, so material and adverse as to make it impractical or inadvisable
to proceed with the offering or the delivery of the Class A Certificates as
contemplated by the Registration Statement and the Prospectus (and any
supplements thereto).
(k) Each of the representations and warranties of the Originators,
Servicer, Back-up Servicer and Transferor contained in the Specified Agreements
are true and correct as of the Closing Date.
(l) Simultaneously with or prior to the Closing Date, $25,000,000
aggregate initial principal amount of the Class B Certificates shall have been
sold to the Class B Underwriters.
Transferor will provide or cause to be provided to the Underwriters
such conformed copies of such opinions, certificates, letters and documents as
the Underwriters may reasonably request.
Section 7. Indemnification and Contribution. (a) Transferor will
indemnify and hold harmless each Underwriter and each Person who controls any
Underwriter within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which the Underwriters or any of
them may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter and each Person who
controls any Underwriter within the meaning of the Securities Act for any actual
legal or other expenses reasonably incurred by the Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that Transferor will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in reliance upon and in conformity with written information furnished to
Transferor by any Underwriter specifically for use therein.
(b) Each Underwriter, severally, agrees to indemnify and hold harmless
Transferor against any losses, claims, damages or liabilities to which
Transferor may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to Transferor by such Underwriter specifically for use
therein, and will reimburse any actual legal or other expenses reasonably
incurred by Transferor in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action or the assertion by a third party of
a claim, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under subsection (a) or (b) above, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party except and to the extent of any prejudice to
such indemnifying party arising from such failure to provide such notice. In
case any such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by Transferor on the
one hand and the Underwriters on the other from the offering of the Class A
Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of Transferor on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by Transferor on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Class A Certificates (before
deducting expenses) received by Transferor bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by Transferor or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Class A Certificates purchased by such Underwriter hereunder. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of Transferor under this Section shall be in
addition to any liability that Transferor may otherwise have and shall extend,
upon the same terms and conditions, to each Person, if any, who controls any
Underwriter within the meaning of the Securities Act; and the obligations of any
Underwriter under this Section shall be in addition to any liability that such
Underwriter may otherwise have and shall extend, upon the same terms and
conditions, to each director of Transferor, to each officer of Transferor who
signed the Registration Statement and to each Person, if any, who controls
Transferor within the meaning of the Securities Act.
Section 8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of Transferor or its officers and of the Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation or statement as to the results thereof, made by or on
behalf of the Underwriters, Transferor or any of their respective
representatives, officers or directors or any controlling Person, and will
survive delivery of and payment for the Class A Certificates. If for any reason
the purchase of the Class A Certificates by the Underwriters is not consummated,
Transferor shall remain responsible for the expenses to be paid or reimbursed by
Transferor pursuant to Section 5(g) hereof and the respective obligations of
Transferor and the Underwriters pursuant to Section 7 hereof shall remain in
effect. If the purchase of the Class A Certificates by the Underwriters is not
consummated for any reason other than solely because of the occurrence of any
event specified in clause (iii), (iv) or (v) of Section 6(c) hereof, Transferor
will reimburse the Underwriters for all actual out-of-pocket expenses (including
fees and disbursements of counsel to the extent previously agreed) reasonably
incurred by them in connection with the offering of the Class A Certificates.
Section 9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Class A Certificates agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the amount
of Class A Certificates set forth opposite their names in Schedule I hereto
bears to the aggregate amount of Class A Certificates set forth opposite the
names of all the remaining Underwriters) the Class A Certificates which the
defaulting Underwriter or Underwriters agreed but failed to purchase; provided,
however, that in the event that the aggregate amount of Class A Certificates
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate principal amount of Class A Certificates set
forth in Schedule I hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Class A Certificates, and if such nondefaulting Underwriters do not purchase all
the Class A Certificates, this Agreement will terminate without liability to any
non-defaulting Underwriter, the Trust or Transferor. In the event of a default
by any Underwriter as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Underwriters shall
determine in order that the required changes in the Registration Statement and
the Prospectus (and any supplements thereto) or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to Transferor and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
Section 10. Notices. All communications hereunder will be in writing
and, if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to them c/o CS First Boston Corporation, 55 East 52nd Street, Park
Avenue Plaza, New York, New York 10055, Attention: Investment Banking
Department--Transactions Advisory Group; or if sent to Transferor will be
mailed, delivered or telegraphed and confirmed to it at Mellon Bank, N.A., One
Mellon Bank Center, Pittsburgh, Pennsylvania 15258, Attention: Corporate
Secretarial Services Department.
Section 11. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling Persons referred to in Section 7 hereof,
and no other Person will have any right or obligation hereunder.
Section 12. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
Section 13. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to any otherwise applicable principles of conflicts of laws.
Section 14. Miscellaneous. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
Section 15. Representative. The Representative will act for the
several Underwriters in connection with this Agreement and the transactions
contemplated hereby and any action under this Agreement taken by the
Representative will be binding upon all the Underwriters.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts duplicate
hereof, whereupon it will become a binding agreement between Transferor and the
several Underwriters in accordance with its terms.
Very truly yours,
MELLON BANK, N.A.
By: /S/ Steven G. Elliot
--------------------
Name: _______________
Title: ________________
The foregoing Underwriting Agreement is hereby confirmed and accepted, as of the
date first above written:
CS FIRST BOSTON CORPORATION
By: /s/ Michael B. Raynes
Name:
Title:
For itself and the other Underwriters named in Schedule I to the foregoing
Underwriting Agreement.
<PAGE>
SCHEDULE I
Principal Amount of
CLASS A UNDERWRITERS CLASS A CERTIFICATES
CS First Boston Corporation.......................................$110,000,000
Mellon Financial Markets, Inc.....................................$110,000,000
Chase Securities Inc..............................................$110,000,000
J.P. Morgan Securities & Co.......................................$110,000,000
Principal Amount of
CLASS B UNDERWRITERS CLASS B CERTIFICATES
CS First Boston....................................................12,500,000
Mellon Financial Markets, Inc.....................................$12,500,000
EXHIBIT 1.2
$25,000,000
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
CLASS B FLOATING RATE ASSET BACKED
CERTIFICATES, SERIES 1996-1
CLASS B UNDERWRITING AGREEMENT
December 12, 1996
CS FIRST BOSTON CORPORATION
as Representative of the
Several Underwriters
55 East 52nd Street
Park Avenue Plaza
New York, New York 10055
Ladies and Gentlemen:
Section 1. Introductory. AFCO Credit Corporation, a New York
corporation ("AFCO Credit"), and AFCO Acceptance Corporation, a California
corporation ("AFCO Acceptance" and together with AFCO Credit, the "Originators"
and in their capacity as servicer, the "Servicer") propose to convey commercial
insurance premium finance loans (the "Receivables") from time to time to Mellon
Bank, N.A., a national banking association organized under the laws of the
United States of America (the "Transferor"). The Transferor proposes to convey
such Receivables to the Mellon Bank Premium Finance Loan Master Trust (the
"Trust"), and proposes to cause the Trust to sell to the Underwriters named in
Schedule I hereto (the "Underwriters"), for whom you are acting as
representative (the "Representative"), $25,000,000 aggregate initial principal
amount of Class B Floating Rate Asset Backed Certificates, Series 1996-1 (the
"Class B Certificates"), in the Trust, the terms of which are described in the
Prospectus (as defined below). It is understood that Transferor is currently
entering into a Class A Underwriting Agreement dated the date hereof (the "Class
A Underwriting Agreement") among the Transferor and the Underwriters named on
Schedule I thereto (the "Class A Underwriters") providing for the sale of
$440,000,000 aggregate initial principal amount of Class A Floating Rate Asset
Backed Certificates, Series 1996-1 (the "Class A Certificates"). The Class B
Certificates and the Class A Certificates are referred to herein collectively as
the "Certificates." This Agreement and the Class A Underwriting Agreement are
referred to herein collectively as the "Underwriting Agreements."
The Receivables will be conveyed by the Originators to the Transferor
pursuant to the Receivables Purchase Agreement dated as of December 1, 1996 (the
"Receivables Purchase Agreement") between the Originators and the Transferor.
The Receivables will be conveyed by the Transferor to the Trust in exchange for
the Certificates pursuant to a Pooling and Servicing Agreement, dated as of
December 1, 1996 (the "P&S") and the Series 1996-1 Supplement thereto (the
"Series Supplement") and together with the P&S, (the "Pooling and Servicing
Agreement") dated as of December 1, 1996, each among the Transferor, the
Servicer, Premium Financing Specialists, Inc., a Missouri corporation ("PFSI"),
as back-up servicer and Premium Financing Specialists of California, Inc., a
California corporation ("PFSIC"), as back-up servicer (PFSI and PFSIC are
collectively referred to as the "Back-up Servicer") and The First National Bank
of Chicago, a national banking association, as trustee (the "Trustee"). In
addition, the Transferor, Servicer, Trustee, Alpine Securitization Corp., a
Delaware Corporation ("Alpine") (the "Collateral Interest Holder") and Credit
Suisse as Agent (the "Agent") will enter into a Loan Agreement to be dated as of
the Closing Date (the "Loan Agreement") pursuant to which the Collateral
Interest Holder will acquire $35,000,000 aggregate initial principal amount of
the Collateral Interest (the "Collateral Interest"), which will act as Credit
Enhancement for the Certificates.
Capitalized terms used herein (including in the Introductory hereto)
that are not otherwise defined shall have the meanings ascribed thereto in the
Pooling and Servicing Agreement.
Section 2. Representations and Warranties of Transferor. (a)
Transferor represents and warrants to, and agrees with, each Underwriter as set
forth in this Section 2. Certain terms used in this Section 2 are defined in
paragraph (i) below.
(i) Transferor meets the requirements for use of Form S-3
under the Securities Act and has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (Registration
No. 333-11961) including a related preliminary prospectus, on such Form
for the registration under the Securities Act, of the Certificates.
Transferor may have filed one or more amendments thereto, including the
related preliminary prospectus, each of which has previously been
furnished to the Representative. Transferor will next file with the
Commission (A) prior to the effectiveness of such registration
statement, a further amendment thereto (including the form of final
prospectus relating to the Class B Certificates) or (B) after
effectiveness of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b)(1) or 424(b)(4) under the
Securities Act. In the case of clause (B), Transferor has included in
such registration statement, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the
Securities Act and the rules thereunder to be included in the
Prospectus with respect to the Class B Certificates and the offering
thereof. As filed, such amendment and form of final prospectus shall
include all Rule 430A Information, together with all other such
required information, with respect to the Class B Certificates and the
offering thereof and, except to the extent the Underwriters shall agree
in writing to a modification, shall be in all substantive respects in
the form furnished to the Representative prior to the Execution Time
or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes (beyond
that contained in the latest preliminary prospectus which has
previously been furnished to the Representative) as Transferor has
advised the Representative, prior to the Execution Time, will be
included or made therein. If the Registration Statement contains the
undertakings specified by item 512(a) of Regulation S-K, the
Registration Statement, at the Execution Time, meets the requirements
set forth in Rule 415(a)(1)(x).
The terms that follow, when used in this Agreement, have the
meanings indicated. The term "Effective Date" means each date that the
Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" means the date and
time that this Agreement is executed and delivered by the parties
hereto. "Preliminary Prospectus" means any preliminary prospectus
referred to in the preceding paragraph and any preliminary prospectus
included in the Registration Statement which, at the Effective Date,
omits Rule 430A Information. "Prospectus" means the form of prospectus
relating to the Class B Certificates that is first filed with the
Commission pursuant to Rule 424(b) or, if no filing pursuant to Rule
424(b) is required, means the prospectus relating to the Class B
Certificates included in the Registration Statement at the Effective
Date. "Registration Statement" means the registration statement
referred to in the preceding paragraph and any registration statement
required to be filed under the Securities Act or rules thereunder,
including incorporated documents, exhibits and financial statements, in
the form in which it has or shall become effective and, in the event
any post-effective amendment thereto becomes effective prior to the
Closing Date, shall also mean such registration statement as so
amended. Such term shall include Rule 430A Information deemed to be
included therein at the Effective Date as provided by Rule 430A. "Rule
424," "Rule 430A," "Rule 415" and "Regulation S-K" refer to such rules
or regulations under the Securities Act. "Rule 430A Information" means
information with respect to the Class B Certificates and the offering
thereof permitted to be omitted from the Registration Statement when it
becomes effective pursuant to Rule 430A. Any reference herein to the
Registration Statement, or the Prospectus shall be deemed to refer to
and include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), on or before the Effective
Date of the Registration Statement or the issue date of the Prospectus,
as the case may be; and any reference herein to the terms "amend,"
"amendment" or "supplement" with respect to the Registration Statement
or Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of the Prospectus, as the
case may be, deemed to be incorporated therein by reference.
(ii) On the Effective Date, the Registration Statement did or
will comply in all material respects with the applicable requirements
of the Securities Act and the rules thereunder; on the Effective Date
and when the Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date, the Prospectus (as amended
and together with any supplements thereto) did or will comply in all
material respects with the applicable requirements of the Securities
Act and the rules thereunder; on the Effective Date, the Registration
Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(as amended and together with any supplements thereto) will not,
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that Transferor makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement or the Prospectus (or any supplements thereto)
in reliance upon and in conformity with information furnished in
writing to Transferor by any Underwriter specifically for use in
connection with the preparation of the Registration Statement or the
Prospectus (or any supplements thereto).
(iii) Transferor is a national banking association duly
organized, validly existing and in good standing under the laws of the
United States, and has all requisite power, authority and legal right
to own its properties and conduct its business as described in the
Registration Statement and the Prospectus and to execute, deliver and
perform the transactions contemplated by the Underwriting Agreements,
the Pooling and Servicing Agreement, the Receivables Purchase
Agreement and the Loan Agreement (collectively the "Specified
Agreements"), and to authorize the authentication, execution and
issuance of the Certificates and the issuance of the Collateral
Interest.
(iv) 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, except where failure to obtain
such qualification or such license would not materially adversely
affect the conduct of its business.
(v) The execution, delivery and performance by Transferor of
the Specified Agreements, the issuance of the Certificates and the
Collateral Interest and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized
by all necessary action or proceedings.
(vi) Transferor has duly and validly authorized the
conveyance of the Receivables to the Trust.
(vii) The execution, delivery and performance by Transferor
of the Specified Agreements, the issuance of the Certificates and the
Collateral Interest and the fulfillment of the terms hereof and
thereof will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, or (other than the Lien of the
Pooling and Servicing Agreement) result in the creation or imposition
of any Lien under any material 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.
(viii) The execution, delivery and performance by Transferor
of the Specified Agreements, the issuance of the Certificates and the
Collateral Interest and the fulfillment of the terms hereof and
thereof, will not conflict with or violate any Requirements of Law
applicable to Transferor.
(ix) There are no proceedings or investigations pending or,
to the best knowledge of Transferor, threatened against Transferor
before any court, regulatory body, administrative agency, arbitrator
or other tribunal or governmental instrumentality (A) asserting the
invalidity of any Specified Agreement or the Certificates or the
Collateral Interest, (B) seeking to prevent the issuance of the
Certificates or the Collateral Interest or the consummation of any of
the transactions contemplated by the Specified Agreements, (C) 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 any Specified Agreement, (D)
seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of any Specified
Agreements or the Certificates or the Collateral Interest, or (E)
seeking to affect adversely the income tax attributes of the Trust, as
described in the Prospectus under the heading "U.S. Federal Income Tax
Consequences"; and there are no contracts or documents of Transferor
that are required to be filed as exhibits to the Registration
Statement by the Securities Act or by the rules and regulations of the
Commissioner promulgated under the Securities Act (the "Rules and
Regulations") that have not been so filed.
(x) All approvals, authorizations, consents, orders and other
actions of any Person or of any governmental body or official required
in connection with the execution and delivery of the Specified
Agreements, the issuance of the Certificates and the Collateral
Interest and the performance of the transactions contemplated hereby
and thereby and the fulfillment of the terms hereof and thereof, have
been obtained.
(xi) Transferor has delivered to the Representative complete
and correct copies of (A) publicly available portions of the
Consolidated Reports of Condition and Income of Transferor for the
years ended December 31, 1993, 1994 and 1995, as submitted to the
Comptroller of the Currency; and (B) the December 31, 1993, 1994 and
1995, audited consolidated balance sheets of Mellon Bank Corporation
which are included in respectively Mellon Bank Corporation's 1993,
1994 and 1995 Annual Reports to Stockholders. Except as otherwise set
forth therein, or in other subsequent filings with the Commission, (x)
there has been no material adverse change in the condition (financial
or otherwise) of Transferor and (y) there have been no transactions
entered into by Transferor, other than those in the ordinary course of
its business, that are material with respect to Transferor.
(xii) Any taxes, fees and other governmental charges in
connection with the execution, delivery and performance of the
Specified Agreements and the Certificates and the Collateral Interest
shall have been paid by Transferor or will be paid by Transferor at or
prior to the Closing Date to the extent then due.
(xiii) The Certificates, when validly authenticated, issued
and delivered in accordance with the Pooling and Servicing Agreement
and sold to the Underwriters as provided herein and to the Class A
Underwriters pursuant to the Class A Underwriting Agreement, will be
duly and validly issued and outstanding and entitled to the benefits
of the Pooling and Servicing Agreement, and, together with the Pooling
and Servicing Agreement, the Loan Agreement and the Collateral
Interest will conform in all material respects to the descriptions
thereof and the statements in relation thereto contained in the
Prospectus.
(xiv) Assuming the due authorization, execution and delivery
thereof by the other parties thereto, the Specified Agreements
constitute the legal, valid and binding agreement of Transferor
enforceable against the Transferor in accordance with its respective
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting enforcement of creditors' rights generally and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(xv) On the Closing Date, Transferor will have good and
marketable title to the Receivables and other property transferred by
it to the Trust pursuant to the Pooling and Servicing Agreement, free
and clear of Liens (other than the Lien of the Pooling and Servicing
Agreement), and will not have assigned to any Person (other than the
Trustee) any of its right, title or interest in any of such
Receivables or such other property or in the Pooling and Servicing
Agreement, and the Underwriters and the Class A Underwriters will have
good and marketable title to Certificates, free and clear of all Liens
when validly authenticated, issued and delivered in accordance with
the Pooling and Servicing Agreement and sold to the Underwriters as
provided herein and to the Class A Underwriters pursuant to the Class
A Underwriting Agreement.
(xvi) At the time of each transfer of Receivables by
Transferor to the Trust after the Closing Date, Transferor will have
good and marketable title to all Receivables and the other property
being transferred by it to the Trust on such day, free and clear of
Liens (other than the Lien of the Pooling and Servicing Agreement),
and will not have sold to any Person (other than the Trustee) any of
its right, title or interest in any of such Receivables or such other
property.
(xvii) Neither Transferor nor the Trust is an "investment
company" or "controlled" by an "investment company" as such terms are
defined in the Investment Company Act.
(xviii) As of the Closing Date each of the representations
and warranties of Transferor deemed made pursuant to the Pooling and
Servicing Agreement will be true and correct, and, as of each other
date on which Transferor is deemed, pursuant to the terms of the
Pooling and Servicing Agreement, to make any of the representations
and warranties set forth therein, and in Officer's Certificates of
Transferor delivered on each such date pursuant to the Pooling and
Servicing Agreement, will be true and correct and the Underwriters may
rely on such representations and warranties as if they were set forth
herein in full.
(b) Any Officer's Certificate signed by any officer of Transferor and
delivered to the Representative or its counsel shall be deemed a representation
and warranty of Transferor to the Underwriters as to the matters covered
thereby.
Section 3. Purchase and Sale. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, Transferor agrees to cause the Trust to sell to
each Underwriter, and each Underwriter agrees, severally and not jointly, except
as set forth in Section 9 below, to purchase the respective initial principal
amount of Class B Certificates set forth opposite such Underwriter's name in
Schedule I hereto, at a purchase price of 99.650000% of the aggregate principal
amount thereof.
The Class B Certificates will initially be represented by one or more
certificates representing $25,000,000 aggregate initial principal amount, each
of which will be registered in the name of Cede & Co., the nominee of The
Depository Trust Company ("DTC") (such certificates, the "DTC Certificates").
The interests of beneficial owners of the DTC Certificates will be represented
by book entries on the records of DTC and participating members thereof.
Definitive certificates evidencing the Class B Certificates will be available
only under the limited circumstances specified in the Pooling and Servicing
Agreement.
Delivery of the DTC Certificates shall be made to the accounts of the
several Underwriters at the office of DTC, 55 Water Street, 49th Floor, New
York, New York 10004, against payment by the several Underwriters of the
purchase price therefor to or upon the order of Transferor in immediately
available funds at the office of Stroock & Stroock & Lavan, New York, New York
at 10:00 a.m., New York time, on December 19, 1996, or at such other time not
later than seven full business days thereafter as Transferor and the
Underwriters determine, such time being herein referred to as the "Closing
Date". The certificates evidencing the DTC Certificates will be made available
for checking at the office of Stroock & Stroock & Lavan at Seven Hanover Square,
New York, New York 10004, at least 24 hours prior to the Closing Date.
Section 4. Offering by the Underwriters. (a) It is understood that the
Underwriters propose to offer the Class B Certificates for sale to the public as
set forth in the Prospectus.
(b) Each Underwriter agrees that if it is a foreign broker dealer not
eligible for membership in the National Association of Securities Dealers, Inc.
(the "NASD"), it will not effect any transaction in the Class B Certificates
within the United States or induce or attempt to induce the purchase of or sale
of the Class B Certificates within the United States, except that it shall be
permitted to make sales to other Underwriters or to its United States
affiliates; provided that such sales are made in compliance with an exemption of
certain foreign brokers or dealers under Rule 15a-6 under the Exchange Act and
in conformity with the Rules of Fair Practice of the NASD as such Rules apply to
non-NASD brokers or dealers.
(c) Each Underwriter represents and agrees that (i) it has not offered
or sold and, prior to the expiry of the period of six months from the Closing
Date, will not offer or sell any Class B Certificates to Persons in the United
Kingdom except to Persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom for the purposes of the
Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 of the
United Kingdom with respect to anything done by it in relation to the Class B
Certificates in, from or otherwise involving the United Kingdom; (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue of the Class B
Certificates to a Person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995
of the United Kingdom or is a Person to whom the document may otherwise lawfully
be issued or passed on.
Section 5. Certain Agreements of Transferor. Transferor covenants and
agrees with the several Underwriters that:
(a) Transferor will use its best efforts to cause the Registration
Statement, and any amendment thereto, if not effective at the Execution Time, to
become effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus is otherwise required under
Rule 424(b), Transferor will file the Prospectus, properly completed, pursuant
to Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Underwriters of such timely filing. Transferor will promptly
advise the Underwriters (i) when the Registration Statement, and any amendment
thereto, shall have become effective, (ii) when the Prospectus, and any
supplement thereto, shall have been filed with the Commission pursuant to Rule
424(b), (iii) of any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or threat of
any proceeding for that purpose and (v) of the receipt by Transferor of any
notification with respect to the suspension of the qualification of the Class B
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. Transferor will not file any amendment of the
Registration Statement or supplement to the Prospectus unless a copy has been
furnished to the Representative for its review prior to such filing. Transferor
will use its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the lifting thereof.
(b) If, at any time when a Prospectus relating to the Class B
Certificates is required to be delivered under the Securities Act, any event
occurs as a result of which such Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, or if it shall be
necessary at any time to amend or supplement such Prospectus to comply with the
Securities Act or the Exchange Act or the Rules and Regulations thereunder,
Transferor promptly will prepare and file with the Commission an amendment or
supplement that will effect such compliance. Neither the consent of any
Underwriter to, nor the delivery by any Underwriter of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6 hereof.
(c) As soon as practicable, but not later than the Availability Date
(as defined below), Transferor will cause the Trustee to make generally
available to the Holders of the Class B Certificates and to the Representative
an earnings statement with respect to the Trust covering a period of at least 12
months beginning after the Effective Date that will satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 under the Securities Act. For
the purpose of the preceding sentence, "Availability Date" means the 45th day
after the end of the fourth fiscal quarter following the fiscal quarter that
includes the Effective Date, except that, if such fourth fiscal quarter is the
last quarter of Transferor's fiscal year, "Availability Date" means the 90th day
after the end of such fourth fiscal quarter.
(d) Transferor will furnish to the Underwriters copies of the
Registration Statement as originally filed and each amendment thereto (in each
case at least three of which will be signed and will include all exhibits), each
related Preliminary Prospectus, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as the Underwriters may reasonably request. Transferor will furnish
or cause to be furnished to the Representative copies of all reports on Form SR
required by Rule 463 under the Securities Act.
(e) Transferor will arrange for the qualification of the Class B
Certificates for sale under the laws of such jurisdictions in the United States
as the Underwriters may reasonably designate and will continue such
qualifications in effect so long as required for the distribution of the Class B
Certificates, provided that Transferor shall not be obligated to qualify to do
business nor become subject to service of process generally, but only to the
extent required for such qualification, in any jurisdiction in which it is not
currently so qualified, and will arrange for the determination of the legality
of the Class B Certificates for purchase by institutional investors.
(f) So long as any of the Class B Certificates are outstanding,
Transferor will deliver or cause to be delivered to the Underwriters (i) copies
of each report mailed to the Trustee or the Series 1996-1 Holders, as soon as
such report is mailed to the Trustee or such Holders, (ii) the annual statement
as to compliance and the annual statement of a firm of independent public
accountants furnished to the Trustee pursuant to Sections 3.5 and 3.6 of the
Pooling and Servicing Agreement, as soon as such statements are furnished to the
Trustee, (iii) copies of all documents required to be filed with the Commission
pursuant to the Exchange Act or any order of the Commission thereunder, and (iv)
such other information concerning Transferor, the Certificates or the Trust as
the Underwriters may reasonably request from time to time.
(g) Transferor will pay all expenses incident to the performance of
its obligations under this Agreement, including without limitation, (i) expenses
of preparing, printing, reproducing and distributing the Registration Statement
and each amendment thereto, the preliminary prospectuses, the Prospectus
(including any amendments and supplements thereto), the Receivables Purchase
Agreement, the Pooling and Servicing Agreement, the Loan Agreement and the Class
B Certificates, (ii) the fees and disbursements of the Trustee and its counsel,
(iii) the fees and disbursements of the independent public accountants of
Transferor and, to the extent previously agreed, fees and disbursements of
counsel to Transferor, (iv) the fees charged by Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Ratings Service, a division of The McGraw Hill
Companies, Inc. ("Standard & Poor's" and together with Moody's, the "Rating
Agencies") in connection with the rating of the Class B Certificates and the
Collateral Interest, as applicable, (v) the fees of DTC in connection with the
book-entry registration of the DTC Certificate, (vi) to the extent previously
agreed, the fees and expenses of Stroock & Stroock & Lavan in its roles as
underwriters' counsel and special counsel to Transferor and (vii) expenses
incurred in distributing preliminary prospectuses and the Prospectus (including
any amendments and supplements thereto) to the Underwriters, and will reimburse
the Underwriters for any expenses (including reasonable fees and disbursements
of counsel) incurred by the Underwriters pursuant to Section 5(e) hereof in
connection with the qualification of the Class B Certificates for sale and
determination of their eligibility for investment under the laws of such
jurisdictions in the United States as the Underwriters may designate.
(h) On or before the Closing Date, Transferor shall cause the
Originators' books and records (including any computer records) to be marked
relating to the Receivables to be transferred to the Trust, to show the transfer
to the Trust of such Receivables, and from and after the Closing Date Transferor
shall not take any action inconsistent with the transfer to the Trust of such
Receivables, other than as permitted by the Pooling and Servicing Agreement.
(i) For a period of 30 days from the date hereof, none of Transferor
or any of its affiliates or any trust formed by it or any of its affiliates
will, without the prior written consent of the Underwriters, directly or
indirectly, offer, sell or contract to sell or announce the offering of, in a
public or private transaction, any other collateralized securities similar to
the Class B Certificates (other than the Class A Certificates and the Collateral
Interest) representing interests in insurance premium finance loans.
(j) So long as any Class B Certificates are outstanding, Transferor
will cause to be delivered to the Underwriters a reliance letter relating to
each Opinion of Counsel delivered to the Trustee or any Rating Agency by counsel
to Transferor pursuant to the Pooling and Servicing Agreement at the time such
opinion is delivered.
(k) To the extent, if any, that the rating provided with respect to
the Class B Certificates by any Rating Agency is conditional upon the furnishing
of documents or the taking of any other actions by Transferor, Transferor shall
furnish such documents and take any such other actions as may be required.
Section 6. Conditions of the Obligations of the Underwriters. The
obligation of the Underwriters to purchase and pay for the Class B Certificates
will be subject to the accuracy of the representations and warranties on the
part of Transferor herein as of the Execution Time and the Closing Date, to the
accuracy of the statements of the officers of the Originators and Transferor
made pursuant to the provisions hereof, to the performance by the Transferor of
their respective obligations hereunder and to the following additional
conditions precedent:
(a) (i) On the date of this Agreement, the Underwriters and Transferor
shall have received a letter, dated the date of delivery thereof (which, if the
Effective Time is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective Time is
subsequent to the execution and delivery of this Agreement, shall be prior to
the filing of the amendment or post-effective amendment to the registration
statement to be filed shortly prior to the Effective Time), of KPMG Peat Marwick
("Peat Marwick") confirming that they are independent public accountants within
the meaning of the Securities Act and the Rules and Regulations, substantially
in the form of the draft to which the Underwriters have previously agreed and
otherwise in form and substance satisfactory to the Underwriters and counsel for
the Underwriters, and (ii) on the Closing Date, the Underwriters and Transferor
shall have received a letter, dated as of the Closing Date, from Peat Marwick
updating the letter referred to in clause (i) above, in form and substance
satisfactory to the Underwriters and counsel for the Underwriters.
(b) If the Registration Statement has not become effective prior to
the Execution Time, unless the Underwriters agree in writing to a later time,
the Registration Statement shall have become effective not later than 10:00 a.m.
New York time on the date of this Agreement (or the next day, if this Agreement
is executed after the close of business on the date hereof); if filing of the
Prospectus, or any supplements thereto, is required pursuant to Rule 424(b), the
Prospectus shall have been filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
any of the Originators or Transferor which, in the judgment of the Underwriters
materially impairs the investment quality of the Class B Certificates; (ii) any
downgrading in the rating of any debt securities of Mellon Bank Corporation or
any of its direct or indirect subsidiaries by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Securities Act), or any public announcement that any such organization has
under surveillance or review its rating of any such debt securities (other than
an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of Transferor on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by Federal, New
York or Pennsylvania authorities; or (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the judgment of the Underwriters, the effect of and such
outbreak, escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the Class
B Certificates.
(d) The Representative shall have received:
(1) The favorable opinion or opinions of internal counsel of
Transferor and/or of Reed Smith Shaw & McClay, counsel to Transferor,
dated the Closing Date and satisfactory in form and substance to the
Representative and its counsel, and in the aggregate substantially to
the effect that:
(i) Transferor has been duly organized as an
association licensed as a national banking association and
is validly existing and in good standing under the laws of
the United States, is duly qualified to do business and is
in good standing under the laws of each jurisdiction other
than where the failure to be so qualified would not have a
material adverse effect on Transferor's business, and has
full corporate power and authority to own its properties, to
conduct its business as described in the Registration
Statement and the Prospectus, to enter into and perform its
obligations under the Specified Agreements, to execute the
Certificates and to consummate the transactions contemplated
hereby and thereby;
(ii) each of the Specified Agreements and the
Certificates have each been duly authorized, executed and
delivered by Transferor;
(iii) neither the execution and delivery of the
Specified Agreements, nor the issuance or delivery of the
Certificates, nor the consummation of any of the
transactions contemplated herein or therein, nor the
fulfillment of the terms of the Certificates or the
Specified Agreements, will conflict with or violate, result
in a material breach of or constitute a default under (A)
any Requirements of Law applicable to Transferor or any
statute or regulation currently applicable to the Trust, (B)
any term or provision of any order known to such counsel to
be currently applicable to Transferor or the Trust of any
court, regulatory body, administrative agency or
governmental body having jurisdiction over Transferor or the
Trust, as the case may be, or (C) any term or provision of
any indenture or other agreement or instrument known to such
counsel to which Transferor or the Trust is a party or by
which either of them or any of their properties are bound
(provided that the opinion provided pursuant to this
paragraph may exclude the indemnification and contribution
provisions of the Underwriting Agreements);
(iv) except as otherwise disclosed in the Prospectus
(and any supplements thereto) or the Registration Statement,
there is no pending or, to the best knowledge of such
counsel, threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator with respect to the Trust, the Certificates, the
Specified Agreements or any of the transactions contemplated
therein or with respect to Transferor which, taking into
account the likelihood of the outcome, the damages or other
relief sought and other relevant factors, would have a
material adverse effect on the holders of the Certificates
or upon the ability of Transferor to perform its obligations
under the Specified Agreements; and any statements included
in the Registration Statement and the Prospectus (and any
amendments or supplements thereto) describing (A) legal
proceedings relating to Transferor and (B) the Premium
Finance Agreements in each case fairly summarize the matters
therein described;
(v) such counsel has no reason to believe that at
the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus (and any amendments or supplements thereto as of
the Closing Date) includes any untrue statement of a
material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading (other than, in
both cases, financial and statistical information contained
or required to be contained therein as to which such counsel
need express no belief) (such belief may be limited to the
sections of the Prospectus under the headings "Prospectus
Summary--Transferor," "Prospectus Summary--Servicer,"
"Maturity Assumptions (limited to the penultimate paragraph
thereof)," "Business of the Originators," and "The
Receivables" and the parallel sections of the Registration
Statement; and
(vi) no approval, authorization, consent, order,
registration, filing, qualification, license or permit of or
with any court or governmental agency or body is required
for the consummation by Transferor or the Trust of the
transactions contemplated in or the performance of any of
its duties and obligations under the Specified Agreements,
except such as have been obtained under the Securities Act
and such as may be required under the blue sky laws of any
jurisdiction inside the United States in connection with the
purchase and distribution of the Class B Certificates by the
Underwriters and such as may be required under insurance
premium finance or similar laws.
In rendering such opinion counsel may rely as to matters of
fact, to the extent deemed proper and as stated therein, on
certificates of responsible officers of the Trust, Transferor and
public officials. References to the Prospectus in this paragraph (d)
include any supplements thereto.
(2) The favorable opinion of Stroock & Stroock & Lavan,
counsel for the Underwriters and special counsel to Transferor, dated
the Closing Date and to the effect that:
(i) the Certificates, when executed, authenticated
and delivered as specified in the Pooling and Servicing
Agreement, and delivered against payment of the
consideration specified herein, will be duly and validly
issued and outstanding and entitled to the benefits of the
Pooling and Servicing Agreement;
(ii) the Receivables Purchase Agreement constitutes
the legal, valid and binding agreement of each of the
Originators and the Transferor, enforceable in accordance
with its terms, subject (a) to the effect of bankruptcy,
insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally and
court decisions with respect thereto, (b) to the
understanding that no opinion is expressed as to the
application of equitable principles in any proceeding,
whether at law or in equity, and (c) to limitations of
public policy under applicable securities laws as to rights
of indemnity and contribution thereunder;
(iii) each of the Pooling and Servicing Agreement
and the Loan Agreement constitutes the legal, valid and
binding agreement of Transferor, enforceable in accordance
with its terms, subject (a) to the effect of bankruptcy,
insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally and
court decisions with respect thereto, (b) to the
understanding that no opinion is expressed as to the
application of equitable principles in any proceeding,
whether at law or in equity, and (c) to limitations of
public policy under applicable securities laws as to rights
of indemnity and contribution thereunder;
(iv) the Registration Statement has become effective
under the Securities Act, and, to the best of their
knowledge and information, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are pending or contemplated under the Securities Act, and
the Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective
effective or issue dates, complied as to form in all
material respects with the requirements of the Securities
Act and the Rules and Regulations.
(v) Such counsel has participated in conferences
with representatives of the Transferor, the Originators and
the Representative, at which the contents of the
Registration Statement, the Prospectus and related matters
were discussed and, although such counsel is not passing
upon and do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except to the
extent set forth in paragraph (ix) below), on the basis of
the foregoing (relying as to materiality to a large extent
upon the opinions of officers and other representatives of
the Transferor and the Originators), no facts have come to
such counsel's attention which would lead such counsel to
believe that the Registration Statement at the time it
became effective, contained an untrue statement of a
material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein no misleading or that the Prospectus, on the date
hereof, includes an untrue statement of a material fact or
omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading (other than, in
the case of both the Registration Statement and the
Prospectus, the financial statements and other financial and
statistical information contained therein or incorporated by
reference therein, as to which, in each case, no view shall
be expressed);
(vi) the Certificates, the Receivables Purchase
Agreement and the Pooling and Servicing Agreement each
conform in all material respects with the description
thereof contained in the Registration Statement and the
Prospectus;
(vii) the Pooling and Servicing Agreement is not
required to be qualified under the Trust Indenture Act of
1939, as amended;
(viii) the Trust is not an "investment company"
within the meaning of the Investment Company Act;
(ix) the statements in the Registration Statement
under the heading "Certain Legal Aspects of the
Receivables-Transfer of Receivables", "U.S. Federal Income
Tax Consequences" and "ERISA Considerations" to the extent
that they constitute statements of matters of law or legal
conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material
respects;
(x) the Receivables constitute "general intangibles"
as defined in the Uniform Commercial Code in the State of
New York;
(xi) (x) the Certificates will properly be treated
as indebtedness for federal income tax purposes and (y) the
Trust will not be classified as an association or a publicly
traded partnership taxable as a corporation for federal
income tax purposes; and
(xii) such other opinions as the Rating Agencies may
require.
In rendering such opinion, Stroock & Stroock & Lavan may rely on the
opinions of Reed Smith Shaw & McClay and internal counsel to Transferor and
Originators, as to the matters dealt with in such opinions.
