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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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) May 27, 1999
Franklin Receivables LLC
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(Exact Name of Registrant as Specified in Charter)
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<S> <C> <C>
Delaware 333-56869 94-3301-790
(State of Incorporation) (Commission File Number) (I.R.S. Employer Identification No.)
</TABLE>
47 West 200 South, Suite 500
Salt Lake City, Utah 84101
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code (302) 636-3305
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. Other Events
On or about May 27, 1999, Franklin Receivables LLC (the "Company")
transferred $106,523,952.96 of Prime, Non-Prime and Sub-Prime motor vehicle
retail installment sale contracts (the "Receivables"), to Franklin Auto
Trust 1999-1 (the "Trust"). The Trust transferred the Receivables to The Chase
Manhattan Bank, as indenture trustee ("Indenture Trustee"), who in turn issued
Class A-1 5.52% Asset Backed Notes (the "Class A-1 Notes") in the aggregate
original principal amount of $66,500,000 due December 2002 and Class A-2 6.05%
Asset Backed Notes (the "Class A-2 Notes") in the aggregate original principal
amount of $40,023,000 due December 2006.
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements - Not Applicable
(b) Pro Forma Financial Information - Not Applicable
(c) Exhibits
Item 601(a) of Regulation S-K
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Exhibit No. Description
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3.1 Amendment No. 2 to the Amended and Restated Limited Liability Company Agreement for Franklin
Receivables LLC dated as of May 27, 1999.
4.1 Amended & Restated Trust Agreement, between the Seller and the Owner Trustee, dated as of May 1, 1999.
4.2 Indenture, between the Issuer and the Indenture Collateral Agent, dated as of May 1, 1999.
4.3 Sale and Servicing Agreement, among the Seller, Franklin Capital, Resources and the Issuer, dated
as of May 1, 1999.
10.1 Purchase Agreement, between Franklin Receivables LLC and Franklin Capital, dated as of May 1, 1999.
10.2 Assignment of Services to Franklin Receivables LLC, dated as of May 1, 1999.
10.3 Underwriting Agreement, among the Seller, FCC Corp., Franklin Capital and the Underwriter, dated May 20, 1999.
10.4 Letter Agreement, between Resources and the Underwriter, dated May 20, 1999.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRANKLIN RECEIVABLES LLC, by
Franklin Capital Corporation as its Managing Member
/s/ Jennifer J. Bolt
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Name: Jennifer J. Bolt
Title: President
May 27, 1999
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INDEX TO EXHIBITS
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<CAPTION>
Exhibit No. Description
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<S> <C>
3.1 Amendment No. 2 to the Amended and Restated Limited Liability Company Agreement for Franklin
Receivables LLC dated as of May 27, 1999.
4.1 Amended & Restated Trust Agreement, between the Seller and the Owner Trustee, dated as of May 1, 1999.
4.2 Indenture, between the Issuer and the Indenture Collateral Agent, dated as of May 1, 1999.
4.3 Sale and Servicing Agreement, among the Seller, Franklin Capital, Resources and the Issuer, dated
as of May 1, 1999.
10.1 Purchase Agreement, between Franklin Receivables LLC and Franklin Capital, dated as of May 1, 1999.
10.2 Assignment of Services to Franklin Receivables LLC, dated as of May 1, 1999.
10.3 Underwriting Agreement, among the Seller, FCC Corp., Franklin Capital and the Underwriter, dated
May 20, 1999.
10.4 Letter Agreement, between Resources and the Underwriter, dated May 20, 1999.
</TABLE>
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Exhibit 3.1
AMENDMENT NO. 2 TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
FOR
FRANKLIN RECEIVABLES LLC,
a Delaware limited liability company
This Amendment No. 2 to the Amended and Restated Limited Liability Company
Agreement of Franklin Receivables LLC, a Delaware limited liability company (the
"Company"), effective as of September 1, 1998 (the "LLC Agreement") and as
amended by Amendment No. 1 to the LLC Agreement effective as of May 17, 1999
("Amendment No. 1 to the LLC Agreement"), amends and restates Amendment No. 1 to
the LLC Agreement as of and is effective this 27th day of May, 1999 by Franklin
Capital Corporation, a Utah corporation ("FCC" or the "Managing Member"), as the
primary member and FCC Receivables Corp., a Delaware corporation ("Receivables
Corp." or the "Special Member"), as the second member.