(3) The favorable opinion of Reed Smith Shaw & McClay, counsel
to Transferor, dated the Closing Date and satisfactory in form and
substance to the Representative and its counsel, and substantially to
the effect that:
(i) the Receivables constitute "general intangibles"
as defined in the Uniform Commercial Code in effect in the
State of Pennsylvania;
(ii) Uniform Commercial Code financing statements
with respect to the Investor Interest in the Receivables and
the proceeds thereof have been filed in the office of the
Secretary of the Commonwealth of Pennsylvania. No other
filings or other actions, with respect to the Trustee's
interest in the Receivables transferred and to be
transferred by Transferor to the Trust, are necessary to
perfect the interest of the Trustee in the Receivables, and
the proceeds thereof, against third parties, except that
appropriate continuation statements must be filed at
five-year intervals; and
(iii) in the event that a court were to conclude
that the assignment of the Receivables, all documents and
instruments relating thereto and all proceeds thereof to the
Trustee pursuant to the Pooling and Servicing Agreement was
not a sale, the Pooling and Servicing Agreement, together
with the filing of the financing statements referred to in
paragraph (ii) above, create a first priority perfected
security interest in the Receivables transferred and to be
transferred by Transferor to the Trust, all documents and
instruments relating thereto and all proceeds thereof, prior
to any security interests which may be perfected under
Pennsylvania law by the filing of financing statements (in
rendering such opinion counsel may take such exceptions as
are appropriate and reasonably acceptable under the
circumstances).
(4) The favorable opinion or opinions of internal counsel of
each of the Originators and/or of Reed Smith Shaw & McClay, counsel to
Originators, dated the Closing Date and satisfactory in form and
substance to the Representative and its counsel, and in the aggregate
substantially to the effect that:
(i) each of the Originators has been duly organized
and licensed as a corporation and is validly existing and in
good standing under the laws of New York and California,
respectively, is duly qualified to do business and is in
good standing under the laws of each jurisdiction where it
conducts its business other than where the failure to be so
qualified would not have a material adverse effect on
Originator's business, and has full corporate power and
authority to own its properties, to conduct its business as
described in the Registration Statement and the Prospectus,
to enter into and perform its obligations under the
Specified Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby;
(ii) each of the Specified Agreements to which it is
a party has been duly authorized, executed and delivered by
each Originator, as the case may be;
(iii) neither the execution and delivery of the
Specified Agreements to which it is a party, nor the
consummation of any of the transactions contemplated herein
or therein, nor the fulfillment of the terms of the
Specified Agreements, will conflict with or violate, result
in a material breach of or constitute a default under (A)
any Requirements of Law applicable to either of the
Originators or any statute or regulation currently
applicable, (B) any term or provision of any order known to
such counsel to be currently applicable to either of the
Originators of any court, regulatory body, administrative
agency or governmental body having jurisdiction over either
of the Originators, as the case may be, or (C) any term or
provision of any indenture or other agreement or instrument
known to such counsel to which either of the Originators is
a party or by which either of them or any of their
properties are bound;
(iv) except as otherwise disclosed in the Prospectus
(and any supplements thereto) or the Registration Statement,
there is no pending or, to the best knowledge of such
counsel, threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator with respect to the Specified Agreements to which
the Originators are a party or any of the transactions
contemplated herein or therein or with respect to the
Originators which would have a material adverse effect on
the Certificates or the Trust or upon the ability of either
of the Originators to perform its obligations under the
Specified Agreements; and the statements included in the
Registration Statement, and the Prospectus (and any
supplements thereto) describing (A) legal proceedings
relating to the Originators and (B) the insurance premium
finance loan agreements, regulation of premium finance
companies and state insurance guaranty funds in each case
fairly summarize the matters therein described;
(v) such counsel has no reason to believe that at
the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus (and any supplements thereto as of the Closing
Date) includes any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading (other than, in both
cases, financial and statistical information contained or
required to be contained therein as to which such counsel
need express no belief) (such belief may be limited to the
sections of the Prospectus under the headings "Prospectus
Summary -- Trust Assets," "Business of the Originators," and
"The Receivables");
(vi) no approval, authorization, consent, order,
registration, filing, qualification, license or permit of or
with any court or governmental agency or body is required
for the consummation or performance by the Originators, the
Transferor, the Trustee or the Trust of the transactions
contemplated by, or performance of their respective
obligations under any of the Specified Agreements, except
such as have been obtained under the Securities Act and such
as may be required under the blue sky laws of any
jurisdiction inside the United States in connection with the
purchase and distribution of the Class B Certificates by the
Underwriters and such filings or other approvals (specified
in such opinion) as have been made or obtained; and
(vii) such counsel has been advised of the
Originators' standard operating procedures relating to the
Originators' acquisition of a perfected first priority
security interest in the unearned premiums securing the
obligations of the borrowers under insurance premium finance
agreements originated by Originators in the ordinary course
of the Originators' business. Assuming that the Originators'
standard operating procedures are followed with respect to
the perfection of security interests in the unearned
premiums relating to the Receivables (such counsel having no
reason to believe that the Originators has not or will not
continue to follow its standard operating procedures in
connection with the perfection of security interests in
unearned premiums), the Originator has acquired or will
acquire a perfected first priority security interest in the
unearned premiums relating to the Receivables.
In rendering such opinion counsel may rely as to matters of
fact, to the extent deemed proper and as stated therein, on
certificates of responsible officers of the Trust, Transferor and
public officials. References to the Prospectus in this paragraph (d)
include any supplements thereto.
(5) The favorable opinion or opinions of internal counsel of
Back-up Servicer and/or of Lathrop & Gage, L.C., counsel to Back-up
Servicer, dated the Closing Date and satisfactory in form and substance
to the Representative and its counsel, and in the aggregate
substantially to the effect that:
(i) Each of PFSI and PFSIC has been duly organized
and licensed as a corporation and is validly existing and in
good standing under the laws of its incorporation, is duly
qualified to do business and is in good standing under the
laws of its incorporation and has full corporate power and
authority to enter into and perform its obligations under
the Pooling and Servicing Agreement, and to consummate the
transactions contemplated thereby;
(ii) each of the Specified Agreements as to which it
is a party to have been duly authorized, executed and
delivered by the Back-up Servicer;
(iii) neither the execution of the Pooling and
Servicing Agreement nor the performance by the Back-up
Servicer of its obligations as a successor Servicer will
conflict with or violate, result in a material breach of or
constitute a default under (A) any Requirements of Law
applicable to Back-up Servicer, (B) any term or provision of
any order known to such counsel to be currently applicable
to Back-up Servicer of any court, regulatory body,
administrative agency or governmental body having
jurisdiction over Back-up Servicer, as the case may be, or
(C) any term or provision of any indenture or other
agreement or instrument known to such counsel to which
Back-up Servicer is a party or by which any of the Back-up
Servicer's properties are bound;
(iv) assuming the laws of the State of New York are
the same as the laws of the State of Missouri with respect
to PFSI, and California with respect to PFSIC, the Pooling
and Servicing Agreement constitutes the legal, valid and
binding obligation of PFSI and PFSIC, respectively,
enforceable in accordance with its respective terms, except
that (y) the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to
creditors' rights and (z) the remedy of specific performance
and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought;
and
(v) no approval, authorization, consent, order,
registration, filing, qualification, license or permit of or
with any court or governmental agency or body is required
for the consummation or performance by the Back-up Servicer
of the transactions contemplated by, or performance of its
obligations under the Pooling and Servicing Agreement
(including the performance of the Back-up Servicer of the
obligations of the Servicer under the Pooling and Servicing
Agreement), except such as have been made or obtained (as
specified in such opinion).
(6) Reliance letters relating to each opinion rendered to the
Trustee or any Rating Agency by Reed, Smith, Shaw & McClay or any other
counsel to Transferor in connection with the rating of the
Certificates.
(7) The favorable opinion of internal counsel to the Trustee,
dated the Closing Date and satisfactory in form and substance to the
Representative and its counsel to the effect that:
(i) The Trustee has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the United States of America with full power and
authority (corporate and other) to own its properties and
conduct its business, as presently conducted by it, and to
enter into and perform its obligations under the Specified
Agreements to which it is a party and to issue the
Certificates and the Collateral Interest;
(ii) each of the Specified Agreements to which it is
a party has been duly authorized, executed and delivered by
the Trustee;
(iii) assuming the laws of the State of Illinois are
the same as the laws of the State of New York, the Specified
Agreements to which it is a party constitute the legal,
valid and binding obligation of the Trustee, enforceable in
accordance with their respective terms, except that (y) the
enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights and
(z) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(iv) the Certificates have been duly executed,
authenticated and delivered by the Trustee;
(v) neither the execution and delivery by the
Trustee of the Specified Agreements to which it is a party
nor the consummation of any of the transactions by the
Trustee contemplated thereby required the consent or
approval of, the giving of notice to, the registration with
or the taking of any other action with respect to, any
governmental authority or agency under any existing federal
or state law governing the banking or trust powers of the
Trustee; and
(vi) the execution and delivery of the Specified
Agreements to which it is a party by the Trustee and the
performance by the Trustee of their respective terms do not
conflict with or result in a violation of (A) any law or
regulation of the United States of America or the State of
Illinois governing trust powers of the Trustee, (B) the
Articles of Association or By-Laws of the Trustee, or (C) to
the best of their knowledge, any indenture, lease, or other
material agreement to which the Trustee is a party or to
which its assets are subject.
(e) The Representative shall have received a certificate dated the
Closing Date of the President, any Vice President, the Treasurer or any
Assistant Treasurer, of Transferor in which such officer shall state that the
representations and warranties of Transferor in this Agreement are true and
correct, and that Transferor has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to the
Closing Date, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission, and subsequent to the date of
the most recent financial statements of Transferor delivered to the
Representative hereunder, there has been no material adverse change in the
condition, financial or otherwise, whether or not arising from transactions in
the ordinary course of business, of Transferor except as set forth in or
contemplated by the Registration Statement and the Prospectus.
(f) The Representative shall have received a certificate dated the
Closing Date of the President, any Vice President, the Treasurer or any
Assistant Treasurer, of each of the Originators in which such officer shall
state that the representations and warranties of each of the Originators in
Specified Agreements to which it is a party are true and correct, and that each
of the Originators has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to the Closing
Date.
(g) The Class B Certificates shall be rated at least "A2" by Moody's
and "A" by Standard & Poor's and the Class A Certificates shall be rated "Aaa"
by Moody's and "AAA" by Standard & Poor's.
(h) The Representative shall have received evidence satisfactory to it
and its counsel that, on or before the Closing Date, UCC-1 financing statements
have been filed in the office of the Secretary of State of the State of New York
and the office of the Secretary of State of the State of California reflecting
the interest of the Transferor in the Receivables and the proceeds thereof and
the office of the Secretary of the Commonwealth of Pennsylvania reflecting the
interest of the Trust in the Receivables and the proceeds thereof.
(i) The Representative and Transferor shall have received from counsel
for the Collateral Interest Holder reasonably acceptable to the Representative
and Transferor, the favorable opinion or opinions, dated the Closing Date and
satisfactory in form and substance to the Representative, its counsel,
Transferor and its counsel, and in the aggregate substantially to the effect
that:
(1) The Collateral Interest Holder is a corporation duly
organized and validly existing under the laws of the State of Delaware
and has the corporate power and authority under the laws of the State
of Delaware to execute, deliver and perform its obligations under the
Loan Agreement;
(2) the Loan Agreement has been duly and validly authorized,
executed and delivered by the Collateral Interest Holder and
constitutes the legal, valid and legally binding obligation of the
Collateral Interest Holder enforceable against the Collateral Interest
Holder in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
liquidation, moratorium, readjustment of debt or other similar laws
affecting the enforcement of creditors' rights generally, as such laws
may be applied in the event of a bankruptcy, insolvency,
reorganization, liquidation, moratorium, readjustment of debt of, or
the appointment of a receiver with respect to the property of, or a
similar event applicable to the Collateral Interest Holder; and
(3) all consents, approvals, authorizations, licenses, rulings
or orders of or actions by any Delaware or federal governmental
authority and all filings, recordings or publications, if any, required
on the part of the Collateral Interest Holder in connection with the
execution, delivery or performance by the Collateral Interest Holder of
the Loan Agreement have been obtained or made and are in full force and
effect.
(j) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall not have
been any change, or any development involving a prospective change, in or
affecting the business or properties of the Trust any Originator or Transferor
the effect of which, in any case referred to above, is, in the judgment of the
Underwriters, so material and adverse as to make it impractical or inadvisable
to proceed with the offering or the delivery of the Class B Certificates as
contemplated by the Registration Statement and the Prospectus (and any
supplements thereto).
(k) Each of the representations and warranties of the Originators,
Servicer, Back-up Servicer and Transferor contained in the Specified Agreements
are true and correct as of the Closing Date.
(l) Simultaneously with or prior to the Closing Date, $440,000,000
aggregate initial principal amount of the Class A Certificates shall have been
sold to the Class A Underwriters.
Transferor will provide or cause to be provided to the Underwriters
such conformed copies of such opinions, certificates, letters and documents as
the Underwriters may reasonably request.
Section 7. Indemnification and Contribution. (a) Transferor will
indemnify and hold harmless each Underwriter and each Person who controls any
Underwriter within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which the Underwriters or any of
them may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter and each Person who
controls any Underwriter within the meaning of the Securities Act for any actual
legal or other expenses reasonably incurred by the Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that Transferor will
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in reliance upon and in conformity with written information furnished to
Transferor by any Underwriter specifically for use therein.
(b) Each Underwriter, severally, agrees to indemnify and hold harmless
Transferor against any losses, claims, damages or liabilities to which
Transferor may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to Transferor by such Underwriter specifically for use
therein, and will reimburse any actual legal or other expenses reasonably
incurred by Transferor in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action or the assertion by a third party of
a claim, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under subsection (a) or (b) above, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party except and to the extent of any prejudice to
such indemnifying party arising from such failure to provide such notice. In
case any such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by Transferor on the
one hand and the Underwriters on the other from the offering of the Class B
Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of Transferor on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by Transferor on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Class B Certificates (before
deducting expenses) received by Transferor bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by Transferor or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required tocontribute
any amount in excess of the underwriting discount applicable to the Class B
Certificates purchased by such Underwriter hereunder. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of Transferor under this Section shall be in
addition to any liability that Transferor may otherwise have and shall extend,
upon the same terms and conditions, to each Person, if any, who controls any
Underwriter within the meaning of the Securities Act; and the obligations of any
Underwriter under this Section shall be in addition to any liability that such
Underwriter may otherwise have and shall extend, upon the same terms and
conditions, to each director of Transferor, to each officer of Transferor who
signed the Registration Statement and to each Person, if any, who controls
Transferor within the meaning of the Securities Act.
Section 8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of Transferor or its officers and of the Underwriters set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation or statement as to the results thereof, made by or on
behalf of the Underwriters, Transferor or any of their respective
representatives, officers or directors or any controlling Person, and will
survive delivery of and payment for the Class B Certificates. If for any reason
the purchase of the Class B Certificates by the Underwriters is not consummated,
Transferor shall remain responsible for the expenses to be paid or reimbursed by
Transferor pursuant to Section 5(g) hereof and the respective obligations of
Transferor and the Underwriters pursuant to Section 7 hereof shall remain in
effect. If the purchase of the Class B Certificates by the Underwriters is not
consummated for any reason other than solely because of the occurrence of any
event specified in clause (iii), (iv) or (v) of Section 6(c) hereof, Transferor
will reimburse the Underwriters for all actual out-of-pocket expenses (including
fees and disbursements of counsel to the extent previously agreed) reasonably
incurred by them in connection with the offering of the Class B Certificates.
Section 9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Class B Certificates agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the amount
of Class B Certificates set forth opposite their names in Schedule I hereto
bears to the aggregate amount of Class B Certificates set forth opposite the
names of all the remaining Underwriters) the Class B Certificates which the
defaulting Underwriter or Underwriters agreed but failed to purchase; provided,
however, that in the event that the aggregate amount of Class B Certificates
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate principal amount of Class B Certificates set
forth in Schedule I hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Class B Certificates, and if such nondefaulting Underwriters do not purchase all
the Class B Certificates, this Agreement will terminate without liability to any
non-defaulting Underwriter, the Trust or Transferor. In the event of a default
by any Underwriter as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Underwriters shall
determine in order that the required changes in the Registration Statement and
the Prospectus (and any supplements thereto) or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to Transferor and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
Section 10. Notices. All communications hereunder will be in writing
and, if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to them c/o CS First Boston Corporation, 55 East 52nd Street, Park
Avenue Plaza, New York, New York 10055, Attention: Investment Banking
Department--Transactions Advisory Group; or if sent to Transferor will be
mailed, delivered or telegraphed and confirmed to it at Mellon Bank, N.A., One
Mellon Bank Center, Pittsburgh, Pennsylvania 15258, Attention: Corporate
Secretarial Services Department.
Section 11. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling Persons referred to in Section 7 hereof,
and no other Person will have any right or obligation hereunder.
Section 12. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
Section 13. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to any otherwise applicable principles of conflicts of laws.
Section 14. Miscellaneous. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
Section 15. Representative. The Representative will act for the
several Underwriters in connection with this Agreement and the transactions
contemplated hereby and any action under this Agreement taken by the
Representative will be binding upon all the Underwriters.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts duplicate
hereof, whereupon it will become a binding agreement between Transferor and the
several Underwriters in accordance with its terms.
Very truly yours,
MELLON BANK, N.A.
By: /s/ Steven G. Elliot
Name: _______________
Title: ________________
The foregoing Underwriting Agreement is hereby confirmed and accepted, as of the
date first above written:
CS FIRST BOSTON CORPORATION
By: /s/ Michael B. Raynes
Name:
Title:
For itself and the other Underwriters named in Schedule I to the foregoing
Underwriting Agreement.
<PAGE>
SCHEDULE I
Principal Amount of
CLASS B UNDERWRITERS CLASS B CERTIFICATES
CS First Boston.................................................$12,500,000
Mellon Financial Markets, Inc...................................$12,500,000
Principal Amount of
CLASS A UNDERWRITERS CLASS A CERTIFICATES
CS First Boston Corporation.....................................$110,000,000
Mellon Financial Markets, Inc...................................$110,000,000
Chase Securities Inc............................................$110,000,000
J.P. Morgan Securities & Co.....................................$110,000,000
EXHIBIT 4.1
MELLON BANK, N.A.
Transferor
AFCO CREDIT CORPORATION
Servicer
AFCO ACCEPTANCE CORPORATION
Servicer
PREMIUM FINANCING SPECIALISTS, INC.
Back-up Servicer
PREMIUM FINANCING SPECIALISTS OF CALIFORNIA, 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
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions...................................................1
SECTION 1.2. Other Interpretive Provisions................................19
SECTION 1.3. Daily Allocation of Finance Charge
Collections..................................................20
SECTION 1.4. Daily Allocation of Principal
Collections.................................................20
SECTION 1.5. Servicer Obligation to True-Up...............................20
ARTICLE II.
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Receivables.....................................21
SECTION 2.2. Acceptance by Trustee)........................................23
SECTION 2.3. Representations and Warranties of
Transferor...................................................23
SECTION 2.4. Representations and Warranties of
Transferor Relating to this
Agreement, the Receivables Purchase
Agreement and the Receivables................................24
SECTION 2.5. Covenants of Transferor.......................................29
SECTION 2.6. Removal of Receivables........................................31
ARTICLE III.
ADMINISTRATION OF RECEIVABLES
SECTION 3.1. Acceptance of Appointment as Servicer and
Back-up Servicer.............................................32
SECTION 3.2. Servicing Compensation and Back-up
Servicing Compensation.......................................34
SECTION 3.3. Representations and Warranties of
Servicer......................................................35
SECTION 3.4. Reports and Records for Trustee................................36
SECTION 3.5. Anual Servicer's Certificate...................................37
SECTION 3.6. Annual Independent Accountants'
Servicing Repor...............................................37
SECTION 3.7. Tax Treatment..................................................38
SECTION 3.8. Notices to Transferor..........................................38
SECTION 3.9. Reports to the Commission......................................39
SECTION 3.10. Covenants of Servicer..........................................39
SECTION 3.11. Representations and Warranties of
Back-up Servicer............ .................................40
SECTION 3.12. Back-Up Servicer Covenant......................................41
SECTION 3.13. Servicer Licensing Covenant....................................42
SECTION 3.14. Custody of Premium Finance Agreements..........................42
SECTION 3.15. Duties of Servicer as Custodian................................42
SECTION 3.16. Instruction; Authority to Act..................................43
SECTION 3.17. Effective Period and Termination...............................43
SECTION 3.18. AFCO Credit to act as Servicer................................44
ARTICLE IV.
RIGHTS OF HOLDERS AND ALLOCATION
AND APPLICATION OF COLLECTIONS
SECTION 4.1. Rights of Holders...............................................44
SECTION 4.2. Establishment of Accounts.......................................44
SECTION 4.3. Collections and Allocations.....................................46
SECTION 4.4. Shared Principal Collections....................................47
SECTION 4.5. Excess Finance Charge Collections...............................48
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...............................................49
SECTION 6.2. Authentication of Certificates.................................49
SECTION 6.3. Registration of Transfer and Exchange
of Certificates.............................................50
SECTION 6.4. Mutilated, Destroyed, Lost or Stolen
Certificates.................................................52
SECTION 6.5. Persons Deemed Owners..........................................53
SECTION 6.6. Appointment of Paying Agent....................................53
SECTION 6.7. Access to List of Holders' Names and
Addresses....................................................54
SECTION 6.8. Authenticating Agent...........................................55
SECTION 6.9. New Issuances..................................................56
SECTION 6.10. Book-Entry Certificates........................................58
SECTION 6.11. Notices to Clearing Agency.....................................58
SECTION 6.12. Definitive Certificates........................................59
SECTION 6.13. Global Certificate; Euro-Certificate
Exchange Date...............................................59
SECTION 6.14. Meetings of Holders............................................60
ARTICLE VII
OTHER MATTERS RELATING TO TRANSFEROR
SECTION 7.1. Liability of Transferor.......................................60
SECTION 7.2. Merger or Consolidation of, or
Assumption of the Obligations of,
Transferor...................................................60
SECTION 7.3. Limitation on Liability.......................................61
SECTION 7.4. Liabilities...................................................61
ARTICLE VIII
OTHER MATTERS RELATING TO SERVICER
SECTION 8.1. Liability of Servicer.........................................62
SECTION 8.2. Merger or Consolidation of, or
Assumption of the Obligations of,
Servicer.....................................................62
SECTION 8.3. Limitation on Liability of Servicer and
Others.......................................................63
SECTION 8.4. Servicer Indemnification of the Trust
and Trustee..................................................63
SECTION 8.5. Servicer Not to Resign........................................64
SECTION 8.6. Access to Certain Documentation and
Information Regarding the Receivables.......................64
SECTION 8.7. Delegation of Duties..........................................64
SECTION 8.8. Examination of Records........................................64
SECTION 8.9. Merger or Consolidation of, or
Assumption of the Obligations of,
Back-up Servicer.............................................65
SECTION 8.10. Back-up Servicer Not to Resign................................65
SECTION 8.11. Cooperation Among Servicer and Back-up
Servicer.....................................................66
ARTICLE IX.
TRUST PAY OUT EVENTS
SECTION 9.1. Trust Pay Out Event...........................................66
SECTION 9.2. Additional Rights Upon the Occurrence
of Certain Events.........................................67
ARTICLE X.
SERVICER DEFAULTS
SECTION 10.1. Servicer Defaults..........................................68
SECTION 10.2. Trustee to Act, Appointment of
Successor................................................71
SECTION 10.3. Notification to Holders....................................72
SECTION 10.4. Waiver of Past Defaults....................................72
ARTICLE XI.
TRUSTEE
SECTION 11.1. Duties of Trustee.........................................73
SECTION 11.2. Certain Matters Affecting Trustee.........................74
SECTION 11.3. Trustee Not Liable for Recitals in
Certificates............................................76
SECTION 11.4. Trustee May Not Own Certificates..........................76
SECTION 11.5. Servicer to Pay Trustee's Fees and
Expenses................................................76
SECTION 11.6. Eligibility Requirements for Trustee......................77
SECTION 11.7. Resignation or Removal of Trustee.........................77
SECTION 11.8. Successor Trustee.........................................78
SECTION 11.9. Merger or Consolidation of Trustee........................78
SECTION 11.10. Appointment of Co-Trustee or Separate
Trustee.................................................78
SECTION 11.11. Tax Returns...............................................79
SECTION 11.12. Trustee May Enforce Claims Without
Possession of Certificates.............................80
SECTION 11.13. Suits for Enforcement.....................................80
SECTION 11.14. Rights of Holders to Direct Trustee.......................80
SECTION 11.15. Representations and Warranties of
Trustee.................................................81
SECTION 11.16. Maintenance of Office or Agency.
SECTION 11.17. Obligor Claims............................................81
SECTION 11.18. Liabilities to Obligors...................................82
ARTICLE XII.
TERMINATION
SECTION 12.1. Termination of Trust......................................82
SECTION 12.2. Optional Purchase.........................................83
SECTION 12.3. Final Payment with Respect to any Series..................84
SECTION 12.4. Termination Rights of Transferor..........................85
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
SECTION 13.1. Amendment..................................................85
SECTION 13.2. Protection of Right, Title and Interest
to Trust.................................................87
SECTION 13.3. Limitation on Rights of Holders............................87
SECTION 13.4. Governing Law..............................................88
SECTION 13.5. Notices....................................................88
SECTION 13.6. Severability of Provisions.................................89
SECTION 13.7. Assignment.................................................89
SECTION 13.8. Certificates Non-Assessable and Fully
Paid.....................................................89
SECTION 13.9. Further Assurances.........................................89
SECTION 13.10. No Waiver, Cumulative Remedies.............................89
SECTION 13.11. Counterparts...............................................90
SECTION 13.12. Third Party Beneficiaries..................................90
SECTION 13.13. Actions by Holders.........................................90
SECTION 13.14. Rule 144A Information......................................90
SECTION 13.16. Headings...................................................91
<PAGE>
EXHIBITS AND SCHEDULES
Schedule I Procedures for Accessing Trust Accounts
Schedule II Location of Receivables
Schedule III Schedule of Permitted States
Schedule IV Receivables Schedule
Exhibit A Form of Monthly Servicer's Certificate
Exhibit B Form of Annual Servicer's Certificate
Exhibit C Form of Reassignment of Receivables
Exhibit D Form of Reconveyance of Receivables
Exhibit E Form of Notice of Financed Premium
<PAGE>
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 Missouri corporation, as Back-up Servicer, PREMIUM
FINANCING SPECIALISTS OF CALIFORNIA, INC., a California 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 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 Defaulted Receivables, 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) less
related Net Payables as of such date of determination.
"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; provided, however, that with respect to
Receivables having borrowers with addresses in the State of California, "Back-up
Servicer" shall mean Premium Financing Specialists of California, Inc.
"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.
"Calculation Date" means the Business Day prior to the Initial Closing
Date.
"CEDEL" means Cedel Bank, societe 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 One First
National Plaza, Suite 0126, Chicago, Illinois 60670-0126 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, 14 Wall Street, Eighth Floor, New York, New York 10005.
"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 (x) with respect to Receivables originated prior
to December 1, 1996, December 1, 1996 and (y) with respect to Receivables
originated on or after December 1, 1996, but prior to the Initial Closing Date,
the Calculation Date.
"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).
"Default Amount" means, with respect to any Monthly Period, the
excess, if any, of (i) the amount of Principal Receivables related to
Receivables which became Defaulted Receivables during such Monthly Period over
(ii) Recoveries for such Monthly Period.
"Defaulted Receivable" means each Receivable as to which the insurance
policy or policies related to such Receivable 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 Defaulted Receivables that are Ineligible Receivables
shall be treated as Ineligible Receivables rather than Defaulted Receivables. In
the event for administrative reasons, the Servicer is unable to identify or
segregate the Defaulted Receivables from other Receivables in the related
Account, then all such Receivables in such Account shall be deemed to be
Defaulted Receivables.
"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 Receivable" means with respect to each Initial Receivable,
each Receivable, as of its Cut Off Date and with respect to each Additional
Receivable, each Additional Receivable, as of the related Addition Date:
(a) which is payable in United States dollars;
(b) which has been funded by the related Originator
in whole or in part;
(c) which in the case of an initial Receivable
arising under an Account, does not finance premiums of any
insurance policy of Lloyds of London;
(d) which does not finance premiums of any foreign insurance
carrier (except that up to 3% of the Aggregate Receivables, after
giving effect to such transfer, may finance premiums of foreign
insurance carriers);
(e) which does not relate to a Premium Finance
Agreement under which the Obligor is a Governmental
Authority;
(f) which (i) in the case of the Initial Receivables is
underwritten in accordance with the Guidelines and (ii) in the case of
Additional Receivables is underwritten in accordance with guidelines
that are not materially different from the Guidelines;
(g) 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;
(h) 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;
(i) 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;
(j) 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;
(k) 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;
(l) which is not delinquent for more than 30 days;
(m) 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;
(n) 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;
(o) which (i) with respect to the Initial Receivables and
Additional Receivables conveyed to the Trust prior to February 1, 1997
grants the related Originator a first priority perfected 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 and (ii) 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 notifying such insurance company or
companies of the Trust's security interest in such Unearned Premiums in
the form of Exhibit E hereto;
(p) with respect to which the related insurance
policy has not been canceled;
(q) with respect to which the stated address of the
Obligor in the related Premium Finance Agreement is in a
Permitted State;
(r) 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;
(s) which is the legal, valid and binding payment
obligation of the related Obligor, legally enforceable
against such Obligor in accordance with its terms;
(t) with respect to which the related Obligor is not
the subject of a bankruptcy or insolvency proceeding;
(u) with respect to which the related Premium Finance
Agreement provides for monthly payments by the related
Obligor;
(v) which is a "general intangible" under the Uniform
Commercial Code in the States of New York and Commonwealth
of Pennsylvania; and
(w) which, after giving effect to the transfer of such
Receivable to the Trust, would not cause any Excess Insurer
Concentration Amount to exist assuming that immediately prior to such
transfer each insurance carrier which has premiums financed by such
Receivable was downgraded by any Rating Agency by one rating category
(giving effect to pluses or minuses).
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Euroclear Operator" means Morgan 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" means as of any date of
determination an amount equal to the sum of (i) with respect to each Tier 1
Insurer, the amount, if positive, by which the aggregate amount of the portion
of the Aggregate Receivables relating to the financing of insurance premiums of
such Tier 1 Insurer exceeds 25% of the amount of the Aggregate Receivables as of
such date of determination, (ii) with respect to each Tier 2 Insurer, the
amount, if positive, by which the aggregate amount of the portion of the
Aggregate Receivables relating to the financing of insurance premiums of such
Tier 2 Insurer exceeds 10% of the Aggregate Receivables as of such date of
determination and (iii) with respect to each Tier 3 Insurer, the amount, if
positive, by which the aggregate amount of the portion of Aggregate Receivables
relating to the financing of insurance premiums of any single Tier 3 Insurer
exceeds 5% of the Aggregate Receivables as of such date of determination.
"Excess 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 3% 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 first 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.
"Ineligible Receivable" is defined in subsection 3.10(c).
"Initial Closing Date" means December 19, 1996.
"Initial Investor Interest" means as to any Series, the amount stated
in the related Supplement.
"Initial Principal Payment Date" shall have the meaning set forth in
any 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" means as of any date of determination, an
insurer that has (i) a claims paying ability rating of at least investment grade
(i.e., in one of the top four generic rating categories, irrespective of any
plus or minus) from Standard & Poor's and (ii) an insurance financial strength
rating of at least investment grade (i.e., in one of the top four generic rating
categories, irrespective of any plus or minus) from Moody's.
"Investment Grade Insurer Percentage" means as of any date of
determination a fraction (expressed as a percentage) the numerator of which is
the portion of the Aggregate Receivables relating to the financing of insurance
premiums of the Top Ten Investment Grade Insurers as of such date of
determination and the denominator of which is the portion of the Aggregate
Receivables relating to the financing of insurance premiums of the Top Ten
Insurers as of such date of determination.
"Investor 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, the Transferor, the Trustee, the Trust, the
Servicer, the Back-up Servicer or any Successor Servicer obtain and maintain a
license in order to own or acquire Premium Finance Agreements, service Premium
Finance Agreements or otherwise engage in the business of insurance premium
financing, in each case, as contemplated by this Agreement and the Receivables
Purchase Agreement.
"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.
"Maximum Top 10 Insurer Percentage" means 60%.
"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 Moody's Investors Service, Inc.
"Net Payables" means with respect to any Receivable, the unfunded
portion of such Receivable.
"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 related to Receivables which became Defaulted Receivables during
such Monthly Period.
"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 AA-m or AA-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) with respect to Standard & Poor's only, prior to the
purchase of such investment the Rating Agency Condition has been satisfied and
(ii) after 10 Business Days notice to Moody's of the purchase of such investment
Moody's has not 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. Any Permitted Investment
may be sponsored by Transferor, Servicer or Trustee if such investment would
otherwise qualify hereunder.
"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
be the states listed on Schedule II.
"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.
"PFSI" means Premium Financing Specialists, Inc., a Missouri
corporation.
"PFSIC" means Premium Financing Specialists of California, Inc., a
California corporation.
"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 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, Servicer and Trustee 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.
"Rating Agency Test" shall have the meaning in any Supplement.
"Reassignment" is defined in subsection 2.6(b)(ii).
"Reassignment Date" is defined in subsection 2.4(e).
"Receivable" means each Premium Finance Agreement, including the power
of attorney included therein 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 amount of Aggregate Receivables, 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 Receivables, 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 Receivables" is defined in subsection 2.6(a).
"Required Investment Grade Insurer Percentage" means 90%.
"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 and any Trust Officer 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.
"Sale Notice" means an officer's certificate signed by the President
or chief executive officer of the Back-up Servicer certifying (i) the Back-up
Servicer has agreed to consolidate with or merge with a third party or a third
party has agreed to acquire the Back-up Servicer's properties and assets
substantially as an entirety (other than assets conveyed or transferred through
a financing or securitization program) or purchase all or substantially all of
the capital stock of the Back-up Servicer and (ii) such agreement is conditioned
on the Back-up Servicer being released from its obligations under this Agreement
or the purchase price included in such agreement is subject to downward
adjustment unless the Back-up Servicer is released from its obligations under
this Agreement.
"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 ,
jointly and severally 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 described in subsection 3.13(c).
"Servicer Ineligible Receivable" is defined in subsection 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 Back-up Servicer Termination Notice" means written notice
signed by the President or the chief executive officer of a Back-up Servicer
that became a successor Back-up Servicer pursuant to Section 8.9, which states
that the Back-up Servicer is terminating its obligations and duties under this
Agreement pursuant to subsection 8.10(c).
"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.
"Tier 1 Insurer" means as of any date of determination, an insurance
carrier which has a then current (i) claims-paying ability rating from Standard
& Poor's of at least A-, but below AAA and (ii) insurance financial strength
rating from Moody's of at least A3, but below Aaa; provided, however, in the
event an insurance carrier has a split rating from Standard & Poor's and
Moody's, the lower of the two ratings will govern for purposes of determining
whether such insurance carrier is a Tier 1 Insurer.
"Tier 2 Insurer" means as of any date of determination, an insurance
carrier which has a then current (i) claims-paying ability rating from Standard
& Poor's of at least BBB-, but below A- and (ii) insurance financial strength
rating from Moody's of at least Baa3, but below A3; provided, however, in the
event an insurance carrier has a split rating from Standard & Poor's and
Moody's, the lower of the two ratings will govern for purposes of determining
whether such insurance carrier is a Tier 2 Insurer.
"Tier 3 Insurer" means as of any date of determination, an insurer
that did not have (i) a claims-paying ability rating of at least investment
grade (i.e., in one of the top four generic rating categories, irrespective of
any plus or minus) from Standard & Poor's or (ii) an insurance financial
strength rating of at least investment grade (i.e., in one of the top four
generic rating categories, irrespective of any plus or minus) from Moody's.
"Top 10 Insurer" means as of any date of determination any of the
insurance carriers listed one through ten on the most recent Insurer Schedule
delivered to the Rating Agencies by the Originators or the Transferor.
"Top 10 Investment Grade Insurer" means as of any date of
determination any Top 10 Insurer which is an Investment Grade Insurer.
"Top 10 Insurer Percentage" means with respect to the Top 10 Insurers
and as of any date of determination a fraction (expressed as a percentage), the
numerator of which is the portion of the aggregate amount of Receivables
relating to the financing of insurance premiums of each Top Ten Insurer and the
denominator of which is the aggregate amount of Receivables.
"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
and any successors pursuant to Section 7.2.
"Transferor Ineligible Account" is defined in subsection 2.4(d)(v).
"Transferor Ineligible Receivable" is defined in subsection
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
Receivables, 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 April
7, 2020.
"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; provided, that any obligations of AFCO Credit, AFCO Acceptance and
Mellon Bank, N.A. under this Agreement that arise out of any of their acts or
omissions in the performance of their duties under this Agreement shall survive
the termination of any such party as a party to this Agreement. 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 with notice to the Rating
Agencies.
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 adjust
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.
<PAGE>
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, rebates or refunds due on such
Receivables, (iv) its rights (but none of its obligations) under 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,
rebates or refunds due on such Additional Receivables, and (iv) 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 to 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 the procedure 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
Receivable conveyed to the Trust it shall 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 Excess Obligor Concentration Amount (as calculated on the
Determination Date immediately preceding such day) to exist or be increased;
(ii) an Excess Insurer Concentration Amount (as calculated on the Determination
Date immediately preceding such day) to exist or be increased; (iii) the
Investment Grade Insurer Percentage (as calculated on the Determination Date
immediately preceding such day) to be less than the Required Investment Grade
Insurer Percentage; (iv) the Investment Grade Insurer Percentage (as calculated
on the Determination Date immediately preceding such day) to be decreased, if on
such day the Investment Grade Insurer Percentage is equal to or less than the
Required Investment Grade Insurer Percentage; (v) the Top 10 Insurer Percentage
(as calculated on the Determination Date immediately preceding such day) to
exceed the Maximum Top Insurer Percentage; (vi) the Top 10 Insurer Percentage to
be increased, if on such day the Top 10 Insurer Percentage (as calculated on the
Determination Date immediately preceding such day) is equal to or greater than
the Maximum Top 10 Insurer Percentage; and (vii) a breach of any Rating Agency
Test specified in a Supplement.
(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 as set forth in Schedule IV.
(h) Notwithstanding anything to the contrary contained in Section
13.1, subsection 2.1(f) may be amended at any time by the Servicer, the Trustee
and the Transferor with the consent of the Credit Enhancement Provider, but
without the consent of the Holders, if the Rating Agency Condition has been
satisfied with respect to such amendment.
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 and
as of any Addition 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
and as of any Addition 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 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 and
any Additional 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 and any
Additional Property. If this Agreement constitutes the grant of a
security interest to the Trust in the Conveyed Property and any
Additional 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.
(viii) Receivables Schedule. The related Receivables Schedule,
as of any date, is an accurate and complete listing in all material
respects of all the Receivables conveyed to the Trust on or prior to
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 November 30, 1996, the Aggregate Receivables in all the Accounts was
$614,886,198.16, of which $600,754,711.61 were Principal Receivables.
(b) Eligibility of Receivables. Transferor hereby represents and
warrants to the Trust as of the Cut Off Date, with respect to the Initial
Receivables, and as of the related Addition Date with respect to the Additional
Receivables:
Each Receivable conveyed to the Trust on such date is an
Eligible Receivable.
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.
(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 Ineligible Receivables.
(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)(ii), and if 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, such
Receivable shall be automatically removed from the Trust on the terms
and conditions set forth in subsection 2.4(d)(iii).
(ii) Removal After Cure Period. In the event of a breach of
(i) the representation and warranty set forth in subsection 2.4(b)(i),
and as a result of such breach the related Receivable becomes a
Defaulted Receivable or the Trust's rights in, to or under a 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), 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, then such Receivable 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 a Receivable,
Transferor shall, subject to subsection 2.4(d)(v), accept reassignment
of such Receivable (a "Transferor Ineligible Receivable") by directing
Servicer to deduct the Aggregate Receivable Balance of each Transferor
Ineligible Receivable 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 Transferor
Ineligible Receivable 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 Transferor Ineligible Receivable 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 Excess Funding
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 Ineligible
Receivable, all monies due or to become due with respect to each
Ineligible Receivable 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 Transferor
Ineligible Receivable 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).
(v) Reassignment of all Receivables in Account. In
the event for administrative reasons, the Transferor is unable
to segregate the Transferor Ineligible Receivables from other
Receivables in the related Account (a "Transferor Ineligible
Account"), then all the Receivables in such Transferor
Ineligible Account shall be treated as Transferor Ineligible
Receivables and the Transferor shall be obligated to accept
reassignment of all such Receivables in such Transferor
Ineligible Account.
(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 Receivables. (a) Subject to the conditions set
forth below, Transferor may, but shall not be obligated to, designate
Receivables for deletion and removal ("Removed Receivables") 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 Receivables will be reassigned
by Trustee to Transferor (the "Removal Date"), Transferor shall give Trustee and
Servicer written notice that the Removed Receivables are to be reassigned to
Transferor.
(b) Transferor shall be permitted to designate and require
reassignment to it of the Removed Receivables only upon satisfaction of the
following conditions:
(i) the removal of any Receivables 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 Removed Receivables 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 C (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 Receivables identified by account number and the aggregate
amount of the Removed Receivables 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
Receivables 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 Receivables, 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 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 removed Principal Receivables 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 Removed Receivables shall no
longer constitute a part of the Trust. The Transferor hereby appoints AFCO
Credit as administrative servicer and AFCO Credit hereby agrees to such
appointment.
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 PFSI and PFSIC to act
as Back-up Servicer (with PFSI to act on all Permitted States except for
California and PFSIC to act in California) under this Agreement and to act as
Successor Servicer under this Agreement upon removal of the Servicer pursuant to
Section 10.2 and PFSI and PFSIC hereby agree 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 (except as expressly
stated otherwise herein). 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 PFSI and PFSIC acting as Back-up Servicer. The Back-up Servicer
shall continue to act as Back-up Servicer under this Agreement until the earlier
of (x) the removal or resignation of the Back-up Servicer pursuant to Sections
10.2 or 8.10 or (y) the initial Series Termination Date.
(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 upon written request of the Transferor supply to
Transferor all necessary information reasonably available requested by
Transferor in such written request 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 until 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
(in which case Back-up Servicer will be entitled to receive a Servicing Fee).
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 (including the Back-up Servicer, if 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 and on
any Addition 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 in
accordance with subsection 3.1(b), 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 A (which includes the Schedule
thereto specified as such in each Supplement) as to such matters as are set
forth in Exhibit A.
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 Repor (a) On or
before March 31 of each calendar year, beginning with March 31, 1998, 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 subsection 3.4(b) 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 the terms and conditions as set forth in Articles III and IV and
Section 8.8 of 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 assets of the Trust 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, 1998, 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 assets of the Trust 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 (or Transferor, if
Back-up Servicer is 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 not
take any action which would impair, 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) so long as the Originators are Servicer, 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 Servicer
(including Back-up Servicer, if Servicer), 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 or materially adversely affecting the Trust or
the Certificateholders.
(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 Receivable becomes a Defaulted Receivable 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 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, subject to
subsection 3.10(d), such Receivable shall be removed from the Trust on the terms
and conditions set forth in subsection 3.10(c).
(c) Procedures for Removal. When the provisions of subsection 3.10(b)
and subsection 3.13(b) require removal of a Receivable, Servicer shall, subject
to subsection 3.13(c), accept assignment of such Receivable (a "Servicer
Ineligible Receivable" and together with any Transferor Ineligible Receivable,
an "Ineligible Receivable") by depositing into the Collection Account on the
applicable Determination Date an amount equal to the principal portion of each
such Receivable 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
such Servicer Ineligible Receivables (and the making 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 Servicer Ineligible Receivable all monies due or to become due with
respect to each Servicer Ineligible Receivable 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 Servicer Ineligible Receivable pursuant to this subsection 3.10(c) in
each case without recourse, representation or warranty. 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.
(d) Indemnity. If a Back-up Servicer is Servicer and the provisions of
subsection 3.10(c) would, but for this subsection 3.10(d), require it to accept
assignment of any Receivable, the Back-up Servicer shall indemnify the Trust
from and against any losses suffered or sustained by the Trust by reason of the
related breach of subsection 3.10(a).
SECTION 3.11. Representations and Warranties of Back-up Servicer. PFSI
and PFSIC, 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 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.
SECTION 3.12. Back-Up Servicer Covenant. The Back-up Servicer hereby
covenants and agrees that it will use its best efforts to be licensed under or
exempt from the Licensing Laws of the Permitted States in which it is licensed
as of the Initial Closing Date. Upon the discovery by the Back-up Servicer that
it is not licensed under or exempt from the Licensing Laws of any Permitted
State for a period of 30 days, the Back-up Servicer shall deliver written notice
of such fact to the Transferor, the Servicer and the Trustee. The Transferor
shall terminate the Back-up Servicer 15 days after receipt of such notice,
unless prior to such time the Transferor is furnished with an opinion of counsel
which states that the absence of such license or exemption would not, if the
Back-up Servicer were the Servicer on such date, (x) cause any of the
Receivables in such state to be unenforceable, (y) subject the Trust or the
Trustee to any civil or criminal penalties, sanctions or taxes or (z) materially
and adversely affects the ability of the Transferor, the Trustee or the Back-up
Servicer to perform their obligations under this Agreement.
SECTION 3.13. Servicer Licensing Covenant. (a) The Servicer (so long
as an Originator is a Servicer) hereto covenants and agrees to comply with the
Licensing Laws of each State where the stated address of any borrower under the
Receivables conveyed to the Trust is located (excluding receivables with zero
balances, Defaulted Receivables or receivables that have been removed from the
Trust) and to cause the Transferor, the Trustee and the Trust to at all times be
in compliance with such Licensing Laws.
(b) In the event of a breach of Section 3.13(a) that (x) results in
Receivables in such state being unenforceable, (y) results in the Transferor,
Trustee or the Trust being subjected to any civil or criminal penalties,
sanctions or taxes or (z) materially and adversely affects the ability of the
Servicer, the Transferor, the Trustee or the Trust to perform their respective
obligations under this Agreement, then either the Servicer shall remove such
Receivables in the manner provided in Section 3.10(c) or indemnify the
Transferor, the Trustee and the Trust for any losses suffered by any of them as
a result of such noncompliance within 15 days of receipt of notice of any such
loss.
(c) In the event for administrative reasons the Servicer is unable to
identify or segregate Servicer Ineligible Receivables from other Receivables in
the related Account (a "Servicer Ineligible Account"), then all the Receivables
in such Servicer Ineligible Account shall be treated as Servicer Ineligible
Receivables and the Servicer will be obligated to remove all of the Receivables
in such Servicer Ineligible Account.
SECTION 3.14. Custody of Premium Finance Agreements. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Trust, upon the execution and delivery of this Agreement, revocably appoints the
Servicer, and the Servicer accepts such appointment, to act as the agent of the
Trust and as custodian of the Premium Finance Agreements conveyed to the Trust,
each of which is hereby constructively delivered to the Trust.
SECTION 3.15. Duties of Servicer as Custodian. (a) Safekeeping. The
Servicer, in its capacity as custodian, shall hold the Premium Finance
Agreements conveyed to the Trust on behalf of the Trust for the use and benefit
of the Trust and maintain such accurate and complete accounts, records and
computer systems pertaining to the Receivables as shall enable the Trustee to
comply with its obligations pursuant to this Agreement.
(b) Maintenance of and Access to Records. The Servicer, in its
capacity as custodian, agrees to maintain the Premium Finance Agreements
conveyed to the Trust at the office(s) listed in Schedule II, or at such of its
offices as shall from time to time be identified to the Trustee by written
notice. The Servicer, in its capacity as custodian, may temporarily move
individual Premium Finance Agreements without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures, but shall promptly return such Premium Finance
Agreements as soon as practicable after it is no longer needed for such purpose
to such office or office(s).
The Servicer, in its capacity as custodian, shall make available to
the Trustee, or its duly authorized representatives, attorneys or auditors, the
Premium Finance Agreements conveyed to the Trust and the related accounts,
records and computer systems maintained by the Servicer at such times during
normal operating hours as the Trust shall reasonably instruct which does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations.
(c) Release of Documents. Upon written instruction from the Trust, the
Servicer, in its capacity as custodian, shall release or cause to be released
any Premium Finance Agreements conveyed to the Trust, the Trust's agent or the
Trust's designee, as the case may be, at such place or places as the Trust may
designate, as soon as practicable. The Servicer, in its capacity as custodian,
shall not be responsible for any loss occasioned by the failure of the Trust,
its agent or its designee to return any document or any delay in doing so.
SECTION 3.16. Instruction; Authority to Act. The Servicer shall be
deemed to have received proper instructions from the Trustee with respect to the
Premium Finance Agreements upon its receipt of written instructions signed by a
Responsible Officer. A certified copy of a by- law or of a resolution of the
board of directors of the Trustee, as applicable, shall constitute conclusive
evidence of the authority of such Responsible Officer to act and shall be
considered in full force and effect until receipt by the Servicer of written
notice to the contrary given by the Trust.
SECTION 3.17. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Initial Closing Date
and shall continue in full force and effect until the earlier of the termination
of the Servicer pursuant to Section 10.2 or such appointment is terminated
pursuant to this Section 3.17 or until this Agreement shall be terminated. The
Servicer may perform its duties as custodian through one or more agents, which
agents may maintain physical possession of Premium Finance Agreements as agent
for the Servicer acting as custodian. The Trust may terminate the Servicer's
appointment as custodian at any time with cause upon written notification to the
Servicer. As soon as practicable after any termination of such appointment, the
Servicer shall deliver the Premium Finance Agreements to the Trust or the
Trust's agent at such place or places as the Trust may reasonably designate. The
Servicer shall cooperate with the Trust in making the transfer and shall bear
all of the Servicer's costs and expenses with respect to such transfer, but the
Trust shall bear the actual costs and expenses of packing and transporting the
Premium Financing Agreements to the location designated by the Trust.
Notwithstanding the termination of the Servicer as custodian, the Trust agrees
that upon any such termination, the Trust shall provide, or cause its agent to
provide, access to the Premium Finance Agreements to the Servicer for the
purpose of carrying out its duties and responsibilities with respect to the
servicing of the Premium Finance Agreements hereunder.
Sections 3.14, 3.15, 3.16 and 3.17 shall not apply to the Back-up
Servicer, if it is Servicer.
SECTION 3.18. AFCO Credit to act as Servicer. AFCO Credit may act on
behalf of AFCO Acceptance in the performance of the duties of Servicer under
this Agreement in all cases except for the servicing of the Receivables which
have Obligors with a stated address in the applicable Premium Finance Agreement
located in California.
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 or 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"). 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. Any
account established with a Qualified Institution pursuant to this Section 4.2 or
the provisions of any Supplement which is no longer a Qualified Institution
shall, on the fifth Business Day after such Qualified Institution is no longer a
Qualified Institution, be moved to a Qualified Institution.
(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 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
or Trust 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 Transferor, or a Person designated in writing by Transferor,
which shall not constitute a part of the Trust, or shall otherwise be turned
over by Trustee to Transferor not less frequently than monthly. Subject to the
restrictions set forth above, Servicer, or a Person designated in writing by
Servicer (or Transferor, if Back-up Servicer is 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.
The exception described in the third paragraph of this subsection 4.3(a) shall
not apply to Principal Collections.
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 Finance Charge 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 of Finance Charge Collections 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 Finance Charge 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 Finance Charge
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
(provided that in such allocation, all other Series will have priority over any
Series whose terms permit the Servicer to extend the Initial Principal Payment
Date, and then only to the extent that the Principal Shortfall for such Series
is greater than such Principal Shortfall would otherwise have been due to the
election by the Transferor not to extend the Initial Principal Payment Date) 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 (or Transferor, if Back- up Servicer is 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 (or
Transferor, if Back- up Servicer is Servicer) 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 Defaulted Receivables, (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.
Neither the Transferor, Servicer, Back-up Servicer or the Trustee will
have any responsibility or obligation to any Clearing Agency, Clearing Agency
Participant, or Certificate Owner with respect to (i) the accuracy of any
records maintained by the Clearing Agency or any Clearing Agency Participant;
(ii) the payment by the Clearing Agency or any Clearing Agency Participant of
any amount due to any Certificate Owner in respect of the Certificates; (iii)
the delivery of any notice by the Clearing Agency or any Clearing Agency
Participant; (iv) the selection of the Certificate Owners to receive payment in
the event of any partial payment of the Certificates; or (v) any other action
taken by the Clearing Agency or any Clearing Agency Participant.
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 not
including properties or assets conveyed or transferred through a financing or
securitization program, 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 Receivables 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.
The obligations of the Transferor hereunder shall survive the
termination of the Trust, the resignation or removal of the Trustee, and the
appointment of a Successor Servicer.
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 (not including
assets conveyed or transferred through a financing or securitization program)
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, stockholders, employees or other affiliates 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. 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 which constitute gross negligence on
the part 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 Receivables 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 (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 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
(not including assets conveyed or transferred through a financing or
securitization program) substantially as an entirety to any Person, unless:
(i) the Person formed by such consolidation (if such Person is
other than the Back-up Servicer) or into which Back-up Servicer is
merged (if the surviving Person of such merger is other than the
Back-up Servicer) 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. (a) 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; provided that the Servicer
and the Transferor shall use their best efforts to replace the Back-up Servicer
if the Back-up Servicer provides written notice to the Transferor of its desire
to resign as Back-up Servicer.
(b) Notwithstanding anything contained in clause (a) above, if the
Back-up Servicer has delivered to Transferor, Servicer and the Trustee a Sale
Notice on a date which is six months after the Initial Closing Date, the Back-up
Servicer's obligations and duties under this Agreement shall be terminated upon
the earlier to occur of (x) the initial Series Termination Date or (y) the
appointment of a successor Back-up Servicer that assumes the obligations of
Back-up Servicer hereunder and under each Series Supplement and the Rating
Agency Condition having been satisfied. Upon the receipt by Transferor, Servicer
and the Trustee of a Sale Notice delivered pursuant to this subsection 8.10(b),
Servicer and Transferor shall use their best efforts to replace the Back-up
Servicer as soon as possible.
(c) If the Back-up Servicer enters into a transaction contemplated by
Section 8.9 and the surviving Person in such transaction assumes the obligations
of the Back-up Servicer in accordance with Section 8.9, such surviving Person
may terminate its duties and obligations as Back-up Servicer under this
Agreement, if on or prior to 10 days after the consummation of such transaction
such surviving Person delivers a Successor Back-up Servicer Termination Notice
to Transferor, Servicer and Trustee. Such termination shall become effective
upon the earlier to occur of (x) the initial Series Termination Date or (y) the
appointment of a successor Back-up Servicer that assumes the obligations of
Back-up Servicer hereunder and under each Series Supplement and the Rating
Agency Condition having been satisfied. Upon receipt by Transferor, Servicer and
Trustee of a Successor Back-up Servicer Termination Notice delivered pursuant to
this subsection 8.10(c), Servicer and Transferor shall use their best efforts to
replace the Back-up Servicer as soon as possible. If a Sale Notice has been
delivered to the Transferor pursuant to subsection 8.10(b), it will not be
necessary for a Successor Back-up Servicer Termination Notice to be delivered
with respect to the transaction referenced in such Sale Notice.
SECTION 8.11. Cooperation Among Servicer and Back-up Servicer. The
Servicer agrees to provide the Back-up Servicer reasonable access to the
Servicer's premises and management upon reasonable notice during normal business
hours, to the purpose and effect of facilitating the ability of Back-up Servicer
promptly to undertake the responsibilities of Servicer if required hereunder.
The Back-up Servicer agrees to keep all information so obtained confidential. If
the Servicer ceases to be such for any reason, and the Back-up Servicer becomes
a Successor Servicer hereunder, the former Servicer shall afford the Successor
Servicer full and complete access without charge to all books, records, computer
databases, systems and personnel of the former Servicer and shall cooperate with
the Successor Servicer so as to facilitate the Successor Servicer's performance
of its obligations hereunder.
ARTICLE IX.
TRUST PAY OUT EVENTS
SECTION 9.1. Trust Pay Out Event. 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;
(b) the Trust shall become an "investment company" within the meaning
of the Investment Company Act;
(c) the Back-up Servicer becomes legally unable to act as Successor
Servicer or has been terminated as Back-up Servicer and, within 90 days of such
event, a successor Back-up Servicer has not assumed the obligations of Back-up
Servicer and the Rating Agency Condition has not been satisfied with respect to
the appointment of such Back-up Servicer;
(d) the failure of either Originator to transfer Additional
Receivables to the Transferor when required by the Receivables Purchase
Agreement or the failure of the Transferor to convey Additional Receivables as
required by Section 2.1;.
(e) the Originators cease to be the Servicer under the Agreement;
(f) the failure to appoint a successor Back-up Servicer by a date
which is ninety days after the receipt by the Servicer, Trustee and Transferor
of either a Sale Notice or Successor Back-up Servicer Termination Notice in
accordance with subsections 8.10(b) and 8.10(c), respectively; or
(g) the failure of the Servicer (so long as the Originator is a
Servicer) to remove Receivables from the Trust or indemnify the Trust for
certain losses resulting from the breach of subsection 3.13(a).
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 X. 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, such Servicer shall deliver to each insurance
carrier which on such date has premiums financed by the Receivables an
assignment of Power of Attorney to the Back-up Servicer (or any other Successor
Servicer) which would allow the Back-up Servicer (or such other Successor
Servicer) to cancel the related insurance policies on behalf of the Trust, and
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 (each such Person a "Successor
Servicer"). Notwithstanding the above, if the Back-up Servicer or the Trustee 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 10. 2 to the contrary, the Trustee, if it becomes Servicer pursuant
to this Section 10. 2, 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 a
predecessor 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. Notwithstanding the above, or anything in this Section 10.
2 or Section 3.1 to the contrary, the Back-up Servicer if it becomes Servicer
pursuant to this Section 10.2 shall have no responsibility or obligation for (i)
any representation or warranty made by a predecessor Servicer hereunder, and
(ii) any act or omission of either a predecessor or a Successor Servicer other
than such Back-up Servicer. Neither the Trustee, the Back-up Servicer 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 (or Transferor, if Servicer is
Back-up Servicer) shall bear all costs of a Successor Servicer being appointed
hereunder, 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. 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 remedying 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 remedied 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 Servicer, 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 its own interests or 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 without separately verifying the accuracy of the contents or
calculations therein.
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
remedied or waived), 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 as of the Cut Off Date
or any Reassignment of Removed Receivables, 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. Trustee may otherwise transact banking
business with the other parties hereto with the same right it would have were it
not Trustee.
SECTION 11.5. Servicer to Pay Trustee's Fees and Expenses. Servicer
(or Transferor if Back-up Servicer is 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 (or Transferor, if Back-up Servicer is 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 (or Transferor, if Back-up Servicer is
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 Moody's 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 (or Transferor, if Back-up Servicer is 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, Transferor, Back-up Servicer or 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 national banking association organized,
existing and authorized to engage in the business of banking under the
laws of the United States;
(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 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 omission to act of
Servicer or Transferor in servicing the Receivables 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 and to the same extent the Back-up Servicer shall not be liable
for any acts or omissions of the Transferor or any predecessor Servicer.
ARTICLE XII.
TERMINATION
SECTION 12.1. Termination of Trust. (a) Subject to Section 7.4 and
Section 8.4, 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, Section 7.4 and Section 8.4 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 and the
Back-up Servicer 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 Moody's, (y) the long-term unsecured debt obligations of Transferor are rated
at least Baa3 by Moody's or (z) the counterparty risk or long- term unsecured
debt of Mellon Bank Corporation is rated at least Baa3 by Moody's (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 Moody's and (2) Moody's has not notified
Transferor that reliance upon Mellon Bank Corporation's ratings for this purpose
would result in the lowering of Moody's 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 D 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, representation or warranty 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) Subject to subsection 2.1(h), this
Agreement or any Supplement may be amended in writing from time to time by
Servicer, Transferor and Trustee, without the notice to or 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,
Transferor and Trustee, without the notice to or 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) Subject to subsection 2.1(h), this Agreement or any Supplement may
also be amended in writing from time to time by 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.
(h) Notwithstanding anything to the contrary contained in this Section
13.1, the provisions of this Agreement or any Supplement which affect the rights
or obligations of the Back-up Servicer may only be amended with the further
written consent of the Back-up Servicer.
SECTION 13.2. Protection of Right, Title and Interest to Trust. (a)
Servicer (or the Transferor, if Back-up Servicer is 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, 500 Grant Street,
Pittsburgh, Pennsylvania 15258-0001 Attention: Chief Financial Officer and
General Counsel, (b) in the case of Servicer, to AFCO Credit Corporation, 10
Hanover Square Street, New York, New York 10004, Attention: Fredrick B. Ollet,
III, Vice President and Chief Financial Officer, with a copy to Robert Ratner,
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, in case of the Back-up Servicer, to Premium
Financing Specialists, Inc., 1055 Broadway, Kansas City, Missouri 64105,
Attention: Frank Bednar 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.
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer, Back-up 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:/s/ Steven G. Elliot
Name:
Title:
AFCO CREDIT CORPORATION, Servicer
By:/s/ Michael M. Nisbet
Name:Michael M. Nisbet
Title: President and CEO
AFCO ACCEPTANCE CORPORATION, Servicer
By:/s/ Michael M. Nisbet
Name:Michael M. Nisbet
Title: President and CEO
PREMIUM FINANCING SPECIALISTS, INC.,
Back-up Servicer
By:/s/Frank Bednar
Name: Frank Bednar
Title:Controller
PREMIUM FINANCING SPECIALISTS OF
CALIFORNIA, INC., Back-up Servicer
By:/s/Frank Bednar
Name: Frank Bednar
Title: Controller
THE FIRST NATIONAL BANK OF CHICAGO, Trustee
By:/s/ Steven M. Wagner
Name: Steven M. Wagner
Title: Vice President
<PAGE>
SCHEDULE I
Procedure for accessing trust accounts on AFCO Credit computer system:
Sign on the HP system AFCO's Credit's processing centers as follows:
:Hello Trust, PFS (Return)
Enter current password
(Password)(Return)
The accounts flagged for the Trust will be listed on the screen.
<PAGE>
SCHEDULE II
AFCO
900 Lanidex Plaza
Parsippany, NJ 07054
AFCO
2990 Brandywine Road
#100
Atlanta, GA 30341-5529
AFCO
21800 Oxnard Street
#800
Woodland Hills, CA 91365-1260
AFCO
4600 College Boulevard
Overland Park, KS 66211-1606
<PAGE>
SCHEDULE III
States
California
Texas
New York Florida
New Jersey
Pennsylvania
Massachusetts
Ohio
Michigan
Utah
Louisiana
Colorado
Maryland
Connecticut
Arkansas
Alabama
South Carolina
Arizona
Hawaii
Oklahoma
North Carolina
Indiana
Nevada
West Virginia
Wisconsin
Minnesota
Kentucky
Idaho
New Hampshire
Rhode Island
Maine
Montana
Iowa
Nebraska
Wyoming
South Dakota
<PAGE>
SCHEDULE IV
Receivables Schedule
See Computer Ptrintout Held By The First National Bank of Chicago, as Trustee
<PAGE>
EXHIBIT A
FORM OF MONTHLY PAYMENT INSTRUCTIONS AND
NOTIFICATION TO TRUSTEE
MELLON BANK, N.A.
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST Series 1996-1
MONTHLY PERIOD ENDING December 31, 1996
Capitalized terms used in this notice have their respective meanings set forth
in the Pooling and Servicing Agreement. References herein to certain sections
and subsections are references to the respective sections and subsections of the
Pooling and Servicing Agreement as supplemented by the Series 1996-1 Supplement.
This notice is delivered pursuant to Section 4.11.
A) AFCO Credit and AFCO Acceptance are Servicer under the Pooling and
Servicing Agreement.
B) The undersigned is a Servicing Officer.
C) The date of this notice is on or before the related Transfer Date
under the Pooling and Servicing Agreement.
I. INSTRUCTION TO MAKE A WITHDRAWAL
Pursuant to Section 4.11, Servicer does hereby instruct Trustee (i) to make
withdrawals from the Finance Charge Account, the Principal Account, the
Distribution Account and the Principal Funding Account on January 14, 1997,
which date is a Transfer Date under the Pooling and Servicing Agreement, in
aggregate amounts set forth below in respect of the following amounts and (ii)
to apply the proceeds of such withdrawals in accordance with Section 3 of the
Series 1996-1 Supplement and Section 4.11 of the Series 1996-1 Supplement:
A. Pursuant to Section 3 of the Series 1996-1 Supplement:
1. Servicer Interchange 0.00
B. Pursuant to subsection 4.11(a)(i):
1. Class A Monthly Interest at the Class A
Certificate Rate on the Class A Investor
Interest 1,871,925.00
2. Class A Deficiency Amount 0.00
3. Class A Additional Interest 0.00
C. Pursuant to subsection 4.11(a)(ii):
1. Class A Servicing Fee 73,333.33
2. Accrued and unpaid Class A Servicing Fee 0.00
D. Pursuant to subsection 4.11(a)(iii):
1. Class A Investor Default Amount 0.00
E. Pursuant to subsection 4.11(a)(iv):
1. Portion of Excess Spread from Class A
Available Funds to be allocated and distributed
as provided in Section 4.13 1,829,762.74
F. Pursuant to subsection 4.11(b)(i):
1. Class B Monthly Interest at the Class B
Certificate Rate on the Class Investor Interest 110,296.88
2. Class B Deficiency Amount 0.00
3. Class B Additional Interest 0.00
G. Pursuant to subsection 4.11(b)(ii):
1. Class B Servicing Fee 4,166.67
2. Accrued and unpaid Class B Servicing Fee 0.00
H. Pursuant to subsection 4.11(b)(iii):
1. Portion of Excess Spread from Class B
Available Funds to be allocated and distributed
as provided in Section 4.13 100,026.29
I. Pursuant to subsection 4.11(c)(i):
1. Collateral Interest Servicing Fee, if applicable 0.00
2. Accrued and unpaid Collateral Interest
Servicing Fee, if applicable 0.00
J. Purusnat to subsection 4.11(c)(ii)
1. Portion of Excess Spread from Collateral Available
Funds to be allocated and distributed as provided
in Section 4.13 300,285.77
Total 2,230,074.80
K. Pursuant to subsection 4.11(d)(i):
1. Collateral Monthly Principal, if any, applied
in accordance with the Loan Agreement 0.00
L. Pursuant to subsection 4.11(d)(ii):
1. Amount to be treated as Shared
Principal Collections 0.00
M. Pursuant to subsection 4.11(d)(iii):
1. Amount to be paid to Transferor 0.00
2. Unallocated Principal Collections 0.00
N. Pursuant to subsection 4.11(e)(i):
1. Class A Monthly Principal 0.00
O. Pursuant to subsection 4.11(e)(ii):
1. Class B Monthly Principal 0.00
P. Pursuant to subsection 4.11(e)(iii)
1. Collateral Monthly Principal to be applied in
accordance with the Loan Agreement 0.00
Q. Pursuant to subsection 4.11(e)(iv):
1. Amount to be treated as Shared
Principal Collections 0.00
R. Pursuant to subsection 4.11(e)(v):
1. Amount to be paid to Transferor 0.00
2. Unallocated Principal Collections 0.00
Total 0.00
S. Pursuant to subsection 4.11(f):
1. Amount to be withdrawn from the Principal
Funding Account and deposited into the
Distribution Account 0.00
II. INSTRUCTION TO MAKE CERTAIN PAYMENTS
Pursuant to Section 4.11, Servicer does hereby instruct Trustee to pay in
accordance with Section 5.1 from the Distribution Account on ____________,
____, which date is a Distribution Date under the Pooling and Servicing
Agreement, amounts so deposited in the Distribution Account pursuant to
Section 4.11 as set forth below:
A. Pursuant to subsection 4.11(g);
1. Amount to be distributed to Class A Holders 0.00
2. Amount to be distributed to Class B Holders 0.00
B. Pursuant to subsection 4.11(h)(i):
1. Amount to be distributed to the Class A Holders 0.00
C. Pursuant to subsection 4.11(h)(ii):
1. Amount to be distributed to the Class B Holders 0.00
III. APPLICATION OF EXCESS SPREAD
Pursuant to Section 4.13, Servicer does hereby instruct Trustee to apply the
Excess Spread with respect to the related Monthly Period and to make the
following distributions in the following priority:
A. The amount equal to the Class A Required Amount, if any, which
which will be used to fund the Class A Required amount and be
applied in accordance with, and in the priority set forth in,
subsection 4.10(a) 0.00
B. The amount equal to the aggregate amount of Class A Investor Charge-
Offs which have not been previously reimbursed (after giving effect to
the allocation on such Transfer Date of certain other amounts applied
for that purpose) which will be treated as a portion of Investor
Principal Collections and deposited into the Principal Account on such
Transfer Date 0.00
C. The amount equal to the Class B Required Amount, if any, which will be
used to find the Class B Required Amount and be applied first in
accordance with, and in the priority set forth in, subsection 4.11(b)
and then any amount available to pay the Class B Investor Investor
Default Amount shall be treated as a portion of Investor Principal
Collections and deposited into the Principal Account 0.00
D. The amount equal to the aggregate amount by which the Class B Investor
Interest has been reduced below the initial Class B Investor Investor
Interest for reasons other than the payment of principal to the Class B
Holders (but not in excess of the aggregate amount of such reductions
which have not been previously reimbursed) which will be treated as a
portion of Investor Principal Collections and deposited into the
Principal Account 0.00
E. The amount equal to the Collateral Monthly Interest plus the amount
of any past due Collateral Monthly Interest which will be paid to the
Collateral Interest Holder for application in accordance with the
Loan Agreement 164,255.82
F. The amount equal to the aggregate amount of accrued but unpaid
Collateral Interest Servicing Fees which will be paid to Servicer.
5,833.33
G. The amount equal to the Collateral Default Amount, if any, for the
prior Monthly Period which will be treated as a portion of Investor
Principal Collections and deposited into the Principal Account 0.00
H. The amount equal to the aggregate amount by which the Collateral
Interest has been reduced below the Required Collateral Interest for
reasons other than the payment of principal to the Collateral Interest
Holder (but not in excess of the aggregate amount of such reductions
which have not been previously reimbursed) which will be treated as a
portion of Investor Principal Collections and deposited into the
Principal Account 0.00
I. On each Transfer Date from and after the Reserve Account Funding Date,
but prior to the date on which the Reserve Account terminates as
described in subsection 4.17(f), the amount up to the excess, if any,
of the Required Reserve Account Amount over the Available Reserve
Account Amount which shall be deposited into the Reserve Account 0.00
J. An amount equal to all other amounts due under the Loan Agreement
(to the extent payable from Available Non-Principal Funds, as
defined therein) shall be deposited into the Distribution Account and
applied in accordance with the Loan Agreement 0.00
K. The balance, if any, after giving effect to the payment made
pursuant to subparagraphs (a) through (j) above shall constitute
Excess Finance Charge Collections to be applied with respect to
other Series in accordance with Section 4.5 2,059,985.65
IV. REALLOCATED PRINCIPAL COLLECTIONS
Pursuant to Section 4.14, Servicer does hereby instruct Trustee to withdraw from
the Principal Account and apply Reallocated Principal Collections pursuant to
Section 4.14 with respect to the related Monthly Period in the following
amounts:
A. Reallocated Collateral Principal Receivables 0.00
B. Reallocated Class B Principal Receivables 0.00
V. ACCRUED AND UNPAID AMOUNTS
After giving effect to the withdrawals and transfers to be made in accordance
with this notice, the following amounts will be accrued and unpaid with respect
to all Monthly Periods preceding the current calendar month
A. Subsections 4.11(a)(i) and (b)(i):
(1) The aggregate amount of the Class A Deficiency Amount 0.00
(2) The aggregate amount of Class B Deficiency Amount 0.00
B. Subsections 4.11(a)(ii) and (b)(ii):
The aggregate amount of all accrued and unpaid Investor Monthly
Servicing Fees 0.00
C. Section 4.12:
The aggregate amount of all unreimbursed Investor Charge Offs 0.00
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate this __ day of__________, ___.
MELLON BANK, N.A.
Transferor
By:______________________
Name:
Title:
EXHIBIT B
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before
March 31 beginning with March 31, 1998,
pursuant to Section 3.5 of the Pooling and
Servicing Agreement referred to below)
AFCO CREDIT CORPORATION
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
The undersigned, a duly authorized representative of AFCO Credit
Corporation ("AFCO"), as Servicer, pursuant to the Pooling and Servicing
Agreement dated as of December 1, 1996 (as may be amended and supplemented from
time to time, the "Agreement"), among Mellon Bank, N.A., as Transferor, AFCO
Credit Corporation, as Servicer, AFCO Acceptance Corporation, as Servicer,
Premium Financing Specialists, Inc., as Back-up Servicer, Premium Financing
Specialists of California, Inc., as Back-up Servicer and The First National Bank
of Chicago, as Trustee, does hereby certify that:
1. AFCO is, as of the date hereof, Servicer under the Agreement.
Capitalized terms used in this Certificate have their respective meanings as set
forth in the Agreement.
2. The undersigned is a Servicing Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to Trustee.
3. A review of the activities of Servicer during the fiscal year ended
_______________, _____, and of its performance under the Agreement was conducted
under my supervision.
4. Based on such review, Servicer has, to the best of my knowledge,
performed in all material respects its obligations under the Agreement
throughout such year and no default in the performance of such obligations has
occurred or is continuing except as set forth in paragraph 5.
5. The following is a description of each default in the performance
of Servicer's obligations under the provisions of the Agreement known to me to
have been made by Servicer during the fiscal year ended ________________, ____,
which sets forth in detail (i) the nature of each such default, (ii) the action
taken by Servicer, if any, to remedy each such default and (iii) the current
status of each such default: [if applicable, insert "None."]
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this __ day of ___________, 19__.
AFCO CREDIT CORPORATION,
Servicer
By __________________________
Name:
Title:
<PAGE>
EXHIBIT C
FORM OF REASSIGNMENT OF RECEIVABLES
(As required by Section 2.6 of
the Pooling and Servicing Agreement)
REASSIGNMENT No._____ of RECEIVABLES dated as of _____, ____1,
pursuant to the Pooling and Servicing Agreement dated as of December 1, 1996 (as
may be amended and supplemented from time to time, the "Agreement") among Mellon
Bank, N.A., as transferor (the "Transferor"), AFCO Credit Corporation and AFCO
Acceptance Corporation, as servicer (collectively, the "Servicer" and in their
capacity as originator, the "Originator"), Premium Financing Specialists, Inc.
and Premium Financing Specialists of California, Inc., as back-up servicer
(collectively, the "Back-up Servicer") and The First National Bank of Chicago,
as trustee (the "Trustee").
W I T N E S S E T H::
WHEREAS Transferor, Servicer, Back-up Servicer and Trustee are parties
to the Agreement;
WHEREAS pursuant to the Agreement, Transferor wishes to remove from
the Trust certain designated Receivables (the "Removed Receivables") and to
cause Trustee to reconvey the Removed Receivables, whether now existing or
hereafter created, from the Trust to Transferor; and
WHEREAS Trustee is willing to accept such designation and to reconvey
the Receivables in the Removed Accounts subject to the terms and conditions
hereof;
NOW, THEREFORE, Transferor and Trustee hereby agree as follows:
1. Defined Terms. All terms defined in the Agreement and used herein
shall have such defined meanings when used herein, unless otherwise defined
herein.
"Removal Date" means, with respect to the Removed Receivables
designated hereby, __________, ____.
"Removal Notice Date" means, with respect to the Removed Receivables,
__________, ____.
2. Designation of Removed Receivables. On or before the date that is
five Business Days after the Removal Date, Transferor will deliver to Trustee a
computer file or microfiche list containing a true and complete list of all
Removed Receivables identified by account number and the Aggregate Receivable
Balance of the Removed Receivables, as of the Removal Date, which computer file
or microfiche list shall supplement any computer file of microfiche list
previously delivered to Trustee pursuant to the Agreement.
3. Conveyance of Receivables. (a) Trustee does hereby transfer,
assign, set over and otherwise convey, without recourse, to Transferor, without
recourse, on and after the Removal Date, all right, title and interest of the
Trustee, on behalf of the Trust, in, to and under the Removed Receivables
existing at the close of business on the Removal Date and thereafter created
from time to time, all monies due or to become due with respect to such
Receivables and all proceeds thereof.