WHEREAS, since the Company's formation, all of the beneficial interests of
the Company have been held solely by FCC;
WHEREAS, the parties intended that the Company be disregarded as an entity
separate from FCC for federal income tax purposes in accordance with Section
301.7701-3 of the Treasury Regulations;
WHEREAS, the LLC Agreement erroneously provided that the parties intended
that the Company be disregarded as an entity separate from Receivables Corp., as
the Special Member of the Company, for federal income tax purposes; and
WHEREAS, the parties wish to correct this error.
NOW, THEREFORE, the parties agree as follows:
1. Section 11.14 of the LLC Agreement is hereby amended and restated to
read as follows:
It is the intention of the parties hereto that, for federal income
tax purposes, the Company shall be disregarded as an entity apart
from the Managing Member, as long as the Managing Member is the
holder of all the beneficial interests in the Company for federal
income tax purposes, or treated as a partnership if the Managing
Member is not the holder of all the beneficial interests in the
Company for federal income tax purposes. The parties agree that,
unless otherwise required by appropriate tax authorities, the
Managing Member will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the
characterization of the Company as a
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division of the Managing Member, or as a partnership, as the case
may be, for such tax purposes.
For so long as the Managing Member's Percentage Interest is 100%,
the Company shall be disregarded as an entity separate from the
Managing Member and all net income and loss of the Company for any
month as determined solely for federal income tax purposes (and each
item of income, gain, loss, credit and deduction entering into the
computation thereof) shall be allocated to the Managing Member and
treated in the same manner as if the Company were a division or
branch of the Managing Member.
2. In all other respects the LCC Agreement is confirmed.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed as of the date first written above.
FRANKLIN CAPITAL CORPORATION
By: /s/ Jennifer J. Bolt
_______________________________
Name: Jennifer J. Bolt
Title: President
FCC RECEIVABLES CORP.
By: /s/ Jennifer J. Bolt
_______________________________
Name: Jennifer J. Bolt
Title: Executive Vice-President
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Exhibit 4.1
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Execution Copy
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FRANKLIN AUTO TRUST 1999-1
AMENDED AND RESTATED TRUST AGREEMENT
between
FRANKLIN RECEIVABLES LLC
and
BANKERS TRUST (DELAWARE)
Owner Trustee
Dated as of May 1, 1999
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Table of Contents
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ARTICLE I
Definitions
SECTION 1.1 Capitalized Terms................................................1
SECTION 1.2 Other Definitional Provisions....................................3
ARTICLE II
Organization
SECTION 2.1 Name.............................................................4
SECTION 2.2 Office...........................................................4
SECTION 2.3 Purposes and Powers..............................................4
SECTION 2.4 Appointment of Owner Trustee.....................................5
SECTION 2.5 Initial Capital Contribution of Trust Estate.....................5
SECTION 2.6 Declaration of Trust.............................................6
SECTION 2.7 Liability of the Seller..........................................6
SECTION 2.8 Title to Trust Property..........................................6
SECTION 2.9 Situs of Trust...................................................7
SECTION 2.10 Representations and Warranties of the Seller.....................7
SECTION 2.11 [Reserved].......................................................8
SECTION 2.12 Covenants of the Certificateholders..............................8
SECTION 2.13 Federal Income Tax Allocations...................................9
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership................................................9
SECTION 3.2 The Trust Certificates..........................................10
SECTION 3.3 Authentication of Trust Certificates............................10
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SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates.....10
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates.........11
SECTION 3.6 Persons Deemed Certificateholders...............................12
SECTION 3.7 Access to List of Certificateholders' Names and Addresses.......12
SECTION 3.8 Maintenance of Office or Agency.................................12
SECTION 3.9 Appointment of Paying Agent.....................................13
SECTION 3.10 [Reserved]......................................................13
SECTION 3.11 [Reserved]......................................................13
SECTION 3.12 [Reserved]......................................................13
SECTION 3.13 [Reserved]......................................................13
SECTION 3.14 [Reserved]......................................................13
SECTION 3.15 [Reserved]......................................................13