(b) In connection with such transfer, Trustee agrees to execute and
deliver to Transferor on or prior to the date this Reassignment is delivered,
applicable termination statements with respect to the Removed Receivables
existing at the close of business on the Removal Date and thereafter created
from time to time reassigned hereby and the proceeds thereof evidencing the
release by the Trust of its interest in the Removed Receivables, and meeting the
requirements of applicable state law, in such manner and such jurisdiction as
are necessary to terminate such interest.
4. Representations and Warranties of Transferor. Transferor hereby
represents and warrants to Trustee, on behalf of the Trust, as of the Removal
Date:
(a) Legal, Valid and Binding Obligation. This Reassignment constitutes
a legal, valid and binding obligation of Transferor enforceable against
Transferor, in accordance with its terms, except 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 except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in equity);
(b) Pay Out Event. Transferor reasonably believes that (A) the removal
of the Removed Receivables will not, based on the facts known to Transferor,
then or thereafter cause a Pay Out Event to occur with respect to any Series and
(B) no selection procedure was utilized by Transferor which would result in a
selection of Removed Receivables from among any pools of Accounts of a similar
type that would be materially adverse to the interests of the Holders of any
Series as of the Removal Date; and
(c) Defaulted Receivables. No selection procedure was utilized by
Transferor with the intent to include a disproportionately higher level of
Defaulted Receivables among the Removed Receivables than exist in the
Receivables or to remove Receivables for the intended purpose of mitigating
losses to the Trust.
5. Ratification of Agreement. As supplemented by this Reassignment,
the Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Reassignment shall be read, taken and construed as one and
the same instrument.
6. Counterparts. This Reassignment 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 shall constitute one and the same
instrument.
7. GOVERNING LAW. THIS REASSIGNMENT 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[; PROVIDED THAT THE
IMMUNITY AND STANDARD OF CARE OF TRUSTEE IN ANY DUTIES ARISING HEREUNDER SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS].
IN WITNESS WHEREOF, Transferor[, Servicer] and Trustee have caused
this Reassignment 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:
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By ___________________________________
Name:
Title:
- - --------
1 To be dated as of the Removal Date.
<PAGE>
EXHIBIT D
FORM OF RECONVEYANCE OF RECEIVABLES
RECONVEYANCE of RECEIVABLES, dated as of ____________ __, 19__,
pursuant to the Pooling and Servicing Agreement dated as of December 1, 1996 (as
may be amended and supplemented from time to time, the "Agreement") among Mellon
Bank, N.A., as transferor (the "Transferor"), AFCO Credit Corporation and AFCO
Acceptance Corporation, as servicer (collectively, the "Servicer" and in their
capacity as originator, the "Originator"), Premium Financing Specialists, Inc.
and Premium Financing Specialists of California, Inc., as back-up servicer
(collectively, the "Back-up Servicer") and The First National Bank of Chicago,
as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Transferor and the Trustee are parties to the Agreement;
WHEREAS, pursuant to the Agreement, the Transferor wishes to cause the
Trustee to reconvey all of the Receivables and proceeds thereof, whether now
existing or hereafter created, from the Trust to the Transferor pursuant to the
terms of Section 12.4 of Agreement upon termination of the Trust pursuant to
Section 12.1 of the Agreement (as each such term is defined in the Agreement);
WHEREAS, the Trustee is willing to reconvey the Receivables subject to
the terms and conditions hereof;
NOW THEREFORE, the Transferor and the Trustee hereby agree as follow:
1. Defined Terms. All terms defined in the Agreement and used herein
shall have such defined meanings when used herein, unless otherwise defined
herein.
"Reconveyance Date" shall mean ____________ __, 19__.
2. Return of Lists of Accounts. The Trustee shall deliver to the
Transferor or the bailee of the Transferor, not later then three Business Days
after the Reconveyance Date, each and every computer file or microfiche list of
Receivables delivered to the Trustee pursuant to the terms of the Agreement.
3. Conveyance of Receivables. (a) The Trustee does hereby reconvey to
the Transferor, without recourse, representation or warranty, on and after the
Reconveyance Date, all right, title and interest of the Trust in and to the
Receivables, all monies due or to become due with respect thereto, and all
proceeds (as defined in Section 9-306 of the UCC as in effect in the [Relevant
UCC State]) of such Receivables and Insurance Proceeds relating to such
Receivables [and Interchange (if any) allocable to the Trust pursuant to any
Supplement,] except for amounts, if any, held by the Trustee pursuant to
subsection 12.3(b) of the Agreement.
(b) In connection with such transfer, the Trustee agrees to execute
and deliver to the Transferor on or prior to the date of this Reconveyance ,
such UCC termination statements as the Transferor may reasonably request,
evidencing the release by Trust of its lien on the Receivables.
4. Counterparts. This Reconveyance 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.
5 Governing Law. THIS RECONVEYANCE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF _____________, WITHOUT REFERENCE TO ITS CONFLICT
OF LAW PROVISIONS.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Reconveyance of
Receivables to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.
MELLON BANK, N.A.,
Transferor
By ___________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By ___________________________________
Name:
Title:
<PAGE>
EXHIBIT E
REFER TO THIS
AFCO ACCOUNT NUMBER IN
ALL CORRESPONDENCE
NOTICE OF FINANCED PREMIUM
INSURED NAME AND ADDRESS
DATE OF NOTICE AND ANTICIPATED CHECK ACCOUNT MATURITY DAY DUE NO &
ACCEPTANCE RELEASE DATE FREQUENCY
OF INST.
SCHEDULE OF POLICIES
<TABLE>
<CAPTION>
POLICY PREFIX EFFECTIVE DATE OF FULL NAME OF INSURER AND GENERAL AGENT(S) COVERAGE POLICY TERM IN PREMIUM
AND NUMBER POLICY OR ANNUAL OTHER THAN SUBMITTING PRODUCER TO WHOM COPY MONTHS FINANCED
INSTALLMENT OF THIS NOTICE WAS SENT COVERED BY
PREMIUM
<S> <C> <C> <C> <C> <C>
</TABLE>
IF NO OTHER AGENT IS SHOWN UNDER THE INSURANCE COMPANY NAME, THE SUBMITTING
PRODUCER IS SHOWN ON OUR RECORDS AS THE ISSUING AGENT OR THE BROKER OF RECORD..
AGENT OR BROKER SUBMITTING AGREEMENT:
Premium check will be sent to following payee:
PLEASE NOTIFY AFCO IF OTHERWISE --- AS PREMIUM WILL BE PAID ACCORDINGLY.
TO THE INSURER:
AFCO has entered into a contract with your insured to advance the
premiums on the policy described above subject to the conditions herein. The
insured has assigned to us any and all unearned premiums and dividends which may
become payable under the policy. Upon default in payment of any installment,
AFCO will cancel the policy in accordance with authority given us by the insured
to cancel on his behalf.
AFCO MUST BE NOTIFIED BEFORE CHECK RELEASE DATE SHOWN ABOVE IF:
1. The policy is NOT in full force and effect or if the premium has not been
fully earned.
2. The policy description differs from your records or is written for a
period less than one year.
3. The policy requires more than ten (10) days notice of cancellation by any
party.
4. The deposit of provisional premium on an audit or reporting form policy
is NOT at least equal to the premium anticipated to be earned in
accordance with the policy term set forth above (See Section A through E
opposite for insurer's undertaking).
5. The policy is subject to a minimum earned premium or includes a fully
earned policy fee.
6. You wish the premium paid other than as indicated.
7. A general agent or any other agent than indicated herein should be
notified.
The policy description and the names of the agents, insureds, etc.
were provided by the submitting producer. The insurer and general agent or
managing general agent, etc., if any, who have been designated by insurers to
receive notices of finance transactions and who have received copies of the this
notice as indicated herein should NOTIFY US OF ANY DISCREPANCIES PRIOR TO CHECK
RELEASE DATE. If AFCO receives no advice of discrepancies it will pay the
premium as set forth above in the absence of other contingencies.
AFCO has sold to Mellon Bank, N.A. ("Mellon") which has in turn sold
to Mellon Bank Premium Finance Loan Master Trust (the "Trust") all of AFCO's
right, title and interest in, to and under the premium finance agreement
pursuant to which the premium payment on the policy(ies) described above will be
advanced (the "PFA") including (without limitation) the unearned premium and the
rights described herein. AFCO, for the Trust, will continue to service the PFA,
will have the right to cancel the PFA and to collect all sums due the Trust from
insureds and insurance companies and their agents. All unearned premiums are to
be paid to, and rights hereunder shall be exercised by, AFCO, unless the insurer
is notified to the contrary by the Trust.
IN CONSIDERATION OF AFCO ADVANCING THE PREMIUM THE INSURER AGREES THAT:
A. If the insured fails to comply with any terms of the Premium Finance
Agreement and if AFCO cancels the policy it will pay AFCO the gross
unearned premium with or without surrender of the policy.
B. If the policy is for any reason cancelled by the insurer or authorized
agent it will pay AFCO the gross pro rata unearned premium with or
without premium surrender of the policy. Unearned premiums on deposit
or provisional premium policies will be computed on a gross pro rata
basis irrespective of the actual premium earned by audit, report or
retrospective rating as if the premium were fixed.
C. It will pay AFCO (a) all gross unearned premiums which may become
payable resulting from endorsement and (b) loss payments which reduce
the unearned premium up to the unpaid balance of the account, subject
to any mortgagee or loss payee interest and (c) all dividends which may
become payable under the policy.
<PAGE>
MELLON BANK, N.A.
Transferor
AFCO CREDIT CORPORATION
Servicer
AFCO ACCEPTANCE CORPORATION
Servicer
PREMIUM FINANCING SPECIALISTS, INC.
Back-up Servicer
PREMIUM FINANCING SPECIALISTS OF CALIFORNIA, INC.
Back-up Servicer
and
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
on behalf of the Series 1996-1 Holders
SERIES 1996-1 SUPPLEMENT
Dated as of December 1, 1996
to
POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1996
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
Series 1996-1
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. Designation ..................................................1
SECTION 2. Definitions ..................................................2
SECTION 3. Servicing Compensation........................................21
SECTION 4. Reassignment and Transfer Terms................................22
SECTION 5. Delivery and Payment for the Investor
Certificates.....................................22
SECTION 6. Depository; Form of Delivery of Investor
Certificates.....................................22
SECTION 7. Article IV of Agreement.......................................22
ARTICLE IV RIGHTS OF HOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS.......................22
SECTION 4.6 Rights of Holders and the Collateral
Interest Holder..................................22
SECTION 4.7 Allocations ................................................23
SECTION 4.8 Determination of Monthly Interest...........................27
SECTION 4.9 Determination of Monthly Principal..........................29
SECTION 4.10 Coverage of Required Amount.................................30
SECTION 4.11 Monthly Payments............................................31
SECTION 4.12 Investor Charge-Offs........................................37
SECTION 4.13 Excess Spread...............................................38
SECTION 4.14 Reallocated Principal Collections...........................40
SECTION 4.15 Shared Principal Collections................................41
SECTION 4.16 Principal Account and Principal Funding
Account..........................................42
SECTION 4.17 Reserve Account.............................................43
SECTION 4.18 Interest Funding Account....................................45
SECTION 4.19 Determination of LIBOR......................................46
SECTION 4.20 Transferor's or Servicer's Failure to Make
a Deposit or Payment.............................47
SECTION 8. Article V of the Agreement....................................47
ARTICLE V DISTRIBUTIONS AND REPORTS TO INVESTOR HOLDERS................47
SECTION 5.1 Distributions................................................47
SECTION 5.2 Monthly Series 1996-1 Holders' Statement.....................49
SECTION 9. Series 1996-1 Pay Out Events..................................49
SECTION 10. Series 1996-1 Termination....................................52
SECTION 12. RESERVED. .................................................52
SECTION 13. RESERVED. .................................................52
SECTION 14. Counterparts.................................................52
SECTION 15. Governing Law................................................52
SECTION 16. Additional Notices...........................................52
SECTION 17. Additional Representations and Warranties of
Servicer.........................................53
SECTION 17. No Petition .................................................53
SECTION 18. Amendments .................................................53
EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT B Form of Monthly Payment Instructions and
Notification to Trustee
EXHIBIT C Form of Monthly Series 1996-1 Holders'
Statement
SCHEDULE 1
Schedule to Exhibit B of the Pooling and Servicing Agreement
with respect to the Investor Certificates
<PAGE>
SERIES 1996-1 SUPPLEMENT, dated as of December 1, 1996 (this "Series
Supplement"), by and among MELLON BANK, N.A., a national banking association, as
Transferor, AFCO CREDIT CORPORATION, a New York corporation, as Servicer, AFCO
ACCEPTANCE CORPORATION, a California corporation, as Servicer, PREMIUM FINANCING
SPECIALISTS, INC., a Missouri corporation, as Back-up Servicer, PREMIUM
FINANCING SPECIALISTS OF CALIFORNIA, INC., a California corporation, as Back-up
Servicer, and THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, as Trustee under the Pooling and Servicing Agreement dated as of
December 1, 1996 by and among each Servicer, each Back-up Servicer, the
Transferor and Trustee (the "Agreement").
Section 6.9 of the Agreement provides, among other things, that
Transferor and Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the delivery by
Trustee to Transferor for the execution and redelivery to Trustee for
authentication of one or more Series of Certificates.
Pursuant to this Series Supplement, Transferor and the Trust shall
create a new Series of Investor Certificates and shall specify the Principal
Terms thereof.
SECTION 1. Designation. (a) There is hereby created a Series of
Investor Certificates to be issued in two classes pursuant to the Agreement and
this Series Supplement and to be known together as the "Series 1996-1
Certificates." The two classes shall be designated the Class A Floating Rate
Asset Backed Certificates, Series 1996-1 (the "Class A Certificates") and the
Class B Floating Rate Asset Backed Certificates, Series 1996-1 (the "Class B
Certificates"). The Class A Certificates and the Class B Certificates shall be
substantially in the form of Exhibits A-1 and A-2, respectively. In addition,
there is hereby created a third Class which constitutes an uncertificated
interest in the Trust, shall be deemed to be an "Investor Certificate" for all
purposes under the Agreement and this Series Supplement, except as expressly
provided herein, and shall be known as the Collateral Interest, Series 1996-1
and have the rights assigned to the Collateral Interest in this Series
Supplement.
(b) Series 1996-1 shall be included in Group One (as defined below).
Series 1996-1 shall not be subordinated to any other Series.
(c) The Collateral Interest Holder, as holder of an "Investor
Certificate" under the Agreement, shall be entitled to the benefits of the
Agreement and this Series Supplement upon payment by the Collateral Interest
Holder of amounts owing on the Closing Date pursuant to the Loan Agreement (as
defined below). Notwithstanding the foregoing, except as expressly provided
herein, the provisions of Article VI and Article XII of the Agreement relating
to the registration, authentication, delivery, presentation, cancellation ad
surrender of Registered Certificates shall not be applicable to the Collateral
Interest.
SECTION 2. Definitions. If any term or provision contained herein
shall conflict with or be inconsistent with any provision contained in the
Agreement, the terms and provisions of this Series Supplement shall govern.
References to any Article, Section or subsection are references to Articles,
Sections or subsections of the Agreement, except as otherwise expressly
provided. All capitalized terms not otherwise defined herein are defined in the
Agreement, and the interpretive provisions set out in Section 1.2 of the
Agreement apply to this Series Supplement. Each capitalized term defined herein
relates only to the Investor Certificates and no other Series of Certificates
issued by the Trust.
"Accumulation Period" means, solely for the purposes of the definition
of Group One Monthly Principal Payment as such term is defined in each
Supplement relating to Group One, the Controlled Accumulation Period.
"Accumulation Shortfall" initially means zero and thereafter means,
with respect to any Monthly Period during the Controlled Accumulation Period,
the excess, if any, of the Controlled Deposit Amount for the previous Monthly
Period over the amount deposited into the Principal Funding Account pursuant to
subsection 4.11(e)(i) with respect to the Class A Certificates for the previous
Monthly Period.
"Adjusted Investor Interest" means, on any date of determination, an
amount equal to the sum of (a) the Class A Adjusted Investor Interest and (b)
the Class B Investor Interest and (c) the Collateral Interest.
"Aggregate Investor Default Amount" means, as to any Monthly Period,
the sum of the Investor Default Amounts in respect of such Monthly Period.
"Available Investor Principal Collections" means, as to any Monthly
Period, an amount equal to (a) the Investor Principal Collections for such
Monthly Period, minus (b) the amount of Reallocated Principal Collections with
respect to such Monthly Period which pursuant to Section 4.14 are required to
fund the Class A Required Amount and the Class B Required Amount (other than any
portions thereof that are applied pursuant to (x) subsection 4.11(a)(iii) and
(y) subsection 4.13(c) (to the extent such portions pursuant to subsection
4.13(c) are available to pay the Class B Investor Default Amount), which shall,
without duplication, be included as Available Investor Principal Collections),
plus (c) the amount of Shared Principal Collections with respect to Group One
that are allocated to Series 1996-1 in accordance with subsection 4.15(b).
"Available Reserve Account Amount" means, as to any Transfer Date, the
lesser of (a) the amount on deposit in the Reserve Account on such date (after
taking into account any interest and earnings retained in the Reserve Account
pursuant to subsection 4.17(b) on such date, but before giving effect to any
deposit made or to be made pursuant to subsection 4.13(i) to the Reserve Account
on such date) and (b) the Required Reserve Account Amount.
"Base Rate" means, as to any Monthly Period, the annualized percentage
equivalent of a fraction, the numerator of which is equal to the sum of the
Class A Monthly Interest, the Class B Monthly Interest and the Collateral
Monthly Interest, each for the related Distribution Date, and the Investor
Servicing Fee with respect to such Monthly Period and the denominator of which
is the Investor Interest as of the close of business on the last day of such
Monthly Period.
"Class A Additional Interest" is defined in Section 4.8(a).
"Class A Adjusted Investor Interest" means, on any date of
determination, an amount equal to the Class A Investor Interest minus the
Principal Funding Account Balance on such date of determination.
"Class A Available Funds" means, as to any Monthly Period, an amount
equal to the sum of (a) the Class A Floating Allocation of Finance Charge
Collections allocated to the Investor Certificates for such Monthly Period, (b)
with respect to any Monthly Period during the Controlled Accumulation Period
prior to the payment in full of the Class A Investor Interest, the Principal
Funding Investment Proceeds arising pursuant to subsection 4.16(b), if any, with
respect to the related Transfer Date and (c) amounts, if any, to be withdrawn
from the Reserve Account which will be deposited into the Finance Charge Account
on the related Transfer Date pursuant to subsections 4.17(b) and 4.17(d) (or
which will be required to be deposited in the Finance Charge Account pursuant to
such subsections on the related Transfer Date (before giving effect to any
permitted netting)).
"Class A Carry-Over Amount" is defined in subsection 4.8(d).
"Class A Certificate Rate" means, with respect to each Interest
Period, a per annum rate equal to 0.11% per annum in excess of LIBOR, as
determined on the related LIBOR Determination Date.
"Class A Certificates" is defined in subsection 1(a) of this Series
Supplement.
"Class A Deficiency Amount" is defined in subsection 4.8(a).
"Class A Fixed Allocation" means, for any Monthly Period following the
Revolving Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Class A Investor Interest as
of the close of business on the last day of the Revolving Period and the
denominator of which is equal to the Investor Interest as of the close of
business on the last day of the Revolving Period.
"Class A Floating Allocation" means, for any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the Class A Adjusted Investor Interest as of the close
of business on the last day of the preceding Monthly Period and the denominator
of which is equal to the Adjusted Investor Interest as of the close of business
on such day; provided that, with respect to the first Monthly Period, the Class
A Floating Allocation means the percentage equivalent of a fraction, the
numerator of which is the Class A Initial Investor Interest and the denominator
of which is the Initial Investor Interest.
"Class A Holder" means the Person in whose name a Class A Certificate
is registered in the Certificate Register.
"Class A Initial Investor Interest" means the aggregate initial
principal amount of the Class A Certificates, which is $440,000,000.
"Class A Interest Funding Account" is defined in subsection 4.18(a).
"Class A Investor Allocation" means, for any Monthly Period, (a) with
respect to Default Amounts, Finance Charge Collections and Principal Collections
during the Revolving Period, the Class A Floating Allocation, and (b) with
respect to Principal Collections during the Controlled Accumulation Period,
Principal Payment Period or Rapid Amortization Period, the Class A Fixed
Allocation.
"Class A Investor Default Amount" means, as to each Transfer Date, an
amount equal to the product of (a) the Aggregate Investor Default Amount for the
related Monthly Period and (b) the Class A Floating Allocation applicable for
the related Monthly Period.
"Class A Investor Interest" means, on any date of determination, an
amount equal to (a) the Class A Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to Class A Holders prior to such
date and minus (c) the excess, if any, of the aggregate amount of Class A
Investor Charge-Offs pursuant to subsection 4.12(a) over Class A Investor
Charge-Offs reimbursed pursuant to subsection 4.13(b) prior to such date of
determination; provided that the Class A Investor Interest may not be reduced
below zero.
"Class A Monthly Interest" is defined in subsection 4.8(a).
"Class A Monthly Principal" is defined in subsection 4.9(a).
"Class A Optimal Interest" is defined in subsection 4.8(a).
"Class A Required Amount" is defined in subsection 4.10(a).
"Class A Scheduled Payment Date" means the December 2001 Distribution
Date.
"Class A Servicing Fee" is defined in subsection 3(a) of this Series
Supplement.
"Class A Shortfall Amount" means, as of any Distribution Date, an
amount, if positive, equal to (x) Class A Optimal Interest for the related
Monthly Interest Period less, if the Originators are not the Servicer, the Class
A Servicing Fee for the related Monthly Period MINUS (y) Class A Available Funds
for the related Monthly Period.
"Class B Additional Interest" is defined in subsection 4.8(b).
"Class B Available Funds" means, as to any Monthly Period, an amount
equal to the Class B Floating Allocation of Finance Charge Collections allocated
to the Investor Certificates for such Monthly Period.
"Class B Carry-Over Amount" is defined in subsection 4.8(d).
"Class B Certificate Rate" means, with respect to any Interest Period,
a per annum rate equal to 0.32% per annum in excess of LIBOR, as determined on
the related LIBOR Determination Date.
"Class B Certificates" is defined in subsection 1(a) of this Series
Supplement.
"Class B Deficiency Amount" is defined in subsection 4.8(b).
"Class B Fixed Allocation" means, for any Monthly Period following the
Revolving Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Class B Investor Interest as
of the close of business on the last day of the Revolving Period and the
denominator of which is equal to the Investor Interest as of the close of
business on the last day of the Revolving Period.
"Class B Floating Allocation" means, for any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the Class B Investor Interest as of the close of
business on the last day of the preceding Monthly Period and the denominator of
which is equal to the Adjusted Investor Interest as of the close of business on
such day; provided that, with respect to the first Monthly Period, the Class B
Floating Allocation means the percentage equivalent of a fraction, the numerator
of which is the Class B Initial Investor Interest and the denominator of which
is the Initial Investor Interest.
"Class B Holder" means the Person in whose name a Class B Certificate
is registered in the Certificate Register.
"Class B Initial Investor Interest" means the aggregate initial
principal amount of the Class B Certificates, which is $25,000,000.
"Class B Interest Funding Account" is defined in subsection 4.18(a).
"Class B Investor Allocation" means, for any Monthly Period, (a) with
respect to Default Amounts and Finance Charge Collections at any time and
Principal Collections during the Revolving Period, the Class B Floating
Allocation, and (b) with respect to Principal Collections during the Controlled
Accumulation Period, the Principal Payment Period or Rapid Amortization Period,
the Class B Fixed Allocation.
"Class B Investor Charge-Off" is defined in subsection 4.12(b).
"Class B Investor Default Amount" means, as to each Transfer Date, an
amount equal to the product of (a) the Aggregate Investor Default Amount for the
related Monthly Period and (b)the Class B Floating Allocation applicable for the
related Monthly Period.
"Class B Investor Interest" means, on any date of determination, an
amount equal to (a) the Class B Initial Investor Interest, minus (b) the
aggregate amount of principal payments made to Class B Holders prior to such
date, minus (c) the aggregate amount of Class B Investor Charge-Offs for all
prior Transfer Dates pursuant to subsection 4.12(b), minus (d) the amount of the
Reallocated Class B Principal Collections allocated pursuant to subsection
4.14(a) on all prior Transfer Dates for which the Collateral Interest has not
been reduced, minus (e) an amount equal to the amount by which the Class B
Investor Interest has been reduced on all prior Transfer Dates pursuant to
subsection 4.12(a) and plus (f) the aggregate amount of Excess Spread allocated
and available on all prior Transfer Dates pursuant to subsection 4.13(d) for the
purpose of reimbursing amounts deducted pursuant to the foregoing clauses (c),
(d) and (e); provided that the Class B Investor Interest may not be reduced
below zero.
"Class B Monthly Interest" is defined in subsection 4.8(b).
"Class B Monthly Principal" is defined in subsection 4.9(b).
"Class B Optimal Interest" is defined in subsection 4.8(b).
"Class B Required Amount" is defined in subsection 4.10(b).
"Class B Scheduled Payment Date" means the January 2002 Distribution
Date.
"Class B Servicing Fee" is defined in subsection 3(a).
"Class B Shortfall Amount" means, as of any Distribution Date, an
amount, if positive, equal to (x) Class B Optimal Interest for the related
Monthly Interest Period less, if the Originators are not the Servicer, the Class
B Servicing Fee for the related Monthly Period MINUS (y) Class B Available Funds
for the related Monthly Period.
"Closing Date" means December 19, 1996.
"Collateral Allocation" means, for any Monthly Period, (a) with
respect to Default Amounts and Finance Charge Collections at any time and
Principal Collections during the Revolving Period, the Collateral Floating
Allocation, and (b) with respect to Principal Collections during the Controlled
Accumulation Period, Principal Payment Period or Rapid Amortization Period, the
Collateral Fixed Allocation.
"Collateral Available Funds" means, as to any Monthly Period, a amount
equal to the Collateral Floating Allocation of Finance Charge Collections
allocated to the Investor Certificates.
"Collateral Charge-Off" is defined in subsection 4.12(c).
"Collateral Default Amount" means, as to any Transfer Date, an amount
equal to the product of (a) the Aggregate Investor Default Amount for the
related Monthly Period and (b) the Collateral Floating Allocation applicable for
the related Monthly Period.
"Collateral Fixed Allocation" means, for any Monthly Period following
the Revolving Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral Interest as
of the close of business on the last day of the Revolving Period and the
denominator of which is equal to the Investor Interest as of the close of
business on the last day of the Revolving Period.
"Collateral Floating Allocation" means, for any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the Collateral Interest as of the close of business on
the last day of the preceding Monthly Period and the denominator of which is
equal to the Adjusted Investor Interest as of the close of business on such day;
provided that, with respect to the first Monthly Period, the Collateral Floating
Allocation means the percentage equivalent of a fraction, the numerator of which
is the Collateral Initial Interest and the denominator of which is the Initial
Investor Interest.
"Collateral Initial Interest" means $35,000,000.
"Collateral Interest" means, on any date of determination, a
fractional undivided interest in the Trust which shall consist of the right to
receive, to the extent necessary to make the required payments to the Collateral
Interest Holder under this Series Supplement, the portion of Collections
allocable thereto under the Agreement and this Series Supplement, and funds on
deposit in the Collection Account allocable thereto pursuant to the Agreement
and this Series Supplement. On any date, for purposes of all calculations in the
Agreement and this Series Supplement, the amount of the Collateral Interest
shall be an amount equal to (a) the Collateral Initial Interest, minus (b) the
aggregate amount of principal payments made to the Collateral Interest Holder
prior to such date, minus (c) the aggregate amount of Collateral Charge-Offs for
all prior Transfer Dates pursuant to subsection 4.12(c), minus (d) the amount of
Reallocated Principal Collections allocated pursuant to subsections 4.14(a) and
(b) on all prior Transfer Dates, minus (e) an amount equal to the amount by
which the Collateral Interest has been reduced on all prior Transfer Dates
pursuant to subsections 4.12(a) and (b), and plus (f) the aggregate amount of
Excess Spread allocated and available on all prior Transfer Dates pursuant to
subsection 4.13(h), for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (c), (d) and (e); provided that the Collateral Interest
may not be reduced below zero.
"Collateral Interest Holder" means the entity so designated in the
Loan Agreement.
"Collateral Interest Servicing Fee" is defined in subsection 3(a) of
this Series Supplement.
"Collateral Monthly Interest" is defined in subsection 4.8(c).
"Collateral Monthly Principal" is defined in subsection 4.9(c).
"Collateral Rate" means, for any Interest Period, the rate specified
in the Loan Agreement.
"Controlled Accumulation Amount" means for any Transfer Date with
respect to the Controlled Accumulation Period prior to the payment in full of
the Class A Investor Interest, $48,888,888.89; provided that if the Controlled
Accumulation Period Length is modified pursuant to subsection 4.11(i), (i) the
Controlled Accumulation Amount for each Transfer Date with respect to the
Controlled Accumulation Period shall mean the amount determined in accordance
with Section 4.11(i) on the date on which the Controlled Accumulation Period has
most recently been modified and (ii) the sum of the Controlled Accumulation
Amounts for all Transfer Dates with respect to the modified Controlled
Accumulation Period shall not be less than the Class A Investor Interest.
"Controlled Accumulation Date" means February 28, 2001.
"Controlled Accumulation Period" means, unless a Pay Out Event shall
have occurred or a Principal Payment Period shall have commenced prior thereto,
the period commencing at the close of business on the Controlled Accumulation
Date or such later date as is determined in accordance with subsection 4.11(i)
and ending on the first to occur of (a) the commencement of the Principal
Payment Period or Rapid Amortization Period and (b) the Series 1996-1
Termination Date.
"Controlled Accumulation Period Length" is defined in subsection
4.11(i).
"Controlled Deposit Amount" means, with respect to any Transfer Date,
the sum of (a) the Controlled Accumulation Amount for such Transfer Date and (b)
any existing Accumulation Shortfall.
"Covered Amount" means an amount determined as of each Transfer Date
with respect to any Interest Period as the product of (a) (i) a fraction, the
numerator of which is the actual number of days in such Interest Period and the
denominator of which is 360, times (ii) the Class A Certificate Rate for such
Monthly Period, and (b)the Principal Funding Account Balance as of the Record
Date preceding such Transfer Date.
"Credit Enhancement" means (a) with respect to the Class A
Certificates, the subordination of the Class B Certificates and the Collateral
Interest, and (b) with respect to the Class B Certificates, the subordination of
the Collateral Interest.
"Credit Enhancement Provider" means the Collateral Interest Holder.
"Cumulative Series Principal Shortfall" means the sum of the Series
Principal Shortfalls (as such term is defined in each of the related
Supplements) for each Series in Group One.
"Daily Principal Shortfall" means, on any date of determination, the
excess of the Group One Monthly Principal Payment for the Monthly Period
relating to such date over the month to date amount of Principal Collections for
such Monthly Period allocable to investor certificates of all outstanding Series
in Group One, not subject to reallocation, which are on deposit or to be
deposited in the Principal Account on such date.
"Deficiency Amount" means, at any date of determination, the sum of
the Class A Deficiency Amount and the Class B Deficiency Amount.
"Distribution Date" means January 15, 1997 and the fifteenth day of
each calendar month thereafter, or if such fifteenth day is not a Business Day,
the next succeeding Business Day.
"Excess Principal Funding Investment Proceeds" means, with respect to
each Transfer Date relating to the Controlled Accumulation Period, the amount,
if any, by which the Principal Funding Investment Proceeds for such Transfer
Date exceed the Covered Amount determined on such Transfer Date.
"Excess Spread" means, with respect to any Transfer Date, the sum of
(a) the sum of the amounts, if any, with respect to such Transfer Date specified
pursuant to subsections 4.11(a)(iv), 4.11(b)(iii) and 4.11(c)(ii), plus (b) the
Excess Finance Charge Collections, if any, allocated to the Investor Interest
pursuant to Section 4.5 for that Transfer Date.
"Fixed Investor Percentage" means, with respect to any Monthly Period,
the percentage equivalent of a fraction, the numerator of which is the Investor
Interest as of the close of business on the last day of the Revolving Period and
the denominator of which is the greater of (a) the aggregate amount of Beginning
of Month Principal Receivables for such Monthly Period and (b) the sum of the
numerators used to calculate the Investor Percentages (as such term is defined
in the Agreement) for allocations with respect to Principal Receivables for all
outstanding Series on such date of determination; provided that with respect to
any Monthly Period in which a Reset Date occurs, the denominator determined
pursuant to clause (a) shall be (i) the aggregate amount of Beginning of Month
Principal Receivables for such Monthly Period for the period from and including
the first day of such Monthly Period to but excluding the Reset Date and (ii)
the aggregate amount of Principal Receivables in the Trust as of the beginning
of the day on the Reset Date (after adjusting for the aggregate amount of
Principal Receivables added to or removed from the Trust on the Reset Date, if
applicable), for the period from and including the Reset Date to and including
the last day of such Monthly Period.
"Floating Investor Percentage" means, with respect to any Monthly
Period, the percentage equivalent of a fraction, the numerator of which is the
Adjusted Investor Interest as of the close of business on the last day of the
preceding Monthly Period (or with respect to the Monthly Period, the Initial
Investor Interest) and the denominator of which is the greater of (a) the
aggregate amount of Beginning of Month Principal Receivables, and (b) the sum of
the numerators used to calculate the Investor Percentages (as such term is
deemed in the Agreement) for allocations with respect to Finance Charge
Receivables, Default Amounts or Principal Receivables, as applicable, for all
outstanding Series on such date of determination; provided that with respect to
any Monthly Period in which a Reset Date occurs, the denominator determined
pursuant to clause (a) shall be (i) the aggregate amount of Beginning of Month
Principal Receivables for the period from and including the first day of the
prior Monthly Period to but excluding the Reset Date and (ii) the aggregate
amount of Principal Receivables in the Trust as of the beginning of the day on
the Reset Date (after adjusting for the aggregate amount of Principal
Receivables added to or removed from the Trust on the Reset Date, if
applicable), for the period from and including the Reset Date to and including
the last day of such Monthly Period.
"Group One" means Series 1996-1 and each other Series specified in the
related Supplement to be included in Group One.
"Group One Monthly Principal Payment" means, with respect to any
Monthly Period, for all Series in Group One (including Series 1996-1) which are
in an Amortization Period or Accumulation Period (as such terms are defined in
the related Supplements for all Series in Group One), the sum of (a) the
Controlled Distribution Amount for the related Transfer Date for any Series in
its Controlled Amortization Period (as such terms are defined in the related
Supplements for all Series in Group One), (b) the Controlled Deposit Amount for
the related Transfer Date for any Series in its Accumulation Period, other than
its Rapid Accumulation Period, as applicable (as such terms are defined in the
related Supplements for all Series in Group One), (c) the Investor Interest as
of the end of the prior Monthly Period taking into effect any payments to be
made on the following Distribution Date for any Series in Group One in its
Principal Payment Period, Principal Amortization Period or Rapid Amortization
Period (as such terms are defined in the related Supplements for all Series in
Group One), (d) the Adjusted Investor Interest as of the end of the prior
Monthly Period taking into effect any payments or deposits to be made on the
following Transfer Date and Distribution Date for any Series in Group One in its
Rapid Accumulation Period (as such terms are defined in the related Supplements
for all Series in Group One), (e) the excess of the Collateral Interest as of
the Transfer Date occurring in such Monthly Period over the Required Collateral
Interest for the related Transfer Date, assuming no Accumulation Shortfall and
(f) such other amounts as may be specified in the related Supplements for all
Series in Group One.
"Initial Investor Interest" means $500,000,000.
"Initial Principal Payment Date" means initially the December 1998
Distribution Date, but will successively be extended to the next Distribution
Date after the then-current Initial Principal Payment Date unless the Transferor
elects, pursuant to Section 11, not to cause such extension to occur; provided,
however, that the Initial Principal Payment Date may not be later than the Class
A Scheduled Payment Date.
"Interest Funding Account" shall have the meaning set forth in
subsection 4.18(a).
"Interest Payment Date" shall mean the 15th day of December, March,
June and September (or, if any such day is not a Business Day, the next
succeeding Business Day), and the Class B Scheduled Payment Date, commencing on
the March 17, 1997 Distribution Date.
"Interest Period" means, (a) with respect to the Class A Certificates
and Class B Certificates and any Payment Date, the period from and including the
previous Payment Date through the day preceding such Payment Date, except the
initial Interest Period will be the period from and including the Closing Date
through the day preceding the initial Payment Date; and (b) with respect to the
Collateral Interest and any Transfer Date, the Monthly Interest Period ending on
the related Distribution Date.
"Investor Certificates" means the Class A Certificates, the Class B
Certificates and the Collateral Interest.
"Investor Default Amount" means, with respect to any Receivables in
Defaulted Accounts, an amount equal to the product of (a) the Receivables in
Defaulted Accounts and (b) the Floating Investor Percentage on the day such
Receivable became a Receivable in a Defaulted Account.
"Investor Holder" means (a) with respect to the Class A Certificates,
the holder of record of a Class A Certificate, (b) with respect to the Class B
Certificates, the holder of record of a Class B Certificate and (c) with respect
to the Collateral Interest, the Collateral Interest Holder.
"Investor Interest" means, on any date of determination, a amount
equal to the sum of (a) the Class A Investor Interest, (b) the Class B Investor
Interest and (c) the Collateral Interest, each as of such date.
"Investor Percentage" means, for any Monthly Period, (a) with respect
to Finance Charge Receivables, Finance Charge Collections and Default Amounts at
any time and Principal Receivables and Principal Collections during the
Revolving Period, the Floating Investor Percentage and (b) with respect to
Principal Receivables and Principal Collections during the Controlled
Accumulation Period, the Principal Payment Period or the Rapid Amortization
Period, the Fixed Investor Percentage.
"Investor Principal Collections" means, with respect to any Monthly
Period, the sum of (a) the aggregate amount deposited or required to be
deposited (before giving effect to any permitted netting) into the Principal
Account for such Monthly Period pursuant to subsections 4.7(a)(ii), (iii) and
(iv), 4.7(b)(ii), (iii) and (iv), or 4.7(c)(ii), in each case, as applicable to
such Monthly Period, (b) the aggregate amount to be treated as Investor
Principal Collections pursuant to subsections 4.11 (a)(iii), and 4.13(a), (b),
(c), (d), (g) and (h) for such Monthly Period (other than such amount paid from
Reallocated Principal Collections), and (c) the aggregate amount of Unallocated
Principal Collections deposited or required to be deposited on the related
Transfer Date (before giving effect to any permitted netting) into the Principal
Account pursuant to subsection 4.7(d).
"Investor Servicing Fee" is defined in subsection 3(a) of this Series
Supplement.
"LIBOR" means, for any Interest Period, an interest rate per annum
determined by Trustee for each Interest Period in accordance with the provisions
of Section 4.19.
"LIBOR Determination Date" means December 17, 1996 for the initial
Interest Period and the second London Business Day prior to the commencement of
each subsequent Interest Period.
"Loan Agreement" means the agreement to which the Transferor, each
Servicer, the Trustee, and the Collateral Interest Holder are parties, dated as
of December 1, 1996, as amended or modified from time to time.
"London Business Day" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"Minimum Aggregate Principal Receivables" means, as of any date of
determination, an amount equal to the sum of the numerators used to calculate
the Investor Percentage with respect to the allocation of Principal Collections
for each Series outstanding on such date.
"Minimum Transferor Interest" means as of any date of determination,
an amount equal to 5% of (a) the amount of Principal Receivables as of such date
of determination plus (b) the amount on deposit in the Excess Funding Account on
the date of determination; provided that Transferor may increase or reduce the
percentage used to determine the Minimum Transferor Interest (but not below 2%)
upon (a) 30 day's prior notice to Trustee, each Rating Agency and any Credit
Enhancement Provider, (b) satisfaction of the Rating Agency Condition, and (c)
delivery to Trustee and each such Credit Enhancement Provider of an Officer's
Certificate stating that Transferor reasonably believes that such reduction will
not, based on the facts known to such officer at the time of such certification,
then or thereafter cause a Pay Out Event to occur with respect to any Series.
"Monthly Interest Period" is defined in subsection 4.8(a).
"Monthly Payment Rate" means, in respect of any Monthly Period, a
fraction (expressed as a percentage), the numerator of which shall equal the
aggregate Collections received by the Servicer during such Monthly Period and
the denominator of which shall equal the aggregate amount of Principal
Receivables as of the first day of such Monthly Period.
"Monthly Period" is defined in the Agreement, except that the first
Monthly Period with respect to the Investor Certificates begins on and includes
the Cut Off Date and ends on and includes December 31, 1996.
"Payment Date" shall mean any Interest Payment Date and any Special
Payment Date.
"Pay Out Commencement Date" means the date on which a Trust Pay Out
Event is deemed to occur pursuant to Section 9.1 of the Agreement or a Series
1996-1 Pay Out Event is deemed to occur pursuant to Section 9 of this Series
Supplement.
"Portfolio Adjusted Yield" means, with respect to any Transfer Date,
the average of the percentages obtained for each of the three preceding Monthly
Periods by subtracting the Base Rate from the Portfolio Yield for such Monthly
Period and deducting 0.50% from the result for each Monthly Period.
"Portfolio Yield" means, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, the numerator of which is an
amount equal to the sum of (a) the Finance Charge Collections deposited or
required to be deposited (before giving effect to any permitted netting) into
the Finance Charge Account and allocable to the Investor Certificates for such
Monthly Period and (b) the Principal Funding Investment Proceeds deposited or
required to be deposited into the Finance Charge Account on the Transfer Date
(before giving effect to any permitted netting) related to such Monthly Period,
and (c) the amount of the Reserve Draw Amount (up to the Available Reserve
Account Amount) plus any amounts of interest and earnings described in Section
4.17, each deposited or required to be deposited into the Finance Charge Account
on the Transfer Date (before giving effect to any permitted netting) relating to
such Monthly Period, after subtracting the Aggregate Investor Default Amount for
such Monthly Period, and the denominator of which is the Investor Interest as of
the close of business on the last day of such Monthly Period.
"Principal Account" is defined in subsection 4.16(a).
"Principal Funding Account" is defined in subsection 4.16(a).
"Principal Funding Account Balance" means, with respect to any date of
determination, the principal amount, if any, on deposit in the Principal Funding
Account on such date of determination.
"Principal Funding Investment Proceeds" means, with respect to each
Transfer Date, the investment earnings on funds in the Principal Funding Account
(net of investment expenses ad losses) for the period from and including the
immediately preceding Transfer Date to but excluding such Transfer Date.
"Principal Funding Investment Shortfall" means, with respect to each
Transfer Date relating to the Controlled Accumulation Period, the amount, if
any, by which the Principal Funding Investment Proceeds for such Transfer Date
are less than the Covered Amount determined as of such Transfer Date.
"Principal Payment Event" if applicable, shall mean the delivery by
the Servicer of a notice to the Trustee of its election not to extend the
Initial Principal Payment Date in accordance with Section 11.
"Principal Payment Period" means the period beginning on the first day
of the Monthly Period second preceding the Initial Principal Payment Date
following the Transferor's election not to extend such Initial Principal Payment
Date and ending on the earliest to occur of (i) the Rapid Amortization Period,
(ii) the payment in full of the Invested Amount and (iii) the Series 1996-1
Termination Date. The first Transfer Date of the Principal Payment Period shall
be the Transfer Date related to such Initial Principal Payment Date.
"Rapid Amortization Period" means the period commencing on the Pay Out
Commencement Date and ending on the earlier to occur of (a) the Series 1996-1
Termination Date and (b) the termination of the Trust pursuant to Section 12.1.
"Rating Agency" means Moody's and Standard & Poor's.
"Rating Agency Condition" means the notification in writing by each
Rating Agency to Transferor, Servicer and Trustee that an action will not result
in any Rating Agency reducing or withdrawing its then existing rating of the
Class A Certificates or the Class B Certificates.
"Reallocated Class B Principal Collections" means, with respect to any
Transfer Date, Principal Collections applied in accordance with subsection
4.14(a) in an amount not to exceed the product of (a) the Class B Investor
Allocation for the Monthly Period relating to such Transfer Date and (b) the
Investor Percentage for the Monthly Period relating to such Transfer Date and
(c) the amount of Principal Collections for the Monthly Period relating to such
Transfer Date; provided that such amount shall not exceed the Class B Investor
Interest after giving effect to any Class B Investor Charge-Offs for such
Transfer Date.
"Reallocated Collateral Principal Collections" means, with respect to
any Transfer Date, Principal Collections applied in accordance with subsections
4.14(a) and (b) in an amount not to exceed the product of (a) the Collateral
Allocation for the Monthly Period relating to such Transfer Date and (b) the
Investor Percentage for the Monthly Period relating to such Transfer Date and
(c) the amount of Principal Collections for the Monthly Period relating to such
Transfer Date; provided that such amount shall not exceed the Collateral
Interest after giving effect to any Collateral Charge-Offs for such Transfer
Date.
"Reallocated Principal Collections" means the sum of (a) Reallocated
Class B Principal Collections and (b) Reallocated Collateral Principal
Collections.
"Reference Banks" means four major banks in the London interbank
market selected by Servicer (or Transferor, if Back-up Servicer is Servicer).
"Required Collateral Interest" means (a) initially, $35,000,000 and
(b) on any Transfer Date thereafter, 7% of the Class A Adjusted Investor
Interest and the Class B Investor Interest on such Transfer Date (after taking
into account deposits into the Principal Funding Account on such Transfer Date
and payments to be made on the related Distribution Date) and the Collateral
Interest on the prior Transfer Date, after any adjustments to be made on such
date, but not less than $15,000,000; provided that (x) if either (i) there is a
reduction in the Collateral Interest pursuant to clause (c), (d) or (e) of the
definition of such term or (ii) a Pay Out Event with respect to the Investor
Certificates has occurred, the Required Collateral Interest for any Transfer
Date shall (subject to clauses (y) and (z)) equal the Required Collateral
Interest for the Transfer Date immediately preceding such reduction or Pay Out
Event, (y) in no event shall the required Collateral Interest exceed the sum of
the outstanding principal amounts of (i) the Class A Certificates and (ii) the
Class B Certificates, each as of the last day of the Monthly Period preceding
such Transfer Date after taking into account the payments to be made on the
related Distribution Date and (z) the Required Collateral Interest may be
reduced at Transferor's option at any time to a lesser amount if Transferor,
Servicer, the Collateral Interest Holder and Trustee have been provided evidence
that the Rating Agency Condition has been satisfied.
"Required Reserve Account Amount" means, with respect to any Transfer
Date on or after the Reserve Account Funding Date, an amount equal to (a) 0.50%
of the outstanding principal balance of the Class A Certificates or (b) any
other amount designated by Transferor; provided that if such designation is of a
lesser amount, Transferor shall (i) provide Servicer, the Collateral Interest
Holder and Trustee with evidence that the Rating Agency Condition has been
satisfied and (ii) deliver to Trustee a certificate of an authorized officer to
the effect that, based on the facts known to such officer at such time, in the
reasonable belief of Transferor, such designation will not cause a Pay Out Event
or an event that, after the giving of notice or the lapse of time, would cause a
Pay Out Event to occur with respect to Series 1996-1.
"Reserve Account" is defined in subsection 4.17(a).
"Reserve Account Funding Date" means the Transfer Date which occurs
not later than the earliest of: (a) the Transfer Date with respect to the
Monthly Period which commences 3 months prior to the commencement of the
Controlled Accumulation Period; (b) the first Transfer Date for which the
Portfolio Adjusted Yield is less than 1.0%, but in such event the Reserve
Account Funding Date shall not be required to occur earlier than the Transfer
Date with respect to the Monthly Period which commences 12 months prior to the
commencement of the Controlled Accumulation Period; (c) the first Transfer Date
for which the Portfolio Adjusted Yield is less than 1.5%, but in such event the
Reserve Account Funding Date shall not be required to occur earlier than the
Transfer Date with respect to the Monthly Period which commences 6 months prior
to the commencement of the Controlled Accumulation Period; and (d) the first
Transfer Date for which the Portfolio Adjusted Yield is less than 2.0%, but in
such event the Reserve Account Funding Date shall not be Required to occur
earlier than the Transfer Date with respect to the Monthly Period which
commences 4 months prior to the commencement of the Controlled Accumulation
Period.
"Reserve Account Surplus" means, as of any Transfer Date following the
Reserve Account Funding Date, the amount, if any, by which the amount on deposit
in the Reserve Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" is defined in subsection 4.17(c).
"Reset Date" means each of (a) a Removal Date on which, if any Series
has been paid in full, Principal Receivables in an aggregate amount
approximately equal to the initial investor interest of such Series are removed
from the Trust and (b) a date on which there is an increase or decrease in the
Investor Interest under any Variable Interest issued by the Trust.
"Revolving Period" means the period from and including the Closing
Date to, but not including, the earliest of (a) the day the Controlled
Accumulation Period commences, (b) the day the Principal Payment Period
commences and (c) the Pay Out Commencement Date.
"Series 1996-1" means the Series of the Mellon Bank Premium Finance
Loan Master Trust represented by the Investor Certificates.
"Series 1996-1 Certificates" means the Class A Certificates and the
Class B Certificates.
"Series 1996-1 Holders" means the holder of record of a Series 1996-1
Certificate.
"Series 1996-1 Pay Out Event" is defined in Section 9 of this Series
Supplement.
"Series 1996-1 Termination Date" means the earliest to occur of (a)
the Distribution Date on which the Investor Interest is paid in full, (b) the
January 2003 Distribution Date and (c) the Trust Termination Date.
"Series Finance Charge Shortfall" means, with respect to any Transfer
Date, an amount equal to the excess, if any, of (a) the sum of the amounts
specified in clauses (a) through (l) of Section 4.13 for that Transfer Date over
(b) the sum of the amounts, if any, with respect to such Transfer Date specified
pursuant to subsections 4.11(a)(iv), 4.11(b)(iii) and 4.11 (c)(ii).
"Series Principal Shortfall" means, with respect to any Transfer Date,
the excess, if any, of (a)(i) with respect to any Transfer Date relating to the
Controlled Accumulation Period or Principal Payment Period, the sum of (A) the
Controlled Deposit Amount (assuming the Principal Payment Period has not
commenced) for such Transfer Date, (B) on the Transfer Date after the Transfer
Date on which the Class A Adjusted Investor Interest is reduced to zero, the
Class B Invested Amount and (C) the excess, if any, of the Collateral Interest
for such Transfer Date over the Required Collateral Interest for such Transfer
Date, (ii) with respect to any Transfer Date during the Rapid Amortization
Period, the Adjusted Investor Interest, (iii) with respect to any Transfer Date
relating to the Revolving Period, the amount specified in clause (a)(i)(C) above
and (iv) with respect to any Transfer Date relating to any Principal Payment
Period, the amount, if any, that would have been the Controlled Accumulation
Amount for such Distribution Date had the related Principal Payment Event not
occurred, over (b) the Investor Principal Collections minus the Reallocated
Principal Collections (other than any portions thereof that are applied pursuant
to (x) subsection 4.11(a)(iii) and (y) subsection 4.13(c) (to the extent such
portions pursuant to subsection 4.13(c) are available to pay the Class B
Investor Default Amount)) for such Transfer Date.
"Series Servicing Fee Percentage" means 0.50%.
"Shared Principal Collections" means, as the context requires, either
(a) the amount allocated to the Investor Certificates which may be applied to
the Series Principal Shortfall with respect to other outstanding Series in Group
One or (b) the amounts allocated to the investor certificates of other Series in
Group One which the applicable Supplements for such Series specify are to be
treated as "Shared Principal Collections" and which may be applied to cover the
Series Principal Shortfall with respect to the Investor Certificates.
"Shortfall Amount" is defined in subsection 4.8(d).
"Special Payment Date" shall mean each Distribution Date with respect
to the Principal Payment Period and Rapid Amortization Period.
"Telerate Page 3750" means the display page currently so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Unallocated Principal Collections" is defined in subsection 4.7(d).
SECTION 3. Servicing Compensation. The share of the Servicing Fee
allocable to Series 1996-1 with respect to any Transfer Date (the "Investor
Servicing Fee") shall be equal to one-twelfth of the product of (i) the Series
Servicing Fee Percentage and (ii) the Adjusted Investor Interest as of the last
day of the Monthly Period preceding such Transfer Date; provided that with
respect to the first Transfer Date, the Investor Servicing Fee shall equal
$83,333.33. The share of the Investor Servicing Fee allocable to the Class A
Investor Interest with respect to any Transfer Date (the "Class A Servicing
Fee") shall equal one-twelfth of the product of (i) the Class A Floating
Allocation, (ii) Series Servicing Fee Percentage and (iii) the Adjusted Investor
Interest as of the last day of the Monthly Period preceding such Transfer Date;
provided that with respect to the first Transfer Date, the Class A Servicing Fee
shall equal $73,333.33. The share of the Investor Servicing Fee allocable to the
Class B Investor Interest with respect to any Transfer Date (the "Class B
Servicing Fee") shall equal one-twelfth of the product of (i) the Class B
Floating Allocation, (ii) the Series Servicing Fee Percentage Rate and (iii) the
Adjusted Investor Interest as of the last day of the Monthly Period preceding
such Transfer Date; provided that with respect to the first Transfer Date, the
Class B Servicing Fee shall equal $4,166.67. The share of the Investor Servicing
Fee allocable to the Collateral Interest with respect to any Transfer Date (the
"Collateral Interest Servicing Fee") shall equal one-twelfth of the product of
(i) the Collateral Floating Allocation, (ii) the Series Servicing Fee Percentage
and (iii) the Adjusted Investor Interest as of the last day of the Monthly
Period preceding such Transfer Date; provided that with respect to the first
Transfer Date, the Collateral Interest Servicing Fee shall equal $5,833.33.
Except as specifically provided above, the Servicing Fee shall be paid by the
cash flows from the Trust allocated to Transferor or the certificateholders of
other Series (as provided in the related Supplements) and in no event shall the
Trust, Trustee or the Investor Holders be liable therefor. The Class A Servicing
Fee shall be payable to Servicer solely to the extent amounts are available for
distribution in respect thereof pursuant to subsections 4.11(a)(ii) and 4.13(a).
The Class B Servicing Fee shall be payable solely to the extent amounts are
available for distribution in respect thereof pursuant to subsections
4.11(b)(ii) and 4.13(c). The Collateral Interest Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to subsection 4.13(f) or if applicable subsection 4.11(c)(i).
SECTION 4. Reassignment and Transfer Terms. The Investor Certificates
shall be subject to retransfer to Transferor at its option, in accordance with
subsection 12.2(a), on any Distribution Date on or after the Distribution Date
on which the Investor Interest is reduced to an amount less than or equal to 5%
of the Initial Investor Interest. The deposit required in connection with any
such repurchase shall include the amount, if any, on deposit in the Principal
Funding Account and will be equal to the sum of (a) the Investor Interest and
(b) accrued and unpaid interest on the Investor Certificates through the day
preceding the Distribution Date on which the repurchase occurs.
SECTION 5. Delivery and Payment for the Investor Certificates.
Transferor shall execute and deliver the Series 1996-1 Certificates to Trustee
for authentication in accordance with Section 6.1. The Trustee shall deliver
such Certificates when authenticated in accordance with Section 6.2.
SECTION 6. Depository; Form of Delivery of Investor Certificates. (a)
The Class A Certificates and the Class B Certificates shall be delivered as
Book-Entry Certificates as provided in Sections 6.1 and 6.10.
(b) The Depository for Series 1996-1 shall be The Depository Trust
Company, and the Class A Certificates and Class B Certificates shall be
initially registered in the name of Cede & Co., its nominee.
SECTION 7. Article IV of Agreement. Sections 4.1 through 4.5 shall
read in their entirety as provided in the Agreement. Article IV (except for
Sections 4.1 through 4.5 thereof) shall be read in its entirety as follows and
shall be applicable only to the Investor Certificates:
ARTICLE IV
RIGHTS OF HOLDERS AND ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 4.6 Rights of Holders and the Collateral Interest Holder. The
Investor Certificates shall represent undivided interests in the Trust,
consisting of the right to receive, to the extent necessary to make the required
payments with respect to such Investor Certificates at the times and in the
amounts specified in this Agreement, (a) the applicable Investor Percentage of
Collections received with respect to the Receivables and (b) funds on deposit in
the Collection Account, the Finance Charge Account, the Principal Account, the
Principal Funding Account, the Reserve Account and the Distribution Account. The
Collateral Interest shall be subordinate to the Class A Certificates and the
Class B Certificates to the extent described herein. The Class B Certificates
shall be subordinate to the Class A Certificates to the extent described herein.
Transferor shall not have any interest in the Collection Account, the Finance
Charge Account, the Principal Account, the Principal Funding Account, the
Reserve Account or the Distribution Account, except as specifically provided in
this Article IV.
SECTION 4.7 Allocations. (a) Allocations During the Revolving Period.
During the Revolving Period, Servicer shall, prior to the close of business on
the day any Collections are deposited in the Collection Account, allocate to the
Investor Holders or Transferor and pay or deposit from the Collection Account
the following amounts as set forth below (subject to Section 4.3):
(i) Allocate to the Investor Holders and deposit into the
Finance Charge Account an amount equal to the product of (A)
the Investor Percentage on the Date of Processing of such
Collections and (B) the Finance Charge Collections on such
Date of Processing to be applied in accordance with Section
4.11.
(ii) Allocate to the Investor Holders and deposit into the
Principal Account an amount equal to the product of (A) the
Collateral Allocation on the Date of Processing of such
Collections, (B) the Investor Percentage on the Date of
Processing of such Collections and (C) the aggregate amount
of Principal Collections on such Date of Processing to be
applied first in accordance with Section 4.14 and then in
accordance with subsection 4.11(d).
(iii) Allocate to the Investor Holders and deposit into the
Principal Account an amount equal to the product of (A) the
Class B Investor Allocation on the Date of Processing of
such Collections, (B) the Investor Percentage on the Date of
Processing of such Collections and (C) the aggregate amount
of Principal Collections on such Date of Processing to be
applied first in accordance with Section 4.14 and then in
accordance with subsection 4.11(d).
(iv) (A) Allocate to the Investor Holders and deposit into the
Principal Account an amount equal to the product of (1) the
Class A Investor Allocation on the Date of Processing of
such Collections, (2) the Investor Percentage on the Date of
Processing of such Collections and (3) the aggregate amount
of Principal Collections Receivables on such Date of
Processing; provided that the amount deposited into the
Principal Account pursuant to this subsection 4.7(a)(iv)(A)
shall not exceed the Daily Principal Shortfall, and (B) pay
to Transferor an amount equal to the excess, if any,
identified in the proviso to clause (A) above; provided that
the amount to be paid to Transferor pursuant to this
subsection 4.7(a)(iv)(B) with respect to any Date of
Processing shall be paid to Transferor only to the extent
that the Transferor Interest on such Date of Processing is
greater than zero (after giving effect to the inclusion in
the Trust of all Receivables transferred to the Trust on or
prior to such Date of Processing and the application of
payments referred to in subsection 4.3(b)) and otherwise
shall be deposited into the Excess Funding Account in
accordance with subsection 4.7(d).
(b) Allocations During the Controlled Accumulation Period. During the
Controlled Accumulation Period, Servicer shall, prior to the close of business
on the day any Collections are deposited in the Collection Account, allocate to
the Investor Holders or Transferor and pay or deposit from the Collection
Account the following amounts as set forth below (subject to Section 4.3):
(i) Allocate to the Investor Holders and deposit into the
Finance Charge Account an amount equal to the product of (A)
the Investor Percentage on the Date of Processing of such
Collections and (B) the aggregate amount of Collections
processed in respect of Finance Charge Receivables on such
Date of Processing to be applied in accordance with Section
4.11.
(ii) Allocate to the Investor Holders and deposit into the
Principal Account an amount equal to the product of (A) the
Collateral Allocation on the Date of Processing of such
Collections, (B) the Investor Percentage on the Date of
Processing of such Collections and (C) the aggregate amount
of Principal Collections on such Date of Processing to be
applied first in accordance with Section 4.14 and then in
accordance with subsection 4.11(e).
(iii) Allocate to the Investor Holders and deposit into the
Principal Account an amount equal to the product of (A) the
Class B Investor Allocation on the Date of Processing of
such Collections, (B) the Investor Percentage on the Date of
Processing of such Collections and (C) the aggregate amount
of Principal Collections on such Date of Processing to be
applied first in accordance with Section 4.14 and then in
accordance with subsection 4.11(e).
(iv) (A) Allocate to the Investor Holders and deposit into the
Principal Account an amount equal to the product of (1) the
Class A Investor Allocation on the Date of Processing of
such Collections, (2) the Investor Percentage on the Date of
Processing of such Collections and (3) the aggregate amount
of Principal Collections on such Date of Processing;
provided that the amount deposited into the Principal
Account pursuant to this subsection 4.7(b)(iv)(A) shall not
exceed the Daily Principal Shortfall, and (B) pay to
Transferor an amount equal to the excess identified in the
proviso to clause (A) above, if any; provided that the
amount to be paid to Transferor pursuant to this subsection
4.7(b)(iv)(B) with respect to any Date of Processing shall
be paid to Transferor only to the extent that the Transferor
Interest on such Date of Processing is greater than zero
(after giving effect to the inclusion in the Trust of all
Receivables transferred to the Trust on or prior to such
Date of Processing and the application of payments referred
to in subsection 4.3(b)) and otherwise shall be deposited
into the Excess Funding Account in accordance with
subsection 4.7(d).
(c) Allocations During the Principal Payment Period and the Rapid
Amortization Period. During the Principal Payment Period and the Rapid
Amortization Period, Servicer shall, prior to the close of business on the day
any Collections are deposited in the Collection Account, allocate to the
Investor Holders and pay or deposit from the Collection Account the following
amounts as set forth below (subject to Section 4.3):
(i) Deposit into the Finance Charge Account an amount equal to
the product of (A) the Investor Percentage on the Date of
Processing of such Collections and (B) the aggregate amount
of Collections processed in respect of Finance Charge
Receivables on such Date of Processing to be applied in
accordance with Section 4.11.
(ii) (A) Deposit into the Principal Account an amount equal to
the product of (1) the Investor Percentage on the Date of
Processing of such Collections and (2) the aggregate amount
of Principal Collections on such Date of Processing;
provided that the aggregate amount deposited into the
Principal Account pursuant to this subsection 4.7(c)(ii)(A)
shall not exceed the sum of the Investor Interest as of the
close of business on the last day of the prior Monthly
Period (after taking into account any payments to be made on
the Distribution Date relating to such prior Monthly Period
and deposits and any adjustments to be made to the Investor
Interest to be made on the Transfer Date relating to such
Monthly Period) and any Reallocated Principal Collections
relating to the Monthly Period in which such deposit is made
and (B) pay to Transferor an amount equal to the excess, if
any, identified in the proviso to clause (A) above; provided
that the amount to be paid to Transferor pursuant to this
subsection 4.7(c)(ii)(B) with respect to any Date of
Processing shall be paid to Transferor only to the extent
that the Transferor Interest on such Date of Processing is
greater than zero (after giving effect to the inclusion in
the Trust of all Receivables transferred to the Trust on or
prior to such Date of Processing and the application of
payments referred to in subsection 4.3(b)) and otherwise
shall be deposited into the Excess Funding Account in
accordance with subsection 4.7(d).
(d) Excess Funding Account. Any Principal Collections or Finance
Charge Collections not allocated and paid to Transferor because of the
limitations contained in subsections 4.7(a)(iv)(B), 4.7(b)(iv)(B) and
4.7(c)(ii)(B) and any amounts allocable to the Investor Certificates deposited
in the Principal Account pursuant to subsection 2.4(d)(iii) ("Unallocated
Principal Collections") shall be held in the Excess Funding Account and, prior
to the commencement of the Controlled Accumulation Period, the Principal Payment
Period or the Rapid Amortization Period shall be paid to Transferor when, and
only to the extent that, the Transferor Interest is greater than zero. For each
Transfer Date with respect to the Controlled Accumulation Period, the Principal
Payment Period or the Rapid Amortization Period, any such Unallocated Principal
Collections held in the Excess Funding Account on such Transfer Date shall be
included in the Investor Principal Collections which to the extent available
shall be distributed as Available Investor Principal Collections to be applied
pursuant to Section 4.11 on such Transfer Date.
With respect to the Investor Certificates, and notwithstanding
anything in the Agreement or this Series Supplement to the contrary, if at any
time Servicer is required to make daily deposits from the Collection Account
into the Finance Charge Account or the Principal Account pursuant to subsections
4.7(a), 4.7(b) and 4.7(c) with respect to any Monthly Period:
(i) on or after the related Determination Date, Servicer may
withdraw from the Finance Charge Account and the Principal
Account any portion of the principal balance held in each
such account in excess of the aggregate amount that will be
required to be distributed to Investor Holders or (if
Transferor is not Servicer) Servicer, distributed in
accordance with the Loan Agreement or deposited in the
Principal Funding Account from that account (directly or
after deposit into the Distribution Account) on the related
Distribution Date and transfer such funds to Transferor
(except that any such excess amount held in the Principal
Account, and any portion of such excess amount held in the
Finance Charge Account that would have been treated as a
portion of Investor Principal Collections on the related
Transfer Date, shall be transferred to Transferor only to
the extent that the Transferor Interest on the date of
transfer is greater than zero (after giving effect to the
inclusion in the Trust of all Receivables transferred to the
Trust on or prior to such date and the application of
payments referred to in subsection 4.3(b) and otherwise
shall be deposited into the Excess Funding Account in
accordance with subsection 4.7(d)); and
(ii) on any date, Servicer may withdraw from the Collection
Account, the Finance Charge Account or the Principal Account
any amounts inadvertently deposited in the such account that
should not have been so deposited.
SECTION 4.8 Determination of Monthly Interest. (a) The amount of
monthly interest distributable from the Finance Charge Account with respect to
the Class A Certificates on any Transfer Date (the "Class A Monthly Interest")
shall equal the lesser of (x) Class A Available Funds for such Monthly Period
less, if the Originators are not the Servicer, the Class A Servicing Fee for
such Monthly Period and (y) the product of (i)(A) a fraction, the numerator of
which is the actual number of days in the period (the "Monthly Interest Period")
from (and including) the immediately preceding Distribution Date (or in the case
of the first Distribution Date, the Closing Date) to (but excluding) the related
Distribution Date and the denominator of which is 360, times (B) the Class A
Certificate Rate, times (ii) the outstanding principal balance of the Class A
Certificates determined as of the Record Date preceding the related Transfer
Date (interest computed pursuant to clause (y), the "Class A Optimal Interest");
provided that in addition to Class A Monthly Interest an amount equal to the
amount of any unpaid Class B Deficiency Amounts, as defined below, plus an
amount equal to the product of (A)(1) a fraction, the numerator of which is the
actual number of days in the related Monthly Interest Period and the denominator
of which is 360, times (2) the sum of the Class A Certificate Rate in effect
with respect to the related Monthly Period, plus 2% per annum, and (B) any Class
A Deficiency Amount from the prior Transfer Date, as defined below (or the
portion thereof which has not theretofore been paid to Class A Holders) (the
"Class A Additional Interest") shall also be distributable from the Finance
Charge Account with respect to the Class A Certificates on any Transfer Date,
and on such Transfer Date Trustee shall deposit such funds, to the extent
available, into the Distribution Account. The "Class A Deficiency Amount" for
any Transfer Date shall equal the excess, if any, of the aggregate amount
accrued pursuant to this subsection 4.8(a) for the prior Monthly Interest Period
over the amount actually deposited or available to be deposited into the Class A
Interest Funding Account for payment to the Class A Holders on the applicable
Payment Date.
(b) The amount of monthly interest distributable from the Finance
Charge Account with respect to the Class B Certificates on any Transfer Date
(the "Class B Monthly Interest") shall equal the lesser of (x) Class B Available
Funds for such Monthly Period less, if the Originators are not the Servicer, the
Class B Servicing Fee for such Monthly Period and (y) the product of (i)(A) a
fraction, the numerator of which is the actual number of days in the period from
(and including) the immediately preceding Distribution Date (or in the case of
the first Distribution Date, the Closing Date) to (but excluding) the related
Distribution Date and the denominator of which is 360, times (B) the Class B
Certificate Rate, times (ii) the outstanding principal balance of the Class B
Certificates determined as of the Record Date preceding the related Transfer
Date (interest computed pursuant to clause (y), the "Class B Optimal Interest");
provided that in addition to Class B Monthly Interest an amount equal to the
amount of any unpaid Class A Deficiency Amounts, as defined below, plus an
amount equal to the product of (A) (1) a fraction, the numerator of which is the
actual number of days in the related Monthly Interest Period and the denominator
of which is 360 times (2) the sum of the Class B Certificate Rate in effect with
respect to the related Monthly Period, plus 2% per annum, and (B) any Class B
Deficiency Amount from the prior Transfer Date, as defined below (or the portion
thereof which has not theretofore been paid to Class B Holders) (the "Class B
Additional Interest") shall also be distributable from the Finance Charge
Account with respect to the Class B Certificates on any Transfer Date, and on
such Transfer Date Trustee shall deposit such funds, to the extent available,
into the Distribution Account. The "Class B Deficiency Amount" for any Transfer
Date shall equal the excess, if any, of the aggregate amount accrued pursuant to
this subsection 4.8(b) as of the prior Monthly Interest Period over the amount
actually deposited or available to be deposited into the Class B Interest
Funding Account for payment to the Class B Holders on the applicable Payment
Date.
(c) The amount of monthly interest distributable from the Finance
Charge Account with respect to the Collateral Interest on any Transfer Date
shall equal the product of (i)(A) a fraction, the numerator of which is the
actual number of days in the period from (and including) the immediately
preceding Distribution Date (or in the case of the first Distribution Date, the
Closing Date) to (but excluding) the related Distribution Date and the
denominator of which is 360, times (B) the Collateral Rate in effect with
respect to the related Interest Period, times (ii) the Collateral Interest
determined as of the Record Date preceding such Transfer Date (the "Collateral
Monthly Interest"); provided that for the purposes of determining Collateral
Monthly Interest only, the Collateral Rate shall not exceed a per annum rate of
1% in excess of LIBOR as determined on the related LIBOR Determination Date.
(d) In the event a Class A Shortfall Amount or Class B Shortfall
Amount is not paid on any Distribution Date pursuant to Section 4.13(k) or (l),
as the case may be, interest shall accrue on such Shortfall Amount at the
applicable Class A or Class B LIBOR Rate plus 2% (such Shortfall Amount plus
interest thereon, compounded monthly, a "Class A Carry-Over Amount" or "Class B
Carry-Over Amount", respectively) and shall be payable on the next succeeding
Distribution Date.
SECTION 4.9 Determination of Monthly Principal. (a) The amount of
monthly principal distributable from the Principal Account with respect to the
Class A Certificates on each Transfer Date ("Class A Monthly Principal"),
beginning with the Transfer Date in the month following the month in which the
Controlled Accumulation Period or, if earlier, the Principal Payment Period or
the Rapid Amortization Period, begins, shall be equal to the least of (i) the
Available Investor Principal Collections on deposit in the Principal Account
with respect to such Transfer Date, (ii) for each Transfer Date with respect to
the Controlled Accumulation Period prior to the Class A Scheduled Payment Date,
the Controlled Deposit Amount for such Transfer Date and (iii) the Class A
Adjusted Investor Interest on such Transfer Date prior to any deposit into the
Principal Funding Account to be made on such day.
(b) The amount of monthly principal distributable from the Principal
Account with respect to the Class B Certificates on each Transfer Date (the
"Class B Monthly Principal") for the Controlled Accumulation Period, beginning
with the Transfer Date after the one on which the Class A Adjusted Investor
Interest is reduced to zero (and for the Principal Payment Period or the Rapid
Amortization Period beginning with the Transfer Date on which the Class A
Investor Interest is reduced to zero, after giving effect to payments to be made
on the related Distribution Date), shall be an amount equal to the lesser of (i)
the excess, if any, of (A) the Available Investor Principal Collections on such
Transfer Date over (B) any Class A Monthly Principal on such Transfer Date and
(ii) the Class B Investor Interest (after taking into account any adjustments to
be made on such Transfer Date pursuant to Sections 4.12 and 4.14) on such
Transfer Date.
(c) The amount of monthly principal (the "Collateral Monthly
Principal") distributable from the Principal Account with respect to the
Collateral Interest on each Transfer Date shall be (i) with respect to the
Revolving Period following any reduction of the Required Collateral Interest
pursuant to clause (z) of the proviso in the definition thereof an amount equal
to the lesser of (A) the excess, if any, of the Collateral Interest (after
taking into account any adjustments to be made on such Transfer Date pursuant to
Sections 4.12 and 4.14) over the Required Collateral Interest on such Transfer
Date, and (B) the Available Investor Principal Collections on such Transfer Date
or (ii) with respect to the Controlled Accumulation Period, the Principal
Payment Period or the Rapid Amortization Period an amount equal to the lesser of
(A) the excess, if any, of the Collateral Interest (after taking into account
any adjustments to be made on such Transfer Date pursuant to Sections 4.12 and
4.14) over the Required Collateral Interest on such Transfer Date, and (B) the
excess, if any, of (1) the Available Investor Principal Collections on such
Transfer Date over (2) the sum of the Class A Monthly Principal and the Class B
Monthly Principal for such Transfer Date.
SECTION 4.10 Coverage of Required Amount. (a) On or before each
Transfer Date, Servicer shall determine the amount (the "Class A Required
Amount"), if any, by which the sum of (i) the Class A Monthly Interest for such
Transfer Date, plus (ii) the Class A Deficiency Amount, if any, for such
Transfer Date, plus (iii) the Class A Additional Interest, if any, for such
Transfer Date, plus (iv) the Class A Servicing Fee for the prior Monthly Period
plus (v) the Class A Servicing Fee, if any, due but not paid on any prior
Transfer Date, plus (vi) the Class A Investor Default Amount, if any, for such
Transfer Date, exceeds the Class A Available Funds deposited or available to be
deposited for the related Monthly Period.
(b) On or before each Transfer Date, Servicer shall also determine the
amount (the "Class B Required Amount"), if any, equal to the sum of (i) the
amount, if any, by which the sum of (A) the Class B Monthly Interest for such
Transfer Date, plus (B) the Class B Deficiency Amount, if any, for such Transfer
Date plus (C) the Class B Additional Interest, if any, for such Transfer Date,
plus (D) the Class B Servicing Fee for the prior Monthly Period plus (E) the
Class B Servicing Fee, if any, due but not paid on any prior Transfer Date,
exceeds the Class B Available Funds deposited or available to be deposited for
the related Monthly Period plus (ii) the Class B Investor Default Amount, if
any, for the prior Monthly Period.
(c) If the sum of the Class A Required Amount and the Class B Required
Amount for such Transfer Date is greater than zero, Servicer shall give written
notice to Trustee of such positive Class A Required Amount or Class B Required
Amount on or before such Transfer Date. In addition:
(i) If the Class A Required Amount for such Transfer Date is greater
than zero, all or a portion of the Excess Spread with respect to such
Transfer Date in an amount equal to the Class A Required Amount, to the
extent available, for such Transfer Date shall be distributed from the
Finance Charge Account on such Transfer Date pursuant to subsection
4.13(a). If the Class A Required Amount for such Transfer Date exceeds
the amount of Excess Spread with respect to such Transfer Date, the
Principal Collections allocable to the Collateral Interest and the
Class B Certificates with respect to the prior Monthly Period shall be
applied as specified in Section 4.14.
(ii) If the Class B Required Amount for such Transfer Date is
greater than zero, all or a portion of the Excess Spread with respect
to such Transfer Date in an amount
equal to the Class B Required Amount, to the extent available, for such
Transfer Date shall be distributed from the Finance Charge Account on
such Transfer Date pursuant to subsection 4.13(c). If the Class B
Required Amount for such Transfer Date exceeds the amount of Excess
Spread available to fund the Class B Required Amount pursuant to
subsection 4.13(c), the Principal Collections allocable to the
Collateral Interest (after application to the Class A Required Amount)
shall be applied as specified in Section 4.14;
provided that the sum of any payments pursuant to this paragraph shall not
exceed the sum of the Class A Required Amount and the Class B Required Amount.
SECTION 4.11 Monthly Payments. On or before each Transfer Date,
Servicer shall instruct Trustee in writing (which writing shall be substantially
in the form of Exhibit B) to withdraw, and Trustee, acting in accordance with
such instructions, shall withdraw on such Transfer Date or the related
Distribution Date, as applicable, to the extent of available funds, the amounts
required to be withdrawn from the Finance Charge Account, the Principal Account
and the Principal Funding Account as follows:
(a) An amount equal to the Class A Available Funds for the related
Monthly Period will be distributed or deposited on each Transfer Date, to the
extent available, in the following priority:
(i) an amount equal to Class A Monthly Interest, plus any Class
A Deficiency Amount, plus any Class A Additional Interest
(in each case for such Transfer Date) shall be deposited by
Servicer or Trustee into the Class A Interest Funding
Account for payment to Class A Holders on the applicable
Payment Date;
(ii) an amount equal to the Class A Servicing Fee for such
Transfer Date, plus any Class A Servicing Fee due but not
paid to Servicer on any prior Transfer Date shall be
distributed to Servicer;
(iii) an amount equal to the Class A Investor Default Amount, if
any, for the preceding Monthly Period shall be treated as a
portion of Investor Principal Collections and deposited into
the Principal Account on such Transfer Date; and
(iv) the balance, if any, shall constitute Excess
Spread and shall be allocated and distributed or deposited
as set forth in Section 4.13.
If the Back-up Servicer is the Servicer, the amounts described in
clause (ii) of this subsection 4.11(a) shall be paid prior to the amounts
described in clause (i) of this subsection 4.11(a).
(b) An amount equal to the Class B Available Funds for the related
Monthly Period will be distributed or deposited on each Transfer Date, to the
extent available, in the following priority:
(i) an amount equal to the Class B Monthly Interest, plus any
Class B Deficiency Amount, plus any Class B Additional
Interest (in each case for such Transfer Date) shall be
deposited by Servicer or Trustee into the Class B Interest
Funding Account for payment to the Class B Holders on the
applicable Payment Date;
(ii) an amount equal to the Class B Servicing Fee for such
Transfer Date, plus any Class B Servicing Fee due but not
paid to Servicer on any prior Transfer Date for such
Transfer Date shall be distributed to Servicer; and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth
in Section 4.13.
If the Back-up Servicer is Servicer, the amounts described in clause
(ii) of this subsection 4.11(b) shall be paid prior to the amounts described in
clause (i) of this subsection 4.11(b).
(c) An amount equal to the Collateral Available Funds for the related
Monthly Period will be distributed or deposited on each Transfer Date, to the
extent available, in the following priority:
(i) if the Originators are no longer Servicer, an amount equal
to the Collateral Interest Servicing Fee for such Transfer
Date, plus any Collateral Interest Servicing Fee due but not
paid to Servicer on any prior Transfer Date shall be
distributed to Servicer;
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth
in Section 4.13.
(d) During the Revolving Period, an amount equal to the Available
Investor Principal Collections for the related Monthly Period will be
distributed on each Transfer Date, to the extent available, in the following
priority:
(i) an amount equal to the Collateral Monthly Principal for such
Transfer Date shall be distributed to the Collateral
Interest Holder in accordance with the Loan Agreement;
(ii) an amount equal to the lesser of (A) the product of (1) a
fraction, the numerator of which is equal to the Available
Investor Principal Collections remaining after the
application specified in subsection 4.11(d)(i) and the
denominator of which is equal to the sum of the Available
Investor Principal Collections available for sharing as
specified in the related Series Supplement for each Series
in Group One and (2) the Cumulative Series Principal
Shortfall and (B) such remaining Available Investor
Principal Collections, shall remain in the Principal Account
to be treated as Shared Principal Collections and applied to
Series in Group One other than this Series 1996- 1; and
(iii) an amount equal to the excess, if any, of (A) the Available
Investor Principal Collections for such Transfer Date over
(B) the applications specified in subsections 4.11(d)(i) and
(ii) above shall be paid to Transferor; provided that the
amount to be paid to Transferor pursuant to this subsection
4.11(d)(iii) with respect to such Transfer Date shall be
paid to Transferor only to the extent that the Transferor
Interest on such Transfer Date is greater than zero (after
giving effect to the inclusion in the Trust of all
Receivables transferred to the Trust on or prior to such
Transfer Date and the application of payments referred to in
subsection 4.3(b)) and otherwise shall be deposited into the
Excess Funding Account in accordance with subsection 4.7(d).
(e) During the Controlled Accumulation Period, the Principal Payment
Period or the Rapid Amortization Period, an amount equal to the Available
Investor Principal Collections for the related Monthly Period will be
distributed on each Transfer Date, to the extent available, in the following
priority:
(i) an amount equal to the Class A Monthly Principal for such
Transfer Date, shall be (A) during the Controlled
Accumulation Period, deposited into the Principal Funding
Account, and (B) during the Principal Payment Period or the
Rapid Amortization Period, deposited into the Distribution
Account;
(ii) after giving effect to the distribution referred to in
clause (i), an amount equal to the Class B Monthly
Principal, shall be deposited into the Distribution Account;
(iii) for each Transfer Date (other than the Transfer Date
immediately preceding the Series 1996-1 Termination Date, in
which case on the Series 1996-1 Termination Date) after
giving effect to the distribution referred to in clauses (i)
and (ii), an amount equal to Collateral Monthly Principal
shall be distributed to the Collateral Interest Holder in
accordance with the Loan Agreement;
(iv) an amount equal to the lesser of (A) the product of (1) a
fraction, the numerator of which is equal to the Available
Investor Principal Collections remaining after the
application specified in subsections 4.11(e)(i), (ii) and
(iii) and the denominator of which is equal to the sum of
the Available Investor Principal Collections available for
sharing as specified in the related Supplement for each
Series in Group One and (2) the Cumulative Series Principal
Shortfall and (B) such remaining Available Investor
Principal Collections, shall remain in the Principal Account
to be treated as Shared Principal Collections and applied to
Series in Group One other than this Series 1996- 1; and
(v) an amount equal to the excess, if any, of (A) the Available
Investor Principal Collections over (B) the applications
specified in subsections 4.11(e)(i) through (iv) shall be
paid to Transferor; provided that the amount to be paid to
Transferor pursuant to this subsection 4.11(e)(v) with
respect to such Transfer Date shall be paid to Transferor
only to the extent that the Transferor Interest on such
Transfer Date is greater than zero (after giving effect to
the inclusion in the Trust of all Receivables transferred to
the Trust on or prior to such Transfer Date and the
application of payments referred to in subsection 4.3(b))
and otherwise shall be deposited into the Excess Funding
Account in accordance with subsection 4.7(d).
(f) On the earlier to occur of (i) the first Transfer Date with
respect to the Principal Payment Period or the Rapid Amortization Period and
(ii) the Transfer Date immediately preceding the Class A Scheduled Payment Date,
Trustee, acting in accordance with instructions from Servicer, shall withdraw
from the Principal Funding Account and deposit in the Distribution Account the
amount on deposit in the Principal Funding Account.
(g) On each Payment Date, Trustee shall pay in accordance with Section
5.1 to the Class A Holders from the Class A Interest Funding Account, the amount
deposited into the Class A Interest Funding Account pursuant to subsection
4.11(a)(i) on the preceding Transfer Date and (b) to the Class B Holders from
the Class B Interest Funding Account, the amount deposited into the Class B
Interest Funding Account pursuant to subsection 4.11(b)(i) on the preceding
Transfer Date.
(h) On the earlier to occur of (i) the first Special Payment Date with
respect to the Principal Payment Period or the Rapid Amortization Period and
(ii) the Class A Scheduled Payment Date and on each Payment Date thereafter,
Trustee, acting in accordance with instructions from Servicer, shall pay in
accordance with Section 5.1 from the Distribution Account the amount so
deposited into the Distribution Account pursuant to subsections 4.11(e) and (f)
on the related Transfer Date in the following priority:
(i) an amount equal to the lesser of such amount on deposit in
the Distribution Account and the Class A Investor Interest
shall be paid to the Class A Holders; and
(ii) for each Special Payment Date with respect to the Principal
Payment Period or the Rapid Amortization Period and on the
Class B Scheduled Payment Date, after giving effect to the
distributions referred to in clause (i) above, an amount
equal to the lesser of such amount on deposit in the
Distribution Account and the Class B Investor Interest shall
be paid to the Class B Holders.
(i) The Controlled Accumulation Period is scheduled to commence
at the close of business on the Controlled Accumulation
Date; provided that if the Controlled Accumulation Period
Length (determined as described below) on any Determination
Date on or after the Determination Date preceding the March
2001 Monthly Period is less than nine months, upon written
notice to Trustee, Transferor and each Rating Agency,
Servicer, at its option, may elect to modify the date on
which the Controlled Accumulation Period actually commences
to the first day of the month that is a number of months
prior to the month in which the Class A Scheduled Payment
Date occurs at least equal to the Controlled Accumulation
Period Length (so that, as a result of such election, the
number of Monthly Periods in the Controlled Accumulation
Period will at least equal the Controlled Accumulation
Period Length); provided that (i) the length of the
Controlled Accumulation Period will not be less than one
month; (ii) such determination of the Controlled
Accumulation Period Length shall be made on each
Determination Date on and after the Determination Date
preceding the March 2001 Monthly Period but prior to the
commencement of the Controlled Accumulation Period, and any
election to shorten the Controlled Accumulation Period shall
be subject to the subsequent lengthening of the Controlled
Accumulation Period to the Controlled Accumulation Period
Length determined on any subsequent Determination Date, but
the Controlled Accumulation Period shall in no event
commence prior to the Controlled Accumulation Date, and
(iii) notwithstanding any other provision of this Series
Supplement to the contrary, no election to postpone the
commencement of the Controlled Accumulation Period shall be
made after a Pay Out Event shall have occurred and be
continuing with respect to any other Series. The "Controlled
Accumulation Period Length" will mean a number of months
such that the amount available for distribution of principal
on the Class A Certificates on the Class A Scheduled Payment
Date is expected to equal or exceed the Class A Investor
Interest, assuming for this purpose that (1) the payment
rate with respect to Principal Collections remains constant
at the lowest level of such payment rate during the nine
preceding Monthly Periods (or such lower payment rate as
Servicer may select), (2) the total amount of Principal
Receivables in the Trust (and the principal amount on
deposit in the Excess Funding Account, if any) remains
constant at the level on such date of determination, (3) no
Pay Out Event with respect to any Series will subsequently
occur and (4) no additional Series (other than any Series
being issued on such date of determination) will be
subsequently issued. Any notice by Servicer electing to
modify the commencement of the Controlled Accumulation
Period pursuant to this clause (i) shall specify (i) the
Controlled Accumulation Period Length, (ii) the commencement
date of the Controlled Accumulation Period and (iii) the
Controlled Accumulation Amount with respect to each Monthly
Period during the Controlled Accumulation Period.
SECTION 4.12 Investor Charge-Offs. (a) On or before each Transfer
Date, Servicer shall calculate the Class A Investor Default Amount. If on any
Transfer Date, the Class A Investor Default Amount for the prior Monthly Period
exceeds the sum of the amount allocated with respect thereto pursuant to
subsection 4.11(a)(iii), subsection 4.13(a) and Section 4.14 with respect to
such Monthly Period, the Collateral Interest (after giving effect to reductions
for any Collateral Charge- Offs and any Reallocated Principal Collections on
such Transfer Date) will be reduced by the amount of such excess, but not by
more than the lesser of the Class A Investor Default Amount and the Collateral
Interest (after giving effect to reductions for any Collateral Charge-Offs and
any Reallocated Principal Collections on such Transfer Date) for such Transfer
Date. If such reduction would cause the Collateral Interest to be a negative
number, the Collateral Interest will be reduced to zero, and the Class B
Investor Interest (after giving effect to reductions for any Class B Investor
Charge-Offs and any Reallocated Class B Principal Collections on such Transfer
Date) will be reduced by the amount by which the Collateral Interest would have
been reduced below zero. If such reduction would cause the Class B Investor
Interest to be a negative number, the Class B Investor Interest will be reduced
to zero, and the Class A Investor Interest will be reduced by the amount by
which the Class B Investor Interest would have been reduced below zero, but not
by more than the Class A Investor Default Amount for such Transfer Date (a
"Class A Investor Charge-Off"). If the Class A Investor Interest has been
reduced by the amount of any Class A Investor Charge-Offs, it will be reimbursed
on any Transfer Date (but not by an amount in excess of the aggregate Class A
Investor Charge-Offs) by the amount of Excess Spread allocated and available for
such purpose pursuant to subsection 4.13(b).
(b) On or before each Transfer Date, Servicer shall calculate the
Class B Investor Default Amount. If on any Transfer Date, the Class B Investor
Default Amount for the prior Monthly Period exceeds the amount of Excess Spread
and Reallocated Collateral Principal Collections which are allocated and
available to fund such amount pursuant to subsection 4.13(c) and Section 4.14,
the Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and any Reallocated Principal Collections on such Transfer Date and
any adjustments with respect thereto as described in Section 4.12(a)) will be
reduced by the amount of such excess but not by more than the lesser of the
Class B Investor Default Amount and the Collateral Interest (after giving effect
to reductions for any Collateral Charge-Offs and any Reallocated Principal
Collections on such Transfer Date and any adjustments with respect thereto as
described in subsection 4.12(a)) for such Transfer Date. If such reduction would
cause the Collateral Interest to be a negative number, the Collateral Interest
shall be reduced to zero and the Class B Investor Interest shall be reduced by
the amount by which the Collateral Interest would have been reduced below zero,
but not by more than the Class B Investor Default Amount for such Transfer Date
(a "Class B Investor Charge-Off"). The Class B Investor Interest will also be
reduced by the amount of Reallocated Class B Principal Collections in excess of
the Collateral Interest pursuant to Section 4.14 and the amount of any portion
of the Class B Investor Interest allocated to the Class A Certificates to avoid
a reduction in the Class A Investor Interest pursuant to subsection 4.12(a). The
Class B Investor Interest will thereafter be reimbursed (but not to an amount in
excess of the unpaid principal balance of the Class B Certificates) on any
Transfer Date by the amount of Excess Spread allocated and available for that
purpose as described under subsection 4.13(d).
(c) On or before each Transfer Date, Servicer shall calculate the
Collateral Default Amount. If on any Transfer Date, the Collateral Default
Amount for the prior Monthly Period exceeds the amount of Excess Spread which is
allocated and available to fund such amount pursuant to subsection 4.13(g), the
Collateral Interest will be reduced by the amount of such excess but not by more
than the lesser of the Collateral Default Amount and the Collateral Interest for
such Transfer Date (a "Collateral Charge-Off"). The Collateral Interest will
also be reduced by the amount of Reallocated Principal Collections pursuant to
Section 4.14 and the amount of any portion of the Collateral Interest allocated
to the Class A Certificates or the Class B Certificates to avoid a reduction in
the Class A Investor Interest, pursuant to subsection 4.12(a), or the Class B
Investor Interest, pursuant to subsection 4.12(b), respectively. The Collateral
Interest will thereafter be reimbursed on any Transfer Date by the amount of the
Excess Spread allocated and available for that purpose as described under
subsection 4.13(h).
SECTION 4.13 Excess Spread. On or before each Transfer Date, Servicer
shall instruct Trustee in writing (which writing shall be substantially in the
form of Exhibit B) to apply, and Trustee, acting in accordance with such
instructions shall apply, Excess Spread with respect to the related Monthly
Period, to make the following distributions on each Transfer Date in the
following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Transfer Date will be used to fund the Class A
Required Amount and be applied in accordance with, and in the priority
set forth in, subsection 4.11(a);
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated
as a portion of Investor Principal Collections and deposited into the
Principal Account on such Transfer Date;
(c) an amount equal to the Class B Required Amount, if any, with
respect to such Transfer Date will be used to fund the Class B
Required Amount and be applied first in accordance with, and in the
priority set forth in, subsection 4.11(b) and then any remaining
amount available to pay the Class B Investor Default Amount shall be
treated as a portion of Investor Principal Collections and deposited
into the Principal Account on such Transfer Date;
(d) an amount equal to the aggregate amount by which the Class B
Investor Interest has been reduced below the initial Class B Investor
Interest for reasons other than the payment of principal to the Class
B Holders (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) will be treated
as a portion of Investor Principal Collections and deposited into the
Principal Account on such Transfer Date;
(e) an amount equal to the Collateral Monthly Interest plus the
amount of any past due Collateral Monthly Interest for such Transfer
Date will be paid to the Collateral Interest Holder in accordance with
the Loan Agreement;
(f) if the Originators are Servicer, an amount equal to the
aggregate amount of accrued but unpaid Collateral Interest Servicing
Fees will be paid to Servicer;
(g) an amount equal to the Collateral Default Amount, if any, for
the prior Monthly Period will be treated as a portion of Investor
Principal Collections and deposited into the Principal Account on such
Transfer Date;
(h) an amount equal to the aggregate amount by which the
Collateral Interest has been reduced below the Required Collateral
Interest for reasons other than the payment of principal to the
Collateral Interest Holder (but not in excess of the aggregate amount
of such reductions which have not been previously reimbursed) will be
treated as a portion of Investor Principal Collections and deposited
into the Principal Account on such Transfer Date;
(i) on each Transfer Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account
terminates as described in subsection 4.17(f), an amount up to the
excess, if any, of the Required Reserve Account Amount over the
Available Reserve Account Amount shall be deposited into the Reserve
Account;
(j) an amount equal to all other amounts due under the Loan
Agreement (to the extent payable from "Available Non- Principal
Funds," as defined therein) shall be distributed in accordance with
the Loan Agreement;
(k) an amount equal to the sum of (x) any Class A Shortfall
Amount for the current Distribution Date and (y) any accrued and
unpaid Class A Carry-Over Amount from a prior Distribution Date shall
be deposited by Servicer or Trustee in the Class A Interest Funding
Account for payment to the Class A Holders on the applicable Payment
Date;
(l) an amount equal to the sum of (x) any Class B Shortfall
Amount for the current Distribution Date and (y) any accrued and
unpaid Class B Carry-Over Amount from a prior Distribution Date shall
be deposited by Servicer or Trustee into the Class B Interest Funding
Account for payment to the Class B Holders on the applicable Payment
Date; and
(m) the balance, if any, after giving effect to the payments made
pursuant to clauses (a) through (l) shall constitute "Excess Finance
Charge Collections" to be applied with respect to other Series in
accordance with Section 4.5 of the Agreement.
SECTION 4.14 Reallocated Principal Collections. On or before each
Transfer Date, Servicer shall instruct Trustee in writing (which writing shall
be substantially in the form of Exhibit B) to, and Trustee in accordance with
such instructions shall, withdraw from the Principal Account and apply
Reallocated Principal Collections (applying all Reallocated Collateral Principal
Collections in accordance with subsections 4.14(a) and (b) prior to applying any
Reallocated Class B Principal Collections in accordance with subsection 4.14(a)
for any amounts still owing after the application of Reallocated Collateral
Principal Collections) with respect to such Transfer Date, to make the following
distributions on each Transfer Date in the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A Required
Amount, if any, with respect to such Transfer Date over (ii) the amount of
Excess Spread with respect to the related Monthly Period, shall be applied
pursuant to subsections 4.11(a)(i), (ii), and (iii) and
(b) an amount equal to the excess, if any, of (i) the Class B Required
Amount, if any, with respect to such Transfer Date over (ii) the amount of
Excess Spread allocated and available to the Class B Certificates pursuant to
subsection 4.13(c) on such Transfer Date shall be applied first pursuant to
subsections 4.11(b)(i) and (ii) and then pursuant to subsection 4.13(c).
On each Transfer Date, the Collateral Interest shall be reduced by the
amount of Reallocated Collateral Principal Collections and by the amount of
Reallocated Class B Principal Collections for such Transfer Date. If such
reduction would cause the Collateral Interest (after giving effect to any
Collateral Charge-Offs for such Transfer Date) to be a negative number, the
Collateral Interest (after giving effect to any Collateral Charge-Offs for such
Transfer Date) shall be reduced to zero and the Class B Investor Interest shall
be reduced by the amount by which the Collateral Interest would have been
reduced below zero. If the reallocation of Reallocated Principal Collections
would cause the Class B Investor Interest (after giving effect to any Class B
Investor Charge-Offs for such Transfer Date) to be a negative number on any
Transfer Date, Reallocated Principal Collections shall be reallocated on such
Transfer Date in an aggregate amount not to exceed the amount which would cause
the Class B Investor Interest (after giving effect to any Class B Investor
Charge-Offs for such Transfer Date) to be reduced to zero.
SECTION 4.15 Shared Principal Collections. (a) The portion of Shared
Principal Collections on deposit in the Principal Account equal to the amount of
Shared Principal Collections allocable to Series 1996-1 on any Transfer Date
shall be applied as Available Investor Principal Collections pursuant to Section
4.11 and pursuant to such Section 4.11 shall be deposited in the Distribution
Account or distributed in accordance with the Loan Agreement.
(b) Shared Principal Collections allocable to Series 1996-1 with
respect to any Transfer Date means an amount equal to the Series Principal
Shortfall, if any, with respect to Series 1996-1 for such Transfer Date;
provided that if the aggregate amount of Shared Principal Collections for all
Series for such Transfer Date is less than the Cumulative Series Principal
Shortfall for such Transfer Date, then Shared Principal Collections allocable to
Series 1996-1 on such Transfer Date shall equal the product of (i) Shared
Principal Collections for all Series for such Transfer Date and (ii) a fraction,
the numerator of which is the Series Principal Shortfall with respect to Series
1996-1 for such Transfer Date and the denominator of which is the aggregate
amount of Cumulative Series Principal Shortfall for all Series for such Transfer
Date.
(c) Solely for the purpose of determining the amount of Available
Investor Principal Collections to be treated as Shared Principal Collections on
any Transfer Date allocable to other Series in Group One, on each Determination
Date, Servicer shall determine the Class A Required Amount, Class B Required
Amount, Excess Spread and Reallocated Principal Collections as of such
Determination Date for the following Transfer Date.
SECTION 4.16 Principal Account and Principal Funding Account. (a) The
Trustee shall establish and maintain in the name of the Trust, on behalf of the
Trust, for the benefit of the Investor Holders, two segregated trust accounts
(the "Principal Account" and the "Principal Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Investor Holders or establish and maintain the Principal Account
and the Principal Funding Account with a Qualified Institution. The Trustee
shall possess all right, title and interest in all funds on deposit from time to
time in the Principal Account and the Principal Funding Account and in all
proceeds thereof. The Principal Account and the Principal Funding Account shall
be under the sole dominion and control of Trustee for the benefit of the
Investor Holders. If at any time a Qualified Institution holding the Principal
Account and the Principal Funding Account ceases to be a Qualified Institution,
Transferor shall notify Trustee, and Trustee upon being notified (or Servicer on
its behalf) shall, within 10 Business Days, establish a new Principal Account
and a new Principal Funding Account meeting the conditions specified above, and
shall transfer any cash or any investments to such new Principal Account and
Principal Funding Account. The Trustee, at the direction of Servicer, shall (i)
make withdrawals from the Principal Account and the Principal Funding Account
from time to time, in the amounts and for the purposes set forth in this Series
Supplement, and (ii) on each Transfer Date (from and after the commencement of
the Controlled Accumulation Period) prior to termination of the Principal
Funding Account make a deposit into the Principal Funding Account in the amount
specified in, and otherwise in accordance with, subsection 4.11(e).
(b) Funds on deposit in the Principal Account and the Principal
Funding Account shall be invested pursuant to the written direction of Servicer
by Trustee in Permitted Investments. Funds on deposit in the Principal Funding
Account on any Transfer Date, after giving effect to any withdrawals from the
Principal Funding Account on such Transfer Date, shall be invested in such
investments that will mature so that such funds will be available for withdrawal
on or prior to the following Transfer Date. The Trustee shall maintain for the
benefit of the Investor Holders possession of the negotiable instruments or
securities, if any, evidencing such Permitted Investments. No Permitted
Investment shall be disposed of prior to its maturity.
On the Transfer Date occurring in the month following the commencement
of the Controlled Accumulation Period and on each Transfer Date thereafter with
respect to the Controlled Accumulation Period, Trustee, acting at Servicer's
direction given on or before such Transfer Date, shall transfer from the
Principal Funding Account to the Finance Charge Account the Principal Funding
Investment Proceeds on deposit in the Principal Funding Account, but not in
excess of the Covered Amount, for application as Class A Available Funds applied
pursuant to subsection 4.11(a)(i).
Any Excess Principal Funding Investment Proceeds shall be paid to
Transferor on each Transfer Date. An amount equal to any Principal Funding
Investment Shortfall will be deposited in the Finance Charge Account on each
Transfer Date from the Reserve Account to the extent funds are available
pursuant to subsection 4.17(d). Principal Funding Investment Proceeds (including
reinvested interest) shall not be considered part of the amounts on deposit in
the Principal Funding Account for purposes of this Series Supplement.
SECTION 4.17 Reserve Account. (a) The Trustee shall establish and
maintain in the name of the Trust, on behalf of the Trust, for the benefit of
the Investor Holders, a segregated trust account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Investor Holders or establish and maintain the
Reserve Account with a Qualified Institution. The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Reserve Account and in all proceeds thereof. The Reserve Account shall be under
the sole dominion and control of Trustee for the benefit of the Investor
Holders. If at any time a Qualified Institution holding the Reserve Account
ceases to be a Qualified Institution, Transferor shall notify the Trustee and
each Rating Agency, and Trustee upon being notified (or Servicer on its behalf)
shall, within 10 Business Days, establish a new Reserve Account meeting the
conditions specified above, and shall transfer any cash or any investments to
such new Reserve Account. The Trustee, at the direction of Servicer, shall (i)
make withdrawals from the Reserve Account from time to time in an amount up to
the Available Reserve Account Amount at such time, for the purposes set forth in
this Series Supplement, and (ii) on each Transfer Date (from and after the
Reserve Account Funding Date) prior to termination of the Reserve Account make a
deposit into the Reserve Account in the amount specified in, and otherwise in
accordance with, subsection 4.13(i).
(b) Funds on deposit in the Reserve Account shall be invested by
Trustee in Permitted Investments pursuant to the written direction of Servicer.
Funds on deposit in the Reserve Account on any Transfer Date, after giving
effect to any withdrawals from the Reserve Account on such Transfer Date, shall
be invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Transfer Date. The Trustee
shall maintain for the benefit of the Investor Holders possession of the
negotiable instruments or securities, if any, evidencing such Permitted
Investments. No Permitted Investment shall be disposed of prior to its maturity.
On each Transfer Date, all interest and earnings (net of losses and investment
expenses) accrued since the preceding Transfer Date on funds on deposit in the
Reserve Account shall be retained in the Reserve Account (to the extent that the
Available Reserve Account Amount is less than the Required Reserve Account
Amount) and the balance, if any, shall be deposited into the Finance Charge
Account and included in Class A Available Funds for such Transfer Date. For
purposes of determining the availability of funds or the balance in the Reserve
Account for any reason under this Series Supplement, except as otherwise
provided in the preceding sentence, investment earnings on such funds shall be
deemed not to be available or on deposit.
(c) On or before each Transfer Date with respect to the Controlled
Accumulation Period prior to the payment in full of the Class A Investor
Interest and on or before the first Transfer Date with respect to the Principal
Payment Period or the Rapid Amortization Period, Servicer shall calculate the
"Reserve Draw Amount" which shall be equal to the Principal Funding Investment
Shortfall with respect to each Transfer Date with respect to the Controlled
Accumulation Period or the first Transfer Date with respect to the Principal
Payment Period or the Rapid Amortization Period less, in each case, the amount
of funds deposited into the Finance Charge Account on such Transfer Date
pursuant to subsection 4.17(b).
(d) If the Reserve Draw Amount for any Transfer Date is greater than
zero, the Reserve Draw Amount, up to the Available Reserve Account Amount, shall
be withdrawn from the Reserve Account on such Transfer Date by Trustee (acting
in accordance with the instructions of Servicer), deposited into the Finance
Charge Account and included in Class A Available Funds for such Transfer Date.
(e) If the Reserve Account Surplus on any Transfer Date, after giving
effect to all deposits to and withdrawals from the Reserve Account with respect
to such Transfer Date, is greater than zero, Trustee, acting in accordance with
the instructions of Servicer, shall withdraw from the Reserve Account, and pay
in accordance with the Loan Agreement, an amount equal to such Reserve Account
Surplus.
(f) Upon the earliest to occur of (i) the termination of the Trust
pursuant to Article XII, (ii) the first Transfer Date relating to the Principal
Payment Period or the Rapid Amortization Period and (iii) the Transfer Date
immediately preceding the Class A Scheduled Payment Date, Trustee, acting in
accordance with the instructions of Servicer, after the prior payment of all
amounts owing to the Series 1996-1 Holders that are payable from the Reserve
Account as provided herein, shall withdraw from the Reserve Account and pay in
accordance with the Loan Agreement, all amounts, if any, on deposit in the
Reserve Account and the Reserve Account shall be deemed to have terminated for
purposes of this Series Supplement.
SECTION 4.18 Interest Funding Account. (a) The Trustee shall establish
and maintain in the name of the Trust, on behalf of the Trust, for the benefit
of the Investor Holders, a segregated trust account (the "Interest Funding
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Investor Holders or establish and
maintain the Interest Funding Account with a Qualified Institution. The Interest
Funding Account shall be divided into two administrative subaccounts, the Class
A Interest Funding Account (the "Class A Interest Funding Account") and the
Class B Interest Funding Account (the "Class B Interest Funding Account"). The
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Interest Funding Account and in all proceeds thereof. The
Interest Funding Account shall be under the sole dominion and control of Trustee
for the benefit of the Investor Holders. If at any time a Qualified Institution
holding the Interest Funding Account ceases to be a Qualified Institution,
Transferor shall notify Trustee, and Trustee upon being notified (or Servicer on
its behalf) shall, within 10 Business Days, establish a new Interest Funding
Account meeting the conditions specified above, and shall transfer any cash or
any investments to such Interest Funding Account. The Trustee, at the direction
of Servicer, shall make withdrawals from the Interest Funding Account and the
relevant subaccount from time to time, in the amounts and for the purposes set
forth in this Series Supplement.
(b) Funds on deposit in the Interest Funding Account shall be invested
pursuant to the written direction of Servicer by Trustee in Permitted
Investments. Funds on deposit in the Interest Funding Account on any Transfer
Date, after giving effect to any withdrawals from the Interest Funding Account
on such Transfer Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Transfer Date. The Trustee shall maintain for the benefit of the Investor
Holders possession of the negotiable instruments or securities, if any,
evidencing such Permitted Investments. No Permitted Investment shall be disposed
of prior to its maturity.
(c) On each Distribution Date, the Servicer shall direct the Trustee
in writing to withdraw from the Interest Funding Account and pay to the
Transferor all interest and other investment income (net of losses and
investment expenses) on funds on deposit in the Interest Funding Account.
(d) Reinvested interest and other investment income on funds deposited
in the Interest Funding Account shall not be considered to be principal amounts
on deposit therein for purposes of this Supplement.
SECTION 4.19 Determination of LIBOR. (a) On each LIBOR Determination
Date, Trustee will determine LIBOR on the basis of the rate for deposits in
United States dollars for a period equal to the relevant Interest Period
(commencing on the first day of such Interest Period) which appears on Telerate
Page 3750 as of 11:00 a.m., London time, on such date. If such rate does not
appear on Telerate Page 3750, the rate for that LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 am., London time, on
that day to prime banks in the London interbank market for a period equal to the
relevant Interest Period (commencing on the first day of such Interest Period).
The Trustee will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that LIBOR Determination Date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that LIBOR Determination Date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by Servicer, at approximately
11:00 a.m., New York City time, on that day for loans in United States dollars
to leading European banks for a period equal to the relevant Interest Period
(commencing on the first day of such Interest Period).
(b) The Class A Certificate Rate and Class B Certificate Rate
applicable to the then current and the immediately preceding Interest Periods
may be obtained by any Investor Holder by telephoning Trustee at its Corporate
Trust Office at One First National Plaza, Suite 0126, Chicago, Illinois
60670-0126, Attention: Corporate Trust Services Division.
(c) On each LIBOR Determination Date prior to 12:00 noon New York City
time, Trustee shall send to Servicer by facsimile, notification of LIBOR for the
following Interest Period.
SECTION 4.20 Transferor's or Servicer's Failure to Make a Deposit or
Payment. If Servicer or Transferor fails to make, or give instructions to make,
any payment or deposit (other than as required by subsection 2.4(d) and (e) and
12.2(a) or Section 10.2 and 12.1) required to be made or given by Servicer or
Transferor, respectively, at the time specified in the Agreement (including
applicable grace periods), Trustee shall make such payment or deposit from the
applicable Investor Account without instruction from Servicer or Transferor. The
Trustee shall be required to make any such payment, deposit or withdrawal
hereunder only to the extent that Trustee has sufficient information to allow it
to determine the amount thereof; provided that Trustee shall in all cases be
deemed to have sufficient information to determine the amount of interest
payable to the Series 1996-1 Holders on each Distribution Date. The Servicer
shall, upon request of Trustee, promptly provide Trustee with all information
necessary to allow Trustee to make such payment, deposit or withdrawal. Such
funds or the proceeds of such withdrawal shall be applied by Trustee in the
manner in which such payment or deposit should have been made by Transferor or
Servicer, as the case may be.
SECTION 8. Article V of the Agreement. Article V of the Agreement
shall read in its entirety as follows and shall be applicable only to the
Investor Holders:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO INVESTOR HOLDERS
SECTION 5.1 Distributions. (a) On each Payment Date, Trustee shall
distribute (in accordance with the certificate delivered on or before the
related Transfer Date by Servicer to Trustee pursuant to subsection 3.4(b)) to
each Class A Holder of record on the immediately preceding Record Date (other
than as provided in subsection 2.4(e) or Section 12.3 respecting a final
distribution) such Holder's pro rata share (based on the aggregate Undivided
Interests represented by Class A Certificates held by such Holder) of amounts on
deposit in the Class A Interest Funding Account as are payable to the Class A
Holders pursuant to Section 4.11(a)(i) and 4.11(g) by check mailed to each Class
A Holder (at such Holder's address as it appears in the Certificate Register),
except that with respect to Class A Certificates registered in the name of the
nominee of a Clearing Agency, such distribution shall be made in immediately
available funds.
(b) On any Special Payment Date and on the Class A Scheduled Payment
Date, Trustee shall distribute (in accordance with the certificate delivered on
or before the related Transfer Date by Servicer to Trustee pursuant to
subsection 3.4(b)) to each Class A Holder of record on the immediately preceding
Record Date (other than as provided in subsection 2.4(e) or Section 12.3
respecting a final distribution) such Holder's pro rata share (based on the
aggregate Undivided Interests represented by Class A Certificates held by such
Holder) of amounts on deposit in the Distribution Account as are payable to the
Class A Holders pursuant to Section 4.11(e), 4.11(f) and 4.11(h)(i) by check
mailed to each Class A Holder (at such Holder's address as it appears in the
Certificate Register), except that with respect to Class A Certificates
registered in the name of the nominee of a Clearing Agency, such distribution
shall be made in immediately available funds.
(c) On each Payment Date, Trustee shall distribute (in accordance with
the certificate delivered on or before the related Transfer Date by Servicer to
Trustee pursuant to subsection 3.4(b) to each Class B Holder of record on the
immediately preceding Record Date (other than as provided in subsection 2.4(e)
or Section 12.3 respecting a final distribution) such Holder's pro rata share
(based on the aggregate Undivided Interests represented by Class B Certificates
held by such Holder) of amounts on deposit in the Class B Interest Funding
Account as are payable to the Class B Holders pursuant to Section 4.11(b)(i) and
4.11(g) by check mailed to each Class B Holder (at such Holder's address as it
appears in the Certificate Register), except that with respect to Class B
Certificates registered in the name of the nominee of a Clearing Agency, such
distribution shall be made in immediately available funds.
(d) On any Special Payment Date and on the Class B Scheduled Payment
Date, Trustee shall distribute (in accordance with the certificate delivered on
or before the related Transfer Date by Servicer to Trustee pursuant to
subsection 3.4(b)) to each Class B Holder of record on the immediately preceding
Record Date (other than as provided in subsection 2.4(e) or Section 12.3
respecting a final distribution) such Holder's pro rata share (based on the
aggregate Undivided Interests represented by Class B Certificates held by such
Holder) of amounts on deposit in the Distribution Account as are payable to the
Class B Holders pursuant to Section 4.11(e), 4.11(f) and 4.11(h)(ii) by check
mailed to each Class B Holder (at such Holder's address as it appears in the
Certificate Register), except that with respect to Class B Certificates
registered in the name of the nominee of a Clearing Agency, such distribution
shall be made in immediately available funds.
SECTION 5.2 Monthly Series 1996-1 Holders' Statement. (a) On or before
each Distribution Date, Trustee shall forward to each Series 1996-1 Holder, each
Rating Agency and the Collateral Interest Holder a statement substantially in
the form of Exhibit C prepared by Servicer and delivered to Trustee.
(b) Annual Holders' Tax Statement. On or before January 31 of each
calendar year, beginning with calendar year 1996, Trustee shall distribute to
each Person who at any time during the preceding calendar year was a Series
1996-1 Holder, a statement prepared by Servicer containing the following
information:
(i) the amount of the current distribution allocable to Class A
Monthly Principal, Class B Monthly Principal and Collateral
Monthly Principal, respectively; and
(ii) the amount of the current distribution allocable to Class A
Monthly Interest, Class A Deficiency Amounts, Class A
Additional Interest, Class B Monthly Interest, Class B
Deficiency Amounts, Class B Additional Interest and
Collateral Monthly Interest, and any accrued and unpaid
Collateral Monthly Interest, respectively.
Such information shall be aggregated for such calendar year or the applicable
portion thereof during which such Person was a Series 1996-1 Holder, together
with such other customary information (consistent with the treatment of the
Certificates as debt) as Trustee or Servicer (or Transferor, if Back-up Servicer
is Servicer) deems necessary or desirable to enable the Series 1996-1 Holders to
prepare their tax returns. Such obligations of Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by Trustee pursuant to any requirements of the Internal Revenue Code.
SECTION 9. Series 1996-1 Pay Out Events. If any one of the following
events shall occur with respect to the Investor Certificates:
(a) failure on the part of Transferor (i) to make any payment or
deposit required by the terms of (A) the Agreement or (B) this Series
Supplement, on or before the date occurring five days after the date such
payment or deposit is required to be made herein or (ii) duly to observe or
perform in any material respect any covenants or agreements of Transferor set
forth in the Agreement or this Series Supplement (including the covenant of
Transferor contained in Section 11 of this Series Supplement), which failure has
a material adverse effect on the Series 1996-1 Holders (which determination
shall be made without reference to whether any funds are available under the
Collateral Interest) and which continues unremedied for a period of 60 days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to Transferor by Trustee, or to Transferor and
Trustee by the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 50% of the Investor Interest of this Series 1996-1,
and continues to affect materially and adversely the interests of the Series
1996-1 Holders (which determination shall be made without reference to whether
any funds are available under the Collateral Interest) for such period;
(b) any representation or warranty made by Transferor in the Agreement
or this Series Supplement, or any information contained in a Receivable Schedule
required to be delivered by Transferor pursuant to Section 2.1, (i) shall prove
to have been incorrect in any material respect when made or when delivered,
which continues to be incorrect in any material respect for a period of 60 days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to Transferor by Trustee, or to Transferor and
Trustee by the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 50% of the Investor Interest of this Series 1996-1,
and (ii) as a result of which the interests of the Series 1996-1 Holders are
materially and adversely affected (which determination shall be made without
reference to whether any funds are available under the Collateral Interest) and
continue to be materially and adversely affected for such period; provided that
a Series 1996-1 Pay Out Event pursuant to this subsection 9(b) shall not be
deemed to have occurred hereunder if Transferor has accepted reassignment of the
related Receivable, or all of such Receivables, if applicable, during such
period in accordance with the provisions of the Agreement;
(c) the average Portfolio Yield for any three consecutive Monthly
Periods is reduced to a rate which is less than the average Base Rate for such
period;
(d) the average Transferor Interest during any 10 consecutive days
being below the Minimum Transferor Interest for the same period and (ii) during
any 10 consecutive days the sum of (x) the Principal Receivables and (y) the
principal amount on deposit in the Excess Funding Account being less than the
Minimum Aggregate Principal Receivables for the same period;
(e) an Originator shall fail to convey Additional Receivables to
Transferor as required by the Receivables Purchase Agreement or Transferor shall
fail to convey Additional Receivables to the Trust, as required by Section
2.1(b);
(f) any Servicer Default shall occur which would have a material
adverse effect on the Series 1996-1 Holders;
(g) the Class A Investor Interest shall not be paid in full on the
Class A Scheduled Payment Date or the Class B Investor Interest shall not be
paid in full on the Class B Scheduled Payment Date;
(h) the Monthly Payment Rate is less than 12% for three consecutive
Monthly Periods;
(i) for a period of three consecutive Determination Dates, (i) there
exists an Excess Obligor Concentration Amount, (ii) there exists an Excess
Insurer Concentration Amount, (iii) the Investment Grade Insurer Percentage is
less than the Required Investment Grade Insurer Percentage, (iv) the Investment
Grade Insurer Percentage to be decreased, if on such day the Investment Grade
Insurer Percentage is equal to or less than the Required Investment Grade
Insurer Percentage, (v) there are less than 300 insurance carriers whose
insurance premiums have been financed by the Receivables, or (vi) the Top 10
Insurer Percentage is greater than the Maximum Top 10 Insurer Percentage; then,
in the case of any event described in subsection 9(a), (b) or (f) hereof, after
the applicable grace period set forth in such subsections, either Trustee or
Holders of Series 1996-1 Certificates (including, for this purpose, the
Collateral Interest Holder) evidencing Undivided Interests aggregating not less
than 50% of the Investor Interest of this Series 1996-1 by notice then given in
writing to Transferor and Servicer (and to Trustee if given by the Holders) may
declare that a pay out event (a "Series 1996-1 Pay Out Event") has occurred as
of the date of such notice, and in the case of any event described in subsection
9(c), (d), (e), (g), (h) or (i) hereof, a Series 1996-1 Pay Out Event shall
occur without any notice or other action on the part of Trustee or the Investor
Holders immediately upon the occurrence of such event. The Series 1996- 1 Pay
Out Events described in subsection 9(i) may be amended by the Transferor, the
Trustee and the Servicer at any time with the consent of the Collateral Interest
Holder, but without the consent of the Certificateholders if the Rating Agency
Condition has been satisfied with respect to such amendment.
SECTION 10. Series 1996-1 Termination. The right of the Investor
Holders to receive payments from the Trust will terminate on the first Business
Day following the Series 1996-1 Termination Date.
SECTION 11. Initial Principal Payment Date. The Initial Principal
Payment Date shall automatically be extended to the next succeeding Distribution
Date after the then-current Initial Principal Payment Date unless the
Transferor, as of the first day of the Monthly Period preceding the Monthly
Period in which the then-current Initial Principal Payment Date occurs, elects
not to cause such extension. Such election may be made by the Transferor by
giving written notice thereof to the Trustee no earlier than the Distribution
Date second preceding the then-current Initial Principal Payment Date and no
later than the first day of the Monthly Period preceding the Monthly Period in
which the then-current Initial Principal Payment Date occurs.
The Transferor will cause the Trustee to provide written notice to
each Certificateholder, the Servicer, each Rating Agency and the Collateral
Interest Holder of any election by the Transferor not to extend the Initial
Principal Payment Date. The Transferor will cause the Trustee to provide such
notice not more than 60 nor less than 30 days prior to the then- current Initial
Principal Payment Date.
SECTION 12. RESERVED.
SECTION 13. RESERVED.
SECTION 14. Counterparts. This Series Supplement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
SECTION 15. Governing Law. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 16. Additional Notices. Transferor shall notify the Collateral
Interest Holder promptly after becoming aware of any Lien on any Receivable
other than the conveyances under the Agreement. Transferor shall notify the
Collateral Interest Holder of any merger, consolidation, assumption or transfer
referred to in Section 7.2.
SECTION 17. Additional Representations and Warranties of Servicer.
AFCO Acceptance and AFCO Credit, as initial Servicer, hereby makes, and any
Successor Servicer by its appointment under the Agreement shall make the
following representations and warranties:
(a) All Consents. All authorizations, consents, orders or approvals of
or registrations or declarations with any Governmental Authority required to be
obtained, effected or given by Servicer in connection with the execution and
delivery of this Series Supplement by Servicer and the performance of the
transactions contemplated by this Series Supplement by Servicer, have been duly
obtained, effected or given and are in full force and effect.
(b) Rescission or Cancellation. The Servicer shall not permit any
rescission or cancellation of any Receivable except as ordered by a court of
competent jurisdiction or other Governmental Authority or in accordance with the
normal operating procedures of Servicer.
SECTION 17. No Petition. Transferor, Servicer, Back-up Servicer and
Trustee, by entering into this Series Supplement and each Holder, by accepting a
Series 1996-1 Certificate hereby covenant and agree that they will not at any
time institute against the Trust, or join in any institution against the Trust
of, any bankruptcy proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Investor Holders, the Agreement or this Series Supplement.
SECTION 18. Amendments. Subject to Section 9, this Series Supplement
may be amended pursuant to Section 13.1 of the Agreement. This Series Supplement
may also be amended by Transferor without the consent of Servicer, Back-up
Servicer, Trustee or any Investor Holder if Transferor provides Trustee with:
(i) an Opinion of Counsel to the effect that such amendment or modification
would (A) reduce the risk that the Trust would be treated as taxable as a
publicly traded partnership pursuant to Internal Revenue Code section 7704 or
(B) permit the Trust or a relevant portion thereof to be treated as a "financial
asset securitization investment trust" and (C) in either case, (1) would not
cause the Trust to be classified, for Federal income tax purposes, as an
association (or publicly traded partnership) taxable as a corporation and (2)
would not cause or constitute an event in which gain or loss would be recognized
by any Investor Holder; and (ii) a certificate that such amendment or
modification would not materially and adversely affect any Investor Holder;
provided that no such amendment shall be deemed effective without Trustee's
consent, if Trustee's rights, duties and obligations hereunder are thereby
modified. Promptly after the execution of any such amendment (other than an
amendment pursuant to subsection 13.1(a) of the Agreement), Trustee shall
furnish notification of the substance of such amendment to each Rating Agency.
Notwithstanding anything to the contrary contained in this Section 18, the
provisions of this Series Supplement which affect the rights or obligations of
the Back-up Servicer may only be amended with the further written consent of the
Back-up Servicer.
<PAGE>
IN WITNESS WHEREOF, Transferor, Servicer, Back-up
Servicer and Trustee have caused this Series 1996-1 Supplement to be duly
executed by their respective officers as of the day and year first above
written.
MELLON BANK, N.A., Transferor
By:/s/ Steven G. Elliot
Name:
Title:
AFCO CREDIT CORPORATION, Servicer
By:/s/ Michael M. Nisbet
Name: Michael M. Nisbet
Title: President and CEO
AFCO ACCEPTANCE CORPORATION,
Servicer
By:/s/ Michael M. Nisbet
Name: Michael M. Nisbet
Title: President and CEO
PREMIUM FINANCING SPECIALISTS,
INC. Back-up Servicer
By:/s/ Frank Bednar
Name: Frank Bednar
Title:Controller
PREMIUM FINANCING SPECIALISTS OF
CALIFORNIA, INC., Back-up Servicer
By:/s/ Frank Bednar
Name: Frank Bednar
Title: Controller
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:/s/ Steven M. Wagner
Name: Steven M. Wagner
Title:Vice President
<PAGE>
CLASS A Certificate
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Mellon Bank,
N.A. or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No. A-1 $200,000,000.00
CUSIP No. 58550UAA3
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
CLASS A FLOATING RATE
ASSET BACKED CERTIFICATE, Series 1996-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of insurance premium finance loans originated by AFCO Credit
Corporation and AFCO Acceptance Corporation and other assets and interests
constituting the Trust under the Pooling and Servicing Agreement dated as of
December 1, 1996 as supplemented by the Series 1996-1 Supplement dated as of
December 1, 1996 (collectively, the "Pooling and Servicing Agreement"), by and
between Mellon Bank, N.A., as Transferor (the "Transferor"), AFCO Credit
Corporation and AFCO Acceptance Corporation, as Servicer (collectively, the
"Servicer"), Premium Financing Specialists, Inc. and Premium Financing
Specialists of California, Inc., as Back-up Servicer (collectively, the "Back-up
Servicer") and The First National Bank of Chicago, as Trustee (the "Trustee").
(Not an interest in or obligation of
Mellon Bank, N.A. or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class A Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the corpus
of which consists of a portfolio of (i) the Receivables identified on the
Receivable Schedule delivered to the Trustee on the Initial Closing Date and
each Addition Date, (ii) the Transferor's security interest in the related
Unearned Premiums, (iii) 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, (iv) the Receivables Purchase Agreement, and
(v) all proceeds of the foregoing. The Series 1996-1 Certificates are issued in
two classes, the Class A Certificates (of which this certificate is one) and the
Class B Certificates, which are subordinated to the Class A Certificates in
certain rights of payment as described herein and in the Pooling and Servicing
Agreement.
Transferor has structured the Pooling and Servicing Agreement and the
Series 1996-1 Certificates with the intention that the Series 1996-1
Certificates will qualify under applicable tax law as indebtedness, and each of
Transferor, Servicer and each Series 1996-1 Holder (or Series 1996-1 Certificate
Owner) by acceptance of its Series 1996-1 Certificate (or in the case of a
Series 1996-1 Certificate Owner, by virtue of such Series 1996-1 Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Series 1996-1 Certificates
(or any 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 Series 1996-1 Holder agrees that it will cause any
Series 1996-1 Certificate Owner acquiring an interest in a Series 1996-1
Certificate through it to comply with the Pooling and Servicing Agreement as to
treatment of the Series 1996-1 Certificates as indebtedness for certain tax
purposes.
To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Pooling and Servicing Agreement.
This Class A Certificate is issued under and is subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Class A Holder by virtue
of the acceptance hereof assents and by which the Class A Holder is bound.
This Class A Certificate represents an interest in Mellon Bank Premium
Finance Loan Master Trust. This Class A Certificate does not represent an
obligation of, or an interest in, Transferor or Servicer, and neither the Series
1996-1 Certificates nor the Accounts or Receivables are insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency. This
Series 1996-1 Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of Trustee, by manual signature, this Class A Certificate shall not
be entitled to any benefit under the Pooling and Servicing Agreement, or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, Mellon Bank, N.A. has caused this Class A
Certificate to be duly executed under its official seal.
By:_________________________
Authorized Officer
Attested to:
By:_____________________
Secretary
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:
Authorized Signatory
<PAGE>
CLASS A Certificate
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Mellon Bank,
N.A. or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No. A-3 $40,000,000.00
CUSIP No. 58550UAA3
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
CLASS A FLOATING RATE
ASSET BACKED CERTIFICATE, Series 1996-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of insurance premium finance loans originated by AFCO Credit
Corporation and AFCO Acceptance Corporation and other assets and interests
constituting the Trust under the Pooling and Servicing Agreement dated as of
December 1, 1996 as supplemented by the Series 1996-1 Supplement dated as of
December 1, 1996 (collectively, the "Pooling and Servicing Agreement"), by and
between Mellon Bank, N.A., as Transferor (the "Transferor"), AFCO Credit
Corporation and AFCO Acceptance Corporation, as Servicer (collectively, the
"Servicer"), Premium Financing Specialists, Inc. and Premium Financing
Specialists of California, Inc., as Back-up Servicer (collectively, the "Back-up
Servicer") and The First National Bank of Chicago, as Trustee (the "Trustee").
(Not an interest in or obligation of
Mellon Bank, N.A. or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class A Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the corpus
of which consists of a portfolio of (i) the Receivables identified on the
Receivable Schedule delivered to the Trustee on the Initial Closing Date and
each Addition Date, (ii) the Transferor's security interest in the related
Unearned Premiums, (iii) 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, (iv) the Receivables Purchase Agreement, and
(v) all proceeds of the foregoing. The Series 1996-1 Certificates are issued in
two classes, the Class A Certificates (of which this certificate is one) and the
Class B Certificates, which are subordinated to the Class A Certificates in
certain rights of payment as described herein and in the Pooling and Servicing
Agreement.
Transferor has structured the Pooling and Servicing Agreement and the
Series 1996-1 Certificates with the intention that the Series 1996-1
Certificates will qualify under applicable tax law as indebtedness, and each of
Transferor, Servicer and each Series 1996-1 Holder (or Series 1996-1 Certificate
Owner) by acceptance of its Series 1996-1 Certificate (or in the case of a
Series 1996-1 Certificate Owner, by virtue of such Series 1996-1 Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Series 1996-1 Certificates
(or any 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 Series 1996-1 Holder agrees that it will cause any
Series 1996-1 Certificate Owner acquiring an interest in a Series 1996-1
Certificate through it to comply with the Pooling and Servicing Agreement as to
treatment of the Series 1996-1 Certificates as indebtedness for certain tax
purposes.
To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Pooling and Servicing Agreement.
This Class A Certificate is issued under and is subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Class A Holder by virtue
of the acceptance hereof assents and by which the Class A Holder is bound.
This Class A Certificate represents an interest in Mellon Bank Premium
Finance Loan Master Trust. This Class A Certificate does not represent an
obligation of, or an interest in, Transferor or Servicer, and neither the Series
1996-1 Certificates nor the Accounts or Receivables are insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency. This
Series 1996-1 Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of Trustee, by manual signature, this Class A Certificate shall not
be entitled to any benefit under the Pooling and Servicing Agreement, or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, Mellon Bank, N.A. has caused this Class A
Certificate to be duly executed under its official seal.
By:_________________________
Authorized Officer
Attested to:
By:_____________________
Secretary
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:
Authorized Signatory
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:
Authorized Signatory
<PAGE>
CLASS B CERTIFICATE
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Mellon Bank,
N.A. or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No. B-1 $25,000,000.00
CUSIP No.5855OUAB1
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
CLASS B FLOATING RATE
ASSET BACKED CERTIFICATE, Series 1996-1
Evidencing an Undivided Interest in a trust, the corpus of which
consists of a portfolio of insurance premium finance loans originated by AFCO
Credit Corporation and AFCO Acceptance Corporation and other assets and
interests constituting the Trust under the Pooling and Servicing Agreement dated
as of December 1, 1996 as supplemented by the Series 1996-1 Supplement dated as
of December 1, 1996 (collectively, the "Pooling and Servicing Agreement"), by
and between Mellon Bank, N.A., as Transferor (the "Transferor"), AFCO Credit
Corporation and AFCO Acceptance Corporation, as Servicer (collectively, the
"Servicer"), Premium Financing Specialists, Inc. and Premium Financing
Specialists of California, Inc., as Back-up Servicer (collectively, the "Back-up
Servicer") and The First National Bank of Chicago, as Trustee (the "Trustee").
(Not an interest in or obligation of
Mellon Bank, N.A. or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class B Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the corpus
of which consists of a portfolio of (i) the Receivables identified on the
Receivable Schedule delivered to the Trustee on the Initial Closing Date and
each Addition Date, (ii) the Transferor's security interest in the related
Unearned Premiums, (iii) 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, (iv) the Receivables Purchase Agreement, and
(v) all proceeds of the foregoing. The Series 1996-1 Certificates are issued in
two classes, the Class A Certificates and the Class B Certificates (of which
this certificate is one), which are subordinated to the Class A Certificates in
certain rights of payment as described herein and in the Pooling and Servicing
Agreement.
Transferor has structured the Pooling and Servicing Agreement and the
Series 1996-1 Certificates with the intention that the Series 1996-1
Certificates will qualify under applicable tax law as indebtedness, and each of
Transferor, Servicer and each Series 1996-1 Holder (or Series 1996-1 Certificate
Owner) by acceptance of its Series 1996-1 Certificate (or in the case of a
Series 1996-1 Certificate Owner, by virtue of such Series 1996-1 Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Series 1996-1 Certificates
(or any 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 Series 1996-1 Holder agrees that it will cause any
Series 1996-1 Certificate Owner acquiring an interest in a Series 1996-1
Certificate through it to comply with the Pooling and Servicing Agreement as to
treatment of the Series 1996-1 Certificates as indebtedness for certain tax
purposes.
To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Pooling and Servicing Agreement.
This Class B Certificate is issued under and is subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Class B Holder by virtue
of the acceptance hereof assents and by which the Class B Holder is bound.
This Class B Certificate represents an interest in Mellon Bank Premium
Finance Loan Master Trust. This Class B Certificate does not represent an
obligation of, or an interest in, Transferor or Servicer, and neither the Series
1996-1 Certificates nor the Accounts or Receivables are insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency. This
Series 1996-1 Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of Trustee, by manual signature, this Class B Certificate shall not
be entitled to any benefit under the Pooling and Servicing Agreement, or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, Mellon Bank, N.A. has caused this Class B
Certificate to be duly executed under its official seal.
By:_________________________
Authorized Officer
Attested to:
By:_____________________
Secretary
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
BY:_________________________
Authorized Signatory
<PAGE>
EXHIBIT A-1
FORM OF CERTIFICATE
CLASS A Certificate
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Mellon Bank,
N.A. or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No. A-1 $
CUSIP No.
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
CLASS A FLOATING RATE
ASSET BACKED CERTIFICATE, Series 1996-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of insurance premium finance loans originated by AFCO Credit
Corporation and AFCO Acceptance Corporation and other assets and interests
constituting the Trust under the Pooling and Servicing Agreement dated as of
December 1, 1996 as supplemented by the Series 1996-1 Supplement dated as of
December 1, 1996 (collectively, the "Pooling and Servicing Agreement"), by and
between Mellon Bank, N.A., as Transferor (the "Transferor"), AFCO Credit
Corporation and AFCO Acceptance Corporation, as Servicer (collectively, the
"Servicer"), Premium Financing Specialists, Inc. and Premium Financing
Specialists of California, Inc., as Back-up Servicer (collectively, the "Back-up
Servicer") and The First National Bank of Chicago, as Trustee (the "Trustee").
(Not an interest in or obligation of
Mellon Bank, N.A. or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class A Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the corpus
of which consists of a portfolio of (i) the Receivables identified on the
Receivable Schedule delivered to the Trustee on the Initial Closing Date and
each Addition Date, (ii) the Transferor's security interest in the related
Unearned Premiums, (iii) 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, (iv) the Receivables Purchase Agreement, and
(v) all proceeds of the foregoing. The Series 1996-1 Certificates are issued in
two classes, the Class A Certificates (of which this certificate is one) and the
Class B Certificates, which are subordinated to the Class A Certificates in
certain rights of payment as described herein and in the Pooling and Servicing
Agreement.
Transferor has structured the Pooling and Servicing Agreement and the
Series 1996-1 Certificates with the intention that the Series 1996-1
Certificates will qualify under applicable tax law as indebtedness, and each of
Transferor, Servicer and each Series 1996-1 Holder (or Series 1996-1 Certificate
Owner) by acceptance of its Series 1996-1 Certificate (or in the case of a
Series 1996-1 Certificate Owner, by virtue of such Series 1996-1 Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Series 1996-1 Certificates
(or any 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 Series 1996-1 Holder agrees that it will cause any
Series 1996-1 Certificate Owner acquiring an interest in a Series 1996-1
Certificate through it to comply with the Pooling and Servicing Agreement as to
treatment of the Series 1996-1 Certificates as indebtedness for certain tax
purposes.
To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Pooling and Servicing Agreement.
This Class A Certificate is issued under and is subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Class A Holder by virtue
of the acceptance hereof assents and by which the Class A Holder is bound.
This Class A Certificate represents an interest in Mellon Bank Premium
Finance Loan Master Trust. This Class A Certificate does not represent an
obligation of, or an interest in, Transferor or Servicer, and neither the Series
1996-1 Certificates nor the Accounts or Receivables are insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency. This
Series 1996-1 Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of Trustee, by manual signature, this Class A Certificate shall not
be entitled to any benefit under the Pooling and Servicing Agreement, or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, Mellon Bank, N.A. has caused this Class A
Certificate to be duly executed under its official seal.
By:_________________________
Authorized Officer
Attested to:
By:_____________________
Secretary
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:
Authorized Signatory
<PAGE>
FORM OF CERTIFICATE
CLASS A
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Mellon Bank,
N.A. or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No. R-2 $200,000,000
CUSIP No. 5855OUAA3
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
CLASS A FLOATING RATE
ASSET BACKED CERTIFICATE, Series 1996-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of insurance premium finance loans originated by AFCO Credit
Corporation and AFCO Acceptance Corporation and other assets and interests
constituting the Trust under the Pooling and Servicing Agreement dated as of
December 1, 1996 as supplemented by the Series 1996-1 Supplement dated as of
December 1, 1996 (collectively, the "Pooling and Servicing Agreement"), by and
between Mellon Bank, N.A., as Transferor (the "Transferor"), AFCO Credit
Corporation and AFCO Acceptance Corporation, as Servicer (collectively, the
"Servicer"), Premium Financing Specialists, Inc. and Premium Financing
Specialists of California, Inc., as Back-up Servicer (collectively, the "Back-up
Servicer") and The First National Bank of Chicago, as Trustee (the "Trustee").
(Not an interest in or obligation of
Mellon Bank, N.A. or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class A Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the corpus
of which consists of a portfolio of (i) the Receivables identified on the
Receivable Schedule delivered to the Trustee on the Initial Closing Date and
each Addition Date, (ii) the Transferor's security interest in the related
Unearned Premiums, (iii) 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, (iv) the Receivables Purchase Agreement, and
(v) all proceeds of the foregoing. The Series 1996-1 Certificates are issued in
two classes, the Class A Certificates (of which this certificate is one) and the
Class B Certificates, which are subordinated to the Class A Certificates in
certain rights of payment as described herein and in the Pooling and Servicing
Agreement.
Transferor has structured the Pooling and Servicing Agreement and the
Series 1996-1 Certificates with the intention that the Series 1996-1
Certificates will qualify under applicable tax law as indebtedness, and each of
Transferor, Servicer and each Series 1996-1 Holder (or Series 1996-1 Certificate
Owner) by acceptance of its Series 1996-1 Certificate (or in the case of a
Series 1996-1 Certificate Owner, by virtue of such Series 1996-1 Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Series 1996-1 Certificates
(or any 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 Series 1996-1 Holder agrees that it will cause any
Series 1996-1 Certificate Owner acquiring an interest in a Series 1996-1
Certificate through it to comply with the Pooling and Servicing Agreement as to
treatment of the Series 1996-1 Certificates as indebtedness for certain tax
purposes.
To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Pooling and Servicing Agreement.
This Class A Certificate is issued under and is subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Class A Holder by virtue
of the acceptance hereof assents and by which the Class A Holder is bound.
This Class A Certificate represents an interest in Mellon Bank Premium
Finance Loan Master Trust. This Class A Certificate does not represent an
obligation of, or an interest in, Transferor or Servicer, and neither the Series
1996-1 Certificates nor the Accounts or Receivables are insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency. This
Series 1996-1 Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of Trustee, by manual signature, this Class A Certificate shall not
be entitled to any benefit under the Pooling and Servicing Agreement, or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, Mellon Bank, N.A. has caused this Class A
Certificate to be duly executed under its official seal.
By:_________________________
Authorized Officer
Attested to:
By:_____________________
Secretary
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:
Authorized Signatory
<PAGE>
FORM OF CERTIFICATE
CLASS A
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Mellon Bank,
N.A. or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No. R-3 $40,000,000
CUSIP No. 5855OUAA3
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
CLASS A FLOATING RATE
ASSET BACKED CERTIFICATE, Series 1996-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of insurance premium finance loans originated by AFCO Credit
Corporation and AFCO Acceptance Corporation and other assets and interests
constituting the Trust under the Pooling and Servicing Agreement dated as of
December 1, 1996 as supplemented by the Series 1996-1 Supplement dated as of
December 1, 1996 (collectively, the "Pooling and Servicing Agreement"), by and
between Mellon Bank, N.A., as Transferor (the "Transferor"), AFCO Credit
Corporation and AFCO Acceptance Corporation, as Servicer (collectively, the
"Servicer"), Premium Financing Specialists, Inc. and Premium Financing
Specialists of California, Inc., as Back-up Servicer (collectively, the "Back-up
Servicer") and The First National Bank of Chicago, as Trustee (the "Trustee").
(Not an interest in or obligation of
Mellon Bank, N.A. or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class A Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the corpus
of which consists of a portfolio of (i) the Receivables identified on the
Receivable Schedule delivered to the Trustee on the Initial Closing Date and
each Addition Date, (ii) the Transferor's security interest in the related
Unearned Premiums, (iii) 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, (iv) the Receivables Purchase Agreement, and
(v) all proceeds of the foregoing. The Series 1996-1 Certificates are issued in
two classes, the Class A Certificates (of which this certificate is one) and the
Class B Certificates, which are subordinated to the Class A Certificates in
certain rights of payment as described herein and in the Pooling and Servicing
Agreement.
Transferor has structured the Pooling and Servicing Agreement and the
Series 1996-1 Certificates with the intention that the Series 1996-1
Certificates will qualify under applicable tax law as indebtedness, and each of
Transferor, Servicer and each Series 1996-1 Holder (or Series 1996-1 Certificate
Owner) by acceptance of its Series 1996-1 Certificate (or in the case of a
Series 1996-1 Certificate Owner, by virtue of such Series 1996-1 Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Series 1996-1 Certificates
(or any 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 Series 1996-1 Holder agrees that it will cause any
Series 1996-1 Certificate Owner acquiring an interest in a Series 1996-1
Certificate through it to comply with the Pooling and Servicing Agreement as to
treatment of the Series 1996-1 Certificates as indebtedness for certain tax
purposes.
To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Pooling and Servicing Agreement.
This Class A Certificate is issued under and is subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Class A Holder by virtue
of the acceptance hereof assents and by which the Class A Holder is bound.
This Class A Certificate represents an interest in Mellon Bank Premium
Finance Loan Master Trust. This Class A Certificate does not represent an
obligation of, or an interest in, Transferor or Servicer, and neither the Series
1996-1 Certificates nor the Accounts or Receivables are insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency. This
Series 1996-1 Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of Trustee, by manual signature, this Class A Certificate shall not
be entitled to any benefit under the Pooling and Servicing Agreement, or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, Mellon Bank, N.A. has caused this Class A
Certificate to be duly executed under its official seal.
By:_________________________
Authorized Officer
Attested to:
By:_____________________
Secretary
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:
Authorized Signatory
<PAGE>
EXHIBIT A-2
FORM OF CERTIFICATE
CLASS B CERTIFICATE
Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Mellon Bank,
N.A. or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
No. B-1 $
CUSIP No.
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
CLASS B FLOATING RATE
ASSET BACKED CERTIFICATE, Series 1996-1
Evidencing an Undivided Interest in a trust, the corpus of which consists of a
portfolio of insurance premium finance loans originated by AFCO Credit
Corporation and AFCO Acceptance Corporation and other assets and interests
constituting the Trust under the Pooling and Servicing Agreement dated as of
December 1, 1996 as supplemented by the Series 1996-1 Supplement dated as of
December 1, 1996 (collectively, the "Pooling and Servicing Agreement"), by and
between Mellon Bank, N.A., as Transferor (the "Transferor"), AFCO Credit
Corporation and AFCO Acceptance Corporation, as Servicer (collectively, the
"Servicer"), Premium Financing Specialists, Inc. and Premium Financing
Specialists of California, Inc., as Back-up Servicer (collectively, the "Back-up
Servicer") and The First National Bank of Chicago, as Trustee (the "Trustee").
(Not an interest in or obligation of
Mellon Bank, N.A. or any Affiliate thereof.)
This certifies that CEDE & CO. (the "Class B Holder") is the
registered owner of an Undivided Interest in a trust (the "Trust"), the corpus
of which consists of a portfolio of (i) the Receivables identified on the
Receivable Schedule delivered to the Trustee on the Initial Closing Date and
each Addition Date, (ii) the Transferor's security interest in the related
Unearned Premiums, (iii) 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, (iv) the Receivables Purchase Agreement, and
(v) all proceeds of the foregoing. The Series 1996-1 Certificates are issued in
two classes, the Class A Certificates and the Class B Certificates (of which
this certificate is one), which are subordinated to the Class A Certificates in
certain rights of payment as described herein and in the Pooling and Servicing
Agreement.
Transferor has structured the Pooling and Servicing Agreement and the
Series 1996-1 Certificates with the intention that the Series 1996-1
Certificates will qualify under applicable tax law as indebtedness, and each of
Transferor, Servicer and each Series 1996-1 Holder (or Series 1996-1 Certificate
Owner) by acceptance of its Series 1996-1 Certificate (or in the case of a
Series 1996-1 Certificate Owner, by virtue of such Series 1996-1 Certificate
Owner's acquisition of a beneficial interest therein), agrees to treat and to
take no action inconsistent with the treatment of the Series 1996-1 Certificates
(or any 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 Series 1996-1 Holder agrees that it will cause any
Series 1996-1 Certificate Owner acquiring an interest in a Series 1996-1
Certificate through it to comply with the Pooling and Servicing Agreement as to
treatment of the Series 1996-1 Certificates as indebtedness for certain tax
purposes.
To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Pooling and Servicing Agreement.
This Class B Certificate is issued under and is subject to the terms, provisions
and conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Class B Holder by virtue
of the acceptance hereof assents and by which the Class B Holder is bound.
This Class B Certificate represents an interest in Mellon Bank Premium
Finance Loan Master Trust. This Class B Certificate does not represent an
obligation of, or an interest in, Transferor or Servicer, and neither the Series
1996-1 Certificates nor the Accounts or Receivables are insured or guaranteed by
the Federal Deposit Insurance Corporation or any other governmental agency. This
Series 1996-1 Certificate is limited in right of payment to certain collections
respecting the Receivables, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of Trustee, by manual signature, this Class B Certificate shall not
be entitled to any benefit under the Pooling and Servicing Agreement, or be
valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, Mellon Bank, N.A. has caused this Class B
Certificate to be duly executed under its official seal.
By:_________________________
Authorized Officer
Attested to:
By:_____________________
Secretary
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
By:
Authorized Signatory
<PAGE>
EXHIBIT B
FORM OF MONTHLY PAYMENT INSTRUCTIONS AND
NOTIFICATION TO TRUSTEE
MELLON BANK, N.A.
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST Series 1996-1
MONTHLY PERIOD ENDING _________, ___
Capitalized terms used in this notice have their respective meanings set forth
in the Pooling and Servicing Agreement. References herein to certain sections
and subsections are references to the respective sections and subsections of the
Pooling and Servicing Agreement as supplemented by the Series 1996-1 Supplement.
This notice is delivered pursuant to Section 4.11.
A) AFCO Credit and AFCO Acceptance are Servicer
under the Pooling and Servicing Agreement.
B) The undersigned is a Servicing Officer.
C) The date of this notice is on or before the
related Transfer Date under the Pooling and
Servicing Agreement.
I. INSTRUCTION TO MAKE A WITHDRAWAL
Pursuant to Section 4.11, Servicer does hereby instruct Trustee (i) to
make withdrawals from the Finance Charge Account, the Principal Account, the
Distribution Account and the Principal Funding Account on ______________, ____,
which date is a Transfer Date under the Pooling and Servicing Agreement, in
aggregate amounts set forth below in respect of the following amounts and (ii)
to apply the proceeds of such withdrawals in accordance with Section 3 of the
Series 1996-1 Supplement and Section 4.11 of the Pooling and Servicing
Agreement:
A. Pursuant to Section 3 of the
Series 1996-1 Supplement:
1. Servicer Interchange $___________
B. Pursuant to subsection 4.11(a)(i):
1. Class A Monthly Interest at
the Class A Certificate Rate
on the Class A Investor
Interest $____________
2. Class A Deficiency Amount $____________
3. Class A Additional Interest $____________
C. Pursuant to subsection 4.11(a)(ii):
1. Class A Servicing Fee $____________
2. Accrued and unpaid Class A
Servicing Fee $____________
D. Pursuant to subsection 4.11(a)(iii):
l. Class A Investor Default
Amount $___________
E. Pursuant to subsection 4.11(a)(iv):
l. Portion of Excess Spread
from Class A Available Funds
to be allocated and distributed
as provided in Section 4.13 $___________
F. Pursuant to subsection 4.11(b)(i):
1. Class B Monthly Interest at
the Class B Certificate Rate
on the Class B Investor
Interest $___________
2. Class B Deficiency Amount $___________
3. Class B Additional Interest $___________
G. Pursuant to subsection 4.11(b)(ii):
1. Class B Servicing Fee $___________
2. Accrued and unpaid Class B
Servicing Fee $___________
H. Pursuant to subsection 4.11(b)(iii):
1. Portion of Excess Spread
from Class B Available Funds
to be allocated and distributed
as provided in Section 4.13 $___________
I. Pursuant to subsection 4.11(c)(i):
1. Collateral Interest
Servicing Fee, if applicable $___________
2. Accrued and unpaid
Collateral Interest
Servicing Fee, if applicable $__________
J. Pursuant to subsection 4.11(c)(ii):
1. Portion of Excess Spread
from Collateral Available
Funds to be allocated and
distributed as provided in
Section 4.13 $__________
Total $
K. Pursuant to subsection 4.11(d)(i):
1. Collateral Monthly Principal,
if any, applied in accordance
with the Loan Agreement $__________
L. Pursuant to subsection 4.11(d)(ii):
1. Amount to be treated as Shared
Principal Collections $__________
M. Pursuant to subsection 4.11(d)(iii):
1. Amount to be paid to
Transferor $___________
2. Unallocated Principal
Collections $___________
N. Pursuant to subsection 4.11(e)(i):
1. Class A Monthly Principal $___________
O. Pursuant to subsection 4.11(e)(ii):
1. Class B Monthly Principal $____________
P. Pursuant to subsection 4.11(e)(iii)
1. Collateral Monthly Principal to
be applied in accordance with the
Loan Agreement $____________
Q. Pursuant to subsection 4.11(e)(iv):
1. Amount to be treated as Shared
Principal Collections $____________
R. Pursuant to subsection 4.11(e)(v):
1. Amount to be paid to
Transferor $____________
2. Unallocated Principal Collections $____________
Total $____________
S. Pursuant to subsection 4.11(f):
1. Amount to be withdrawn from the
Principal Funding Account and
deposited into the Distribution
Account $____________
II. INSTRUCTION TO MAKE CERTAIN PAYMENTS
Pursuant to Section 4.11, Servicer does hereby instruct Trustee to pay
in accordance with Section 5.1 from the Distribution Account on ____________,
____, which date is a Distribution Date under the Pooling and Servicing
Agreement, amounts so deposited in the Distribution Account pursuant to Section
4.11 as set forth below:
A. Pursuant to subsection 4.11(g);
1. Amount to be distributed to
Class A Holders $____________
2. Amount to be distributed to
Class B Holders $____________
B. Pursuant to subsection 4.11(h)(i):
1. Amount to be distributed to the
Class A Holders $____________
C. Pursuant to subsection 4.11(h)(ii):
1. Amount to be distributed to the
Class B Holders $____________
III. Application OF EXCESS SPREAD
Pursuant to Section 4.13, Servicer does hereby instruct Trustee to
apply the Excess Spread with respect to the related Monthly Period and to make
the following distributions in the following priority:
A. The amount equal to the Class A Required
Amount, if any, which will be used to fund
the Class A Required Amount and be applied
in accordance with, and in the priority set
forth in, subsection 4.11(a) $________
B. The amount equal to the aggregate amount
of Class A Investor Charge-Offs which have
not been previously reimbursed (after giving
effect to the allocation on such Transfer
Date of certain other amounts applied
for that purpose) which will be treated as a
portion of Investor Principal Collections
and deposited into the Principal Account
on such Transfer Date $________
C. The amount equal to the Class B Required
Amount, if any, which will be used to
find the Class B Required Amount and be
applied first in accordance with, and
in the priority set forth in, subsection
4.11(b) and then any amount available
to pay the Class B Investor Default Amount
shall be treated as a portion of Investor
Principal Collections and deposited
into the Principal Account $________
D. The amount equal to the aggregate amount
by which the Class B Investor Interest
has been reduced below the initial
Class B Investor Interest for reasons
other than the payment of principal to the
Class B Holders (but not in excess of the
aggregate amount of such reductions which
have not been previously reimbursed) which
will be treated as a portion of Investor
Principal Collections and deposited into
the Principal Account $________
E. The amount equal to the Collateral Monthly
Interest plus the amount of any past due
Collateral Monthly Interest which will be
paid to the Collateral Interest Holder for
application in accordance with the Loan
Agreement $________
F. The amount equal to the aggregate amount
of accrued but unpaid Collateral Interest
Servicing Fees which will be paid to
Servicer if Transferor or The Bank of
New York is Servicer $________
G. The amount equal to the Collateral Default
Amount, if any, for the prior Monthly
Period which will be treated as a portion
of Investor Principal Collections and
deposited into the Principal Account $________
H. The amount equal to the aggregate amount
by which the Collateral Interest has been
reduced below the Required Collateral
Interest for reasons other than the
payment of principal to the Collateral
Interest Holder (but not in excess of
the aggregate amount of such reductions
which have not been previously reimbursed)
which will be treated as a portion of
Investor Principal Collections and
deposited into the Principal Account $________
I. On each Transfer Date from and after the
Reserve Account Funding Date, but prior
to the date on which the Reserve Account
terminates as described in subsection
4.l7(f), the amount up to the excess,
if any, of the Required Reserve Account
Amount over the Available Reserve Account
Amount which shall be deposited into the
Reserve Account $________
J. An amount equal to all other amounts due
under the Loan Agreement (to the extent
payable from "Available Non-Principal Funds,"
as defined therein) shall be deposited
into the Distribution Account and applied
in accordance with the Loan Agreement $________
K. The balance, if any, after giving effect
to the payments made pursuant to subparagraphs
(a) through (j) above shall constitute
"Excess Finance Charge Collections" to be
applied with respect to other Series in
accordance with Section 4.5 $________
IV. REALLOCATED PRINCIPAL COLLECTIONS
Pursuant to Section 4.14, Servicer does hereby instruct Trustee to
withdraw from the Principal Account and apply Reallocated Principal Collections
pursuant to Section 4.14 with respect to the related Monthly Period in the
following amounts:
A. Reallocated Collateral Principal Receivables $_____________
B. Reallocated Class B Principal Receivables $_____________
V. ACCRUED AND UNPAID AMOUNTS
After giving effect to the withdrawals and transfers to be made in
accordance with this notice, the following amounts will be accrued and unpaid
with respect to all Monthly Periods preceding the current calendar month
A. Subsections 4.11(a)(i) and (b)(i):
(1) The aggregate amount of the Class A
Deficiency Amount $____________
(2) The aggregate amount of Class B
Deficiency Amount $____________
B. Subsections 4.11(a)(ii) and (b)(ii):
The aggregate amount of all accrued and
unpaid Investor Monthly Servicing Fees $_____________
C. Section 4.12:
The aggregate amount of all unreimbursed
Investor Charge Offs $_____________
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate this __ day of__________, ___.
MELLON BANK, N.A.
Transferor
By:______________________________
Name:
Title:
EXHIBIT 4.3
RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT dated as of December 1, 1996 (this
"Agreement"), is among AFCO Credit Corporation, a New York corporation, AFCO
Acceptance Corporation, a California corporation (each, an "Originator" and,
collectively, the "Originators") and Mellon Bank, N.A., a national banking
association ("Purchaser").
W I T N E S S E T H:
WHEREAS, each of the Originators intends to sell Receivables to the
Purchaser on the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, the Purchaser desires to purchase Receivables from the
Originators on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, to obtain the necessary funds to purchase such Receivables,
the Purchaser has entered into the Pooling and Serving Agreement;
NOW, THEREFORE, in consideration of premises and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADDITION DATE" means the date Additional Receivables are added to the
Receivables Schedule pursuant to subsection 2.1(h).
"ADDITIONAL PROPERTY" shall have the meaning set forth in subsection
2.1(b).
"CONVEYED PROPERTY" shall have the meaning set forth in subsection
2.1(a).
"POOLING AND SERVICING AGREEMENT" means the Pooling and Servicing
Agreement dated as of December 1, 1996, among the Purchaser, the Servicer, the
Back-up Servicer and the Trustee, as such agreement may be amended,
supplemented, waived, or otherwise modified from time to time.
"PURCHASE PRICE" means with respect to any Receivable and as of any
date of determination the outstanding principal balance of such Receivable
conveyed to the Purchaser pursuant to Section 2.1(a) and 2.1(b).
All capitalized terms used herein and not otherwise defined have the
meanings assigned such terms in the Pooling and Servicing Agreement.
SECTION 1.2 ACCOUNTING AND UCC TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with United States
generally accepted accounting principles ("U.S. GAAP"); and all terms used in
Article 9 of the UCC that are used but not specifically defined herein are used
herein as defined therein.
ARTICLE II
SECTION 2.1 THE PURCHASES. (a) Each Originator hereby sells,
transfers, assigns and otherwise conveys to the Purchaser as of the Initial
Closing Date without recourse, all of its right, title and interest in and to
(i) each Premium Finance Agreement (including the power of attorney included
therein) that have an Aggregate Receivable Balance as of the day prior to the
Initial Closing Date and which as of its Cut Off Date satisfies the eligibility
criteria set forth in the definition of "Eligible Receivables" in the Pooling
and Servicing Agreement (the "Initial Receivables"), (ii) the Originator's
security interest in the related Unearned Premiums, (iii) all monies due or to
become due with respect to each such Initial Receivable on or after its 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, refunds and rebates due on such Receivables and, (iv) all proceeds of
all of the foregoing (the property described in clauses (i) - (iv) above being,
the "Conveyed Property").
(b) Each Originator hereby sells, transfers, assigns, and otherwise
conveys to the Purchaser without recourse, as of the related Addition Date, all
of its right title and interest in and to (i) each Premium Finance Agreement
(including the Power of Attorney included therein) originated on or after the
Initial Closing Date which as of the date of its origination satisfies the
eligibility criteria set forth in the definition of "Eligible Receivables" in
the Pooling and Servicing Agreement ("Additional Receivables" and together with
the Initial Receivables, the "Receivables"); PROVIDED HOWEVER that neither
Originator shall be required to sell, transfer, assign or convey to the
Purchaser any Premium Finance Agreement which was originated after the Initial
Closing Date, but prior to the date on which the state in which the stated
address of the Obligor in the related Premium Finance Agreement is located
became a Permitted State, (ii) such Originator'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,
refunds or rebates due on such Additional Receivables, and (iv) all of the
proceeds of the foregoing (the property described in clauses (i) - (iv) above
being, the "Additional Property").
(c) In connection with any sale, transfer, assignment and conveyance
pursuant Section 2.1(a) or Section 2.1(b), each Originator 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 Purchaser, and to deliver a file-stamped copy of such
financing statement or continuation statement or other evidence of such filing
to the Purchaser on or prior to the Initial Closing Date (and in the case of any
continuation statements filed pursuant to this Section 2.1, as soon as
practicable after receipt thereof by the applicable Originator).
(d) In connection with any sale, transfer, assignment and conveyance
pursuant to Section 2.1, each Originator agrees, at its own expense, (i) on or
prior to the Initial Closing Date and each Addition Date, as applicable, to
indicate in its computer files that the Initial Receivables and the related
Additional Receivables, as applicable, have been sold to Transferor by
identifying such Initial Receivables or 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) Each Originator covenants and agrees that it shall not sell,
transfer, assign or convey on any day any Receivable to the Purchaser which if
transferred by the Purchaser to the Trust on such day to the Trust would cause
as of such day, after giving effect to such transfer (i) an Excess Obligor
Concentration Amount (as calculated on the Determination Date immediately
preceding such day) to exist or be increased; (ii) an Excess Insurer
Concentration Amount (as calculated on the Determination Date immediately
preceding such day) to exist or be increased; (iii) the Investment Grade Insurer
Percentage (as calculated on the Determination Date immediately preceding such
day) to be less than the required Investment Grade Insurer Percentage; (iv) the
Investment Grade Insurer Percentage (as calculated on the Determination Date
immediately preceding such day) to be decreased, if on such day the Investment
Grade Insurer Percentage is equal to or less than the Required Investment Grade
Insurer Percentage; (v) the Top 10 Insurer Percentage (as calculated on the
Determination Date immediately preceding such day) to exceed the Maximum Top
Insurer Percentage; (vi) the Top 10 Insurer Percentage to be increased, if on
such day the Top 10 Insurer Percentage (as calculated on the Determination Date
immediately preceding such day) is equal to or greater than the Maximum Top 10
Insurer Percentage; or (vii) a breach of any Rating Agency Limitation specified
in a Supplement.
(f) Notwithstanding anything to the contrary contained in Section 6.1,
subsection 2.1(e) may be amended at any time by the Servicer, the Trustee and
the Transferor with the consent of the Credit Enhancement Provider, but without
the consent of the Holders, if the Rating Agency Condition has been satisfied
with respect to such amendment.
(g) It is the intention of each Originator that the sale, transfer,
assignment and conveyance contemplated by this Agreement shall constitute a sale
of the Conveyed Property and Additional Property from each Originator to the
Purchaser and the beneficial interest in and title to the Receivables and such
other Conveyed Property and Additional Property shall not be part of an
Originator's estate in the event of the filing of a bankruptcy petition by or
against such Originator under any bankruptcy law. In the event that,
notwithstanding the intent of each Originator, the sale, transfer, assignment
and conveyance contemplated hereby is held not to be a sale, this Agreement
shall constitute a grant to the Purchaser of a security interest in the Conveyed
Property and Additional Property of the applicable Originator.
(h) Each Originator shall on the Closing Date prepare the Receivables
Schedule in accordance with terms of the Pooling and Servicing Agreement with
respect to each of the Initial Receivables and Additional Receivables to the
Receivables Schedule on each Addition Date. The Originators shall deliver the
Receivables Schedule to the Purchaser on the Initial Closing Date and on each
Addition Date after any required additions pursuant to this subsection 2.1(h)
are made to the Receivables Schedule on such date.
SECTION 2.2 PAYMENTS AND COMPUTATIONS. (a) The Purchase Price for
Receivables shall be paid or provided for on the Initial Closing Date, with
respect to the Initial Receivables , or on the related Addition date, with
respect to Additional Receivables in either of the following ways, at the
election of the Purchaser: (i) by payment in cash in immediately available
funds; or (ii) in the event that the total Purchase Price is not paid in full in
cash by the Purchaser on the date of Purchase, the applicable Originator shall
receive an unsecured promissory note (each such note, a "Purchase Note") from
the Purchaser in an original principal amount equal to the portion of such cash
shortfall owed to such Originator. The characteristics of each Purchase Note
shall be as follows:
(i) interest shall accrue on the outstanding principal amount of
each Purchase Note at a per annum rate of interest (calculated on the
basis of a 360-day year of twelve 30-day months) equal to 5.55%;
(ii) the outstanding principal of and accrued interest on each
Purchase Note shall be payable on demand by the applicable
Originators;
(iii) all amounts paid with respect to an outstanding Purchase
Note shall be allocated first to accrued interest until all such
interest is paid, and then to outstanding principal;
(iv) the obligation of the Purchaser to repay Purchase Notes
issued to the applicable Originator from the amounts paid to such
Purchaser shall not be subject to any right of setoff or counterclaim
whatsoever.
The Purchaser, at its option, may repay all or any portion of the
accrued interest on and principal of any Purchase Note at any time.
(b) The Purchaser shall pay all amounts to be paid in cash with
respect to the purchases to the Originator on the date of the purchase thereof
and shall pay all amounts in respect of principal of and interest on any
Purchase Note in accordance with the terms thereof.
SECTION 2.3 REPURCHASE OF RECEIVABLES. If (i) any of the
representations or warranties of any Originator contained in Sections 3.2 or 3.3
hereof were not true with respect to such Originator or any Receivable, as
applicable, at the time such representation or warranty was made, or (ii) if the
Originators breach any of the covenants contained in subsection 2.1(e), and as a
result thereof, the Purchaser is required to repurchase any Receivable from the
Trust pursuant to subsection 2.4(d) of the Pooling and Servicing Agreement, then
the Originator of the repurchased Receivable shall be obligated to pay to the
Purchaser immediately upon the Purchaser's demand therefor an amount equal to
the amount of all losses, damages and liabilities of the Purchaser that result
from such breach, including but not limited to the cost of the Purchaser's
repurchase obligations pursuant to subsection 2.4(d) of the Pooling and
Servicing Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents and warrants to the Originators as follows:
(a) Organization and Good Standing. The Purchaser 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.
(b) Due Qualification. The Purchaser 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 the Purchaser required under Federal and
Pennsylvania law (including any necessary licenses required under the Licensing
Laws of each Permitted State).
(c) Purchaser's Deposit Accounts. As of the Initial Closing Date,
deposits in the Purchaser's deposit accounts were insured to the limits provided
by law by BIF.
(d) Binding Obligation; Valid Transfer and Assignment.
(i) The execution and delivery of this Agreement by
the Purchaser and the consummation of the transactions provided
for in this Agreement have been duly authorized by the Purchaser by all
necessary corporate action on its part, and this Agreement will remain from the
time of its execution, an official record of the Purchaser.
(ii) This Agreement constitutes legal, valid and binding
obligations of the Purchaser, enforceable against the Purchaser in accordance
with its 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 performance of the transactions contemplated by this 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 the Purchaser 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 performance of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof will not conflict with or violate any
Requirements of Law applicable to the Purchaser.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF EACH OF THE ORIGINATORS.
(a) Organization and Good Standing. Each Originator is a corporation
duly organized and validly existing in good standing under the laws of the
jurisdiction of its incorporation 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.
(b) Due Qualification. Each Originator 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 business, and has obtained all necessary
licenses and approvals with respect to such Originator required under federal
and applicable state law.
SECTION 3.3 REPRESENTATIONS AND WARRANTIES OF EACH ORIGINATOR RELATING
TO THIS AGREEMENT AND THE RECEIVABLES.
(a) Binding Obligation; Valid Transfer and Assignment. Each Originator
jointly and severally hereby represents and warrants to the Purchaser that, as
of the Initial Closing Date and as of any Addition Date:
(i) The execution and delivery of this Agreement by each
Originator and the consummation of the transactions provided for in this
Agreement have been duly authorized by each Originator by all necessary
corporate action on its part, and this Agreement will remain, from the time of
its execution, an official record of each Originator.
(ii) This Agreement constitutes legal, valid and binding
obligations of each Originator, enforceable against each Originator in
accordance with its 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 performance of the transactions contemplated by this Agreement,
and the fulfillment of the terms hereof 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 performance of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof will not conflict with or violate any
Requirements of Law applicable to each Originator.
(v) Title. (i) It is the intention of each Originator that the
transfer and assignment contemplated by this Agreement constitute a sale of the
Conveyed Property and Additional Property from each Originator to the Transferor
and that the beneficial interest in and title to such Conveyed Property and
Additional Property not be part of the debtor's estate in the event of the
filing of a petition for bankruptcy or insolvency by or against each Originator.
No Conveyed Property and Additional Property has been sold, transferred,
assigned or pledged by each Originator to any Person other than
the Transferor pursuant to this Agreement. Immediately prior to the sale,
transfer, assignment and conveyance contemplated by this Agreement, each
Originator had good and marketable title to the Conveyed Property and Additional
Property conveyed by it to the Transferor on such date, free and clear of all
Liens and, immediately upon the transfer thereof, the Transferor shall have good
and marketable title to such Conveyed Property and Additional Property free and
clear of all Liens.
(vi) No Proceedings. There are no proceedings or
investigations pending or, to the best knowledge of each Originator, threatened
against an Originator before any court, regulatory body, administrative agency,
or other tribunal or governmental instrumentality (i) asserting the invalidity
of this Agreement (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, (iii) seeking any determination or
ruling that, in the reasonable judgment of the Originators, would materially and
adversely affect the performance by the Originators of their obligations under
this Agreement or (iv) seeking any determination or ruling that would materially
and adversely affect the validity or enforceability of this Agreement,
(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 performance of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof, have been obtained.
(viii) Receivable Schedule. The related Receivable Schedule is
an accurate and complete listing in all material respects of (A) on the Initial
Closing Date, all the Receivables as of the Cut Off Date and (B) on the day any
Additional Receivables are conveyed to the Purchaser, the related Additional
Receivables. In either case, the information contained therein with respect to
the identity of such Receivables is true and correct in all material respects as
of the Cut Off Date or on the day any Additional Receivable is conveyed to the
Purchaser, for any related Additional Receivable. As of November 30, 1996, the
aggregate amount of Receivables was $614,886,198.16, of which $600,754,711.61
were Principal Receivables.
(b) Eligibility of Receivables. Each Originator hereby jointly and
severally represents and warrants to the Purchaser that as of the Cut Off Date,
with respect to the Initial Receivables, and as of the related Addition Date,
with respect to Additional Receivables, such that:
(i) Each Receivable conveyed to the Purchaser on
such date is an Eligible Receivable.
(ii) Each Receivable conveyed to the Purchaser on such date
has been conveyed to the Purchaser free and clear of any Lien of any Person
claiming through or under Originators or any of its Affiliates (other than Liens
permitted under subsection 2.5(b) of the Pooling and Servicing Agreement) and in
compliance, in all material respects, with all Requirements of Law applicable to
the Originators.
(c) Notice of Breach. The representations and warranties set forth in
this Section 3.3 shall survive the transfer and assignment of the respective
Receivables to the Purchaser. Upon discovery by the Purchaser or any Originator
of a breach of any of the representations and warranties set forth in this
Section 3.3, the party discovering such breach shall give prompt written notice
to the other parties mentioned above. The Originators agree to cooperate with
the Purchaser in attempting to cure any such breach.
ARTICLE IV
GENERAL COVENANTS
SECTION 4.1 COVENANTS OF EACH ORIGINATOR. Each Originator jointly and
severally covenants that:
(a) Receivables to be General Intangibles. The Originators will take
no action to cause any Receivable to be anything other than a general intangible
as defined under the UCC of the States of New York and California.
(b) Security Interests. Except for the conveyances hereunder, the
Originators 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; The
Originators shall immediately notify the Purchaser of the existence of any Lien
on any Receivable; and the Originators shall defend the right, title and
interest of the Purchaser 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 4.1(b) shall prevent
or be deemed to prohibit the Originators 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 an Originator 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. If any Originator is unable for any reason
to transfer Receivables to the Purchaser in accordance with the provisions of
this Agreement (including by reason of the application of an order by any
Federal governmental agency having regulatory authority over such Originator or
any court of competent jurisdiction that Originator not transfer any additional
Principal Receivables to the Purchaser) then, in any such event the Originators
agree to allocate and pay to the Purchaser, after the date of such inability,
all Collections with respect to Principal Receivables, and all amounts which
would have constituted Collections with respect to Principal Receivables but for
such Originator's inability to transfer such Receivables (up to an aggregate
amount equal to the amount of Principal Receivables in the Trust on such date).
(d) The Originators agree to jointly and severally indemnify, defend
and hold the Purchaser harmless from and against any and all loss, liability,
damage, judgment, claim, deficiency or expense including interest, penalties,
reasonable attorneys' fees and disbursements and amounts paid in settlement to
which the Company may become subject insofar as such loss, liability, damage,
judgment, claim, deficiency or expense arises out of, or is based upon or
relates to, a breach by an Originator of any warranty, representation, covenant
or agreement contained in this Agreement.
(e) Each Originator hereby covenants and agrees not to decrease the
interest rates payable under Premium Finance Agreements it originates on or
after the Initial Closing Date that are eligible for sale hereunder (other than
as a result of a decrease in LIBOR) so as to materially increase the likelihood
that a Pay Out Event will occur or the Class A Available Funds or Class B
Available Funds will be less than the Class A Optimal Amount or the Class B
Optimal Amount, respectively on any Distribution Date.
(f) Each Originator hereby agrees that in the event Premium Finance
Agreements of the same Obligor are owned by any such Originator and by the
Purchaser or the Trust, to the extent payments are received from such Obligors
on such Receivables, such amounts will be applied first as Collections until the
Aggregate Receivable Balance for such Receivable is zero.
ARTICLE V
PURCHASE TERMINATION EVENTS
SECTION 5.1 PURCHASE TERMINATION. If Purchaser or an Originator 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 the Purchaser or an
Originator (an "Insolvency Event"), the Originators, in the case of an
insolvency of the Purchaser, or the insolvent Originator in the case of an
insolvency of an Originator shall on the day of such Insolvency Event (the
"Appointment Day") immediately cease to transfer Receivables to the Purchaser
and shall promptly give notice to the Purchaser of such Insolvency Event.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 AMENDMENT.
(a) Subject to subsection 2.1(f), this Agreement may be amended in
writing from time to time by the Originators and the Purchaser, 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 or
Credit Enhancement Provider; PROVIDED further that the Rating Agency Condition
shall have been satisfied with respect to such action.
(b) Subject to subsection 2.1(f), this Agreement may also be amended
in writing from time to time by Purchaser and the Originators with the consent
of each Credit Enhancement Provider and 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 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, or (ii)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of each Investor Holder of all Series adversely affected.
(c) Promptly after the execution of any such amendment (other than an
amendment pursuant to subsection (a)), Purchaser 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.
(d) It shall not be necessary for the consent of Investor Holders
under this Section 6.1 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.
SECTION 6.2 NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telex,
facsimile or cable communication) and mailed, telegraphed, telexed, transmitted,
cabled or delivered, if to the Originators, to AFCO Credit Corporation, 10
Hanover Square Street, New York, New York 10004 Attention: Fredrick B. Ollett
III, Vice President and Chief Financial Officer, with a copy to Robert Ratner,
Esq., Senior Vice President, General Counsel and Secretary; and if to the
Purchaser, to Mellon Bank, N.A., One Mellon Bank Center, Suite 1910, 500 Grant
Street, Pittsburgh, Pennsylvania 15258 Attention: Chief Financial Officer and
General Counsel, or as to each party, at such other address as shall be
designated by such party in a written notice to the other parties.
SECTION 6.3 NO WAIVER; REMEDIES. No failure on the part of the
Purchaser to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 6.4 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of each Originator and the Purchaser and their respective
successors and assigns, except that no Originator shall have the right to assign
its rights hereunder or any interest herein without the prior written consent of
the Purchaser. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect as between the Purchaser and each Originator until such
time, after the Purchase Termination Date applicable to such Originator, as the
Purchaser shall not have any net ownership interest in any Receivables;
PROVIDED, HOWEVER, that the indemnification provisions of Article VIII shall be
continuing and shall survive any termination of this Agreement.
SECTION 6.5 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 6.6 ACKNOWLEDGMENT OF ASSIGNMENTS. Each of the Originators
hereby acknowledges and consents to the assignment by the Purchaser of
Receivables and the rights of the Purchaser under this Agreement pursuant to the
Pooling and Servicing Agreement.
SECTION 6.7 CUSTODY OF PREMIUM FINANCE AGREEMENTS. For administrative
convenience and in contemplation of the subsequent transfer by the Purchaser to
the Trustee of the Receivables sold to the Purchaser hereunder, each Originator
hereby acknowledges its obligation to maintain custody of the Premium Finance
Agreements sold to the Purchaser hereunder under the Pooling and Servicing
Agreement and hereby agrees to maintain custody of the Premium Finance
Agreements in accordance with the Pooling and Servicing Agreement and, prior to
its sale to the Trustee, permit the Purchaser access to such Premium Finance
Agreements at all times during normal business hours.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE ORIGINATORS:
AFCO CREDIT CORPORATION
By:/s/ Michael M. Nisbet
Title: President and CEO
AFCO ACCEPTANCE CORPORATION
By:/s/ Michael M. Nisbet
Title: President and CEO
THE PURCHASER:
MELLON BANK, N.A.
By:/s/ Steven G. Elliot
Title: _______________________
EXHIBIT 19.1
MONTHLY CERTIFICATEHOLDERS STATEMENT
MELLON BANK PREMIUM FINANCE LOAN MASTER TRUST
SERIES 1996-1
Pursuant to the Pooling and Servicing Agreement, dated as of December
1,1996 (as may be amended, from time to time, the Agreement ), as supplemented
by the Series 1996-1 Supplement (as amended and Supplemented, the Series
Supplement ), each among AFCO Credit and AFCO Acceptance, as Servicer and Seller
and The First National Bank of Chicago, as Trustee, the Servicer is required to
prepare certain information each month regarding distributions to
Certificateholders and the performance of the Trust. The information with
respect to the applicable Distribution Date and Monthly Period is set forth
below.
Monthly Period: Dec-96
Determination Date: 9-Jan-97
Number of Days in Period: 27
Distribution Date: 15-Jan-97
Period 1
(Revolving = 0-51
Controlled Accumulation = 52-60)
<TABLE>
<CAPTION>
A. ORIGINAL DEAL PARAMETERS
<S> <C> <C>
(a) Class A Initial Investor Interest $440,000,000.00 88.00%
(b) Class B Initial Investor Interest $25,000,000.00 5.00%
(c) Collateral Initial Interest $35,000,000.00 7.00%
(d) Total Initial Investor Interest $500,000,000.00
(e) Minimum Transferor Interest 5.00000%
(f) 3-Month LIBOR as of most recent reset date 5.56250%
(g) Current Class A Certificate Rate ((f) + 0.11%) 5.67250%
(h) Current Class B Certificate Rate ((f) + 0.32%) 5.88250%
(i) Current Class C Certificate Rate 6.25736%
(j) Servicing Fee Rate 0.50000%
I. RECEIVABLES IN THE TRUST
(a) Beginning of Period Aggregate Receivables $614,886,198.16
(b) Beginning of Period Finance Charge Receivables $14,131,486.55
(c) Beginning of Period Principal Receivables $600,754,711.61
(d) End of Period Aggregate Receivables $553,956,190.34
(e) End of Period Finance Charge Receivables $12,802,141.65
(f) End of Period Principal Receivables $541,154,048.69
II. INVESTOR INTERESTS AND INVESTOR PERCENTAGES
(a) Class A Initial Investor Interest $440,000,000.00 88.00%
(b) Class B Initial Investor Interest $25,000,000.00 5.00%
(c) Collateral Initial Interest $35,000,000.00 7.00%
(d) Total Initial Investor Interest (a + b + c) $500,000,000.00
(e) Beginning of Period Class A Investor Interest $440,000,000.00 88.00%
(f) Beginning of Period Class B Investor Interest $25,000,000.00 5.00%
(g) Beginning of Period Collateral Interest $35,000,000.00 7.00%
(h) Beginning of Period Total Investor Interest (e + f + g) $500,000,000.00
(i) End of Period Class A Investor Interest (e - (IX.b) - (X.f)) $440,000,000.00 88.00%
(j) End of Period Class B Investor Interest (f - (IX.e) - (X.k)) $25,000,000.00 5.00%
(k) End of Period Collateral Interest (g - (IX.h) - (X.n) - (X.o)) $35,000,000.00 7.00%
(l) End of Period Total Investor Interest (i + j + k) $500,000,000.00
(m) Floating Investor Percentage (h / (I.c)) 83.23%
(n) Class A Floating Allocation (e / h) 88.00%
(o) Class B Floating Allocation (f / h) 5.00%
(p) Class C Floating Allocation (g / h) 7.00%
(q) Total Servicing Fee (h * (A.j) / 12)
(for first Transfer Date-section 3, Supplement) $83,333.33
(r) Aggregate Investor Default Amount (m * (IV.j)) $0.00
III. TRANSFEROR INTEREST
(a) Beginning Transferor Interest (I.c - II.h) $100,754,711.61
(b) Ending Transferor Interest (I.f - II.l) $41,154,048.69
(c) Minimum Transferor Interest (A.e * II.l) $25,000,000.00
(d) Minimum Aggregate Principal Receivables (II.h) $500,000,000.00
(e) Excess Funding Account Balance at end of Period $0.00
(f) Sum of Principal Receivables and Excess Funding Account (I.f + e) $541,154,048.69
IV. PERFORMANCE SUMMARY
COLLECTIONS:
(a) Collections of Principal Receivables $137,932,582.20
(b) Collections of Finance Charge Receivables
(inc. net recoveries, if any) $4,536,119.96
(c) Collections of Principal and Finance Charge Receivables $142,468,702.16
(d) Late Charges Collected $618,111.17
(e) Total Collections (a + b + d) $143,086,813.33
DELINQUENCIES AND LOSSES:
(f) End of the month delinquencies:
(g) 30 days delinquent $22,800.43
(h) 60 days delinquent $0.00
(i) 90 days delinquent $0.00
(j) 120 + days delinquent $0.00
(k) Total 30 + days delinquent (g + h + i + j) $22,800.43
(l) Aggregate Default Amount (net of recoveries) $0.00
(m) AFCO is Servicer? Yes
V. ALLOCATION AND APPLICATION OF COLLECTIONS
(a) Class A Available Funds ((II.n)*[(II.m)*(IV.b + IV.d)]) $3,775,021.07
(b) Class A Optimal Interest ([(A.g)*(II.a)*(# days)] /360) $1,871,925.00
(c) Class A Monthly Interest (Lesser of (a) or (b)) $1,871,925.00
(d) Class A Deficiency Amount $0.00
(e) Class A Additional Interest $0.00
(f) Class A Servicing Fee ([(II.n) * (A.j) * (II.l)] /12)
(per section 3, Supplement) $73,333.33 $0.00 Unpaid Servicing
this month
(g) Unpaid Class A Servicing from prior periods $0.00 $0.00 Cumulative Unpaid
Servicing
(h) Class A Investor Default Amount ((II.n) * (II.r)) $0.00
(i) Class A contribution to Excess Spread (a - c - d - e - f - g - h $1,829,762.74
(j) Class B Available Funds ((II.o)*[(II.m)*(IV.b + IV.d))]) $214,489.83
(k) Class B Optimal Interest ([(A.h)*(II.b)*(# days)] /360) $110,296.88
(l) Class B Monthly Interest (Lesser of (j) or (k)) $110,296.88
(m) Class B Deficiency Amount $0.00
(n) Class B Additional Interest $0.00
(o) Class B Servicing Fee ([(II.o)*(A.j)*(II.l)] /12)
(per section 3, Supplement) $4,166.67 ##### Unpaid Servicing
this month
(p) Unpaid Class B Servicing from prior periods $0.00 $0.00 Cumulative Unpaid
Servicing
(q) Class B contribution to Excess Spread (j - l - m - n - o - p) $100,026.29
(r) Collateral Available Funds ((II.p)*[(II.m)*(IV.b + IV.d)]) $300,285.77
(s) Collateral Servicing Fee (if NOT AFCO) $0.00
(t) Collateral Interest contribution to Excess Spread (r - s) $300,285.77
(u) Total Excess Spread (i + q + t) $2,230,074.80
(v) Class A Required Amount $0.00
(w) Unreimbursed Class A Investor Charge-Offs $0.00
(x) Class B Required Amount $0.00
(includes Class B Investor Default Amount (II.o*II.r))
(y) Unreimbursed Class B Investor Charge-Offs $0.00
(z) Collateral Monthly Interest ([(A.i)*(II.c)*(# days)] / 360) $164,255.82
(aa) Coll. Int. Svcg Fee (if AFCO) ([(II.q)*(A.j)*(II.l)] / 12)
(per sect. 3, Supplement) $5,833.33
(ab) Collateral Interest Default Amount (II.p*II.r) $0.00
(ac) Unreimbursed Collateral Interest Charge-Offs $0.00
(ad) Reserve Account Funding Date month 48
(ae) Reserve Fund Cap 0.50%
(af) Required Reserve Account Amount $0.00
(ag) Reserve Account Balance $0.00
(ah) Payable under the Loan Agreement $0.00
(ai) Class A Shortfall Amount $0.00
(aj) Class B Shortfall Amount $0.00
(ak) Excess Finance Charge Collections (u-v-w-x-y-z-aa-ab-ac $2,059,985.65
-ag-ah-ai-aj)
(al) Excess Finance Charge Percentage (aj / II.h)*12 4.94%
VI. YIELD and BASE RATE
Base Rate
(The sum of the Class A Rate, Class B Rate, and Class C Rate and
Investor Servicing Fee (0.5%) divided by the Investor Interest)
(a) Base Rate (current month) 6.22%
(b) Base Rate (prior month) 0.00%
(c) Base Rate (2 months ago) 0.00%
(d) 3 Month Average Base Rate 6.22%
Gross Portfolio Yield
(Series 1996-1 Finance Charge + Late Charge Collections allocable to
investors/total investor interest)
(e) Gross Portfolio Yield (current month) 10.30%
(f) Gross Portfolio Yield (prior month) 0.00%
(g) Gross Portfolio Yield (2 months ago) 0.00%
(h) 3 Month Average Portfolio Yield 10.30%
Portfolio Yield
(Series 1996-1 Finance Charge + Late Charge Collections allocable to
investors less investor default amount/total investor interest)
(e) Portfolio Yield (current month) 10.30%
(f) Portfolio Yield (prior month) 0.00%
(g) Portfolio Yield (2 months ago) 0.00%
(h) 3 Month Average Portfolio Yield 10.30%
Portfolio Yield - Base Rate
(e) Portfolio Adjusted Yield (current month) 4.07%
(f) Portfolio Adjusted Yield (prior month) 0.00%
(g) Portfolio Adjusted Yield (2 months ago) 0.00%
(h) 3 Month Average Portfolio Adjusted Yield 4.07%
Excess Finance Charge Yield
(Excess Finance Charge Collections/total Investor Interest)
(e) Excess Finance Charge Yield (current month) 4.94%
(f) Excess Finance Charge Yield (prior month) 0.00%
(g) Excess Finance Charge Yield (2 months ago) 0.00%
(h) 3 Month Average Excess Finance Charge Yield 4.94%
VII. PORTFOLIO PERFORMANCE RATES
(a) Aggregate Default Amount (% of beginning of month Principal Receivables) 0.00%
(b) Monthly Payment Rate (% of beginning of month Principal Receivables) 23.82%
(c) Gross Porfolio Yield to Investors (3 month average annualized) 10.30%
(d) Portfolio Yield (3 month average annualized)) 10.30%
(e) Base Rate (3 month average) 6.22%
(f) Excess Finance Charge Collections % 4.94%
VIII. ACCUMULATION AND PRINCIPAL FUNDING ACCOUNT
(a) Cumulative Class A principal distributed to PFA (as of prior distribution date) $0.00
(b) Class A Principal deposited in the PFA $0.00
(c) Total Class A Principal deposited in the PFA (a + b) $0.00
(d) Cumulative Class B principal distributed to PFA (as of prior distribution date) $0.00
(e) Class B Principal deposited in the PFA $0.00
(f) Total Class B Principal deposited in the PFA (a + b) $0.00
(g) Ending PFA balance (c + f) $0.00
IX. PRINCIPAL REPAYMENT
(a) Class A Principal paid (as of prior distribution dates) $0.00
(b) Class A Principal payments $0.00
(c) Total Class A Principal paid (a + b) $0.00
(d) Class B Principal paid (as of prior distribution dates) $0.00
(e) Class B Principal payments $0.00
(f) Class B Principal paid (d + e) $0.00
(g) Collateral Principal paid (as of prior distribution dates) $0.00
(h) Collateral Principal payments $0.00
(i) Total Collateral Principal paid (g + h) $0.00
X. INVESTOR CHARGE-OFFS
CLASS A INVESTOR CHARGE-OFFS
(a) Class A Investor Default Amount $0.00
(b) Reimbursed from Class A Available Funds $0.00
(c) Reimbursed from Excess Spread $0.00
(d) Reimbursed from Reallocated Principal Collections $0.00
(e) Total amount reimbursed in respect of Class A Investor Default Amount $0.00
(f) Class A Investor Charge-Off (a - e) $0.00
CLASS B INVESTOR CHARGE-OFFS
(g) Class B Investor Default Amount $0.00
(h) Reimbursed from Excess Spread $0.00
(i) Reimbursed from Reallocated Principal Collections $0.00
(j) Total amount reimbursed in respect of Class B Investor Default Amount $0.00
(k) Class B Investor Charge-Off (g - j) $0.00
CLASS C INVESTOR CHARGE-OFFS
(l) Collateral Default Amount $0.00
(m) Reimbursed from Excess Spread $0.00
(n) Collateral Charge-Off (l - m) $0.00
(o) Writedown from Reallocated Principal Collections $0.00
XI. PAYOUT EVENTS
(a) Failure by Transferor to make any deposit or payment? No
(b) Breach of representation or warranty? No
(c) 3-mo Avg. Portfolio Yield less than 3-mo Avg. Base Rate? No
(d) Principal Receivables + Excess Funding Account less than
Minimum Agg. Prin Receivables? No
(e) Originator or Transferor failed to convey Additional Receivables? No
(f) Servicer Default? No
(g) Class A or Class B not paid in full on Sched. Pmt. Date? No
(h) Monthly payment rate less than 12% for 3 consecutive months? No
(i) Transferor, Trust or Trustee failed be become licensed when required? No
(j) Excess Obligor Concentration for 3 consecutive Determination Dates? No
(k) Excess Insurer Concentration for 3 consecutive Determination Dates? No
(l) Investment Grade Insurer Percentage less than 90% for 3 consec. Det'n Dates? No
(m) Fewer than 300 insurance carriers in the pool for 3 consec. Det'n Dates? No
(n) Top Ten insurers exceed 60% of pool for 3 consec. Det'n Dates? No
(o) Transferor or Originator in insolvency proceedings? No
(p) Trust is an investment company? No
(q) No successor Backup Svcr found w/in 90 days of term'n of Backup Svcr? No
(r) AFCO no longer Servicer? No
(s) Failure of AFCO to remove receivables or indemnify the Transferor, the Trustee,
and the Trust from losses resulting from failure to comply with licensing laws? No
</TABLE>
AFCO Credit Corporation, as Servicer
By:
Name: Frederick B. Ollett III
Title: Vice President & Chief Financial Officer