SECTION 3.16 [Reserved]......................................................13
SECTION 3.17 Trust Certificate Transfer Restrictions.........................14
ARTICLE IV
Actions by Owner Trustee
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain
Matters.........................................................15
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters....17
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy.........17
SECTION 4.4 Restrictions on Certificateholders' Power.......................17
SECTION 4.5 Majority Control................................................17
SECTION 4.6 Rights of Security Insurer......................................18
SECTION 4.7 Execution of Documents..........................................18
ARTICLE V
Application of Trust Funds: Certain Duties
SECTION 5.1 Establishment of Certificate Distribution Account...............18
SECTION 5.2 Application of Funds in Certificate Distribution Account........19
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SECTION 5.3 [Reserved]......................................................19
SECTION 5.4 Method of Payment...............................................20
SECTION 5.5 No Segregation of Monies; No Interest...........................20
SECTION 5.6 Accounting and Reports to the Noteholders, Certificateholders,
the Internal Revenue Service and Others.........................20
SECTION 5.7 Signature on Returns; Tax Matters Partner.......................21
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority...............................................21
SECTION 6.2 General Duties..................................................21
SECTION 6.3 Action upon Instruction.........................................22
SECTION 6.4 No Duties Except as Specified in this Agreement or in
Instructions....................................................23
SECTION 6.5 No Action Except under Specified Documents or Instructions......23
SECTION 6.6 Restrictions....................................................23
SECTION 6.7 Notice of Default Under Indenture...............................23
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1 Acceptance of Trusts and Duties.................................24
SECTION 7.2 Furnishing of Documents.........................................25
SECTION 7.3 Representations and Warranties..................................25
SECTION 7.4 Reliance; Advice of Counsel.....................................26
SECTION 7.5 Not Acting in Individual Capacity...............................26
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Receivables..26
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes..............27
SECTION 7.8 Payments from Owner Trust Estate................................27
SECTION 7.9 Doing Business in Other Jurisdictions...........................27
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ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses...............................28
SECTION 8.2 Indemnification.................................................28
SECTION 8.3 Payments to the Owner Trustee...................................28
SECTION 8.4 Non-recourse Obligations........................................28
ARTICLE IX
Dissolution and Termination of Trust
SECTION 9.1 Termination of Trust Agreement..................................29
SECTION 9.2 [Reserved]......................................................30
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee......................30
SECTION 10.2 Resignation or Removal of Owner Trustee.........................31
SECTION 10.3 Successor Owner Trustee.........................................31
SECTION 10.4 Merger or Consolidation of Owner Trustee........................32
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee...................32
ARTICLE XI
Miscellaneous
SECTION 11.1 Supplements and Amendments......................................34
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders......35
SECTION 11.3 Limitations on Rights of Others.................................35
SECTION 11.4 Notices.........................................................36
SECTION 11.5 Severability....................................................36
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SECTION 11.6 Separate Counterparts...........................................36
SECTION 11.7 Successors and Assigns..........................................36
SECTION 11.8 [Reserved]......................................................37
SECTION 11.9 No Petition.....................................................37
SECTION 11.10 No Recourse.....................................................37
SECTION 11.11 Headings........................................................37
SECTION 11.12 GOVERNING LAW...................................................37
SECTION 11.13 [Reserved]......................................................37
SECTION 11.14 Servicer........................................................37
SECTION 11.15 Third Party Beneficiary.........................................38
EXHIBITS
EXHIBIT A FORM OF TRUST CERTIFICATE
EXHIBIT B FORM OF CERTIFICATE OF TRUST
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AMENDED AND RESTATED TRUST AGREEMENT dated as of May 1, 1999 between
FRANKLIN RECEIVABLES LLC, as seller, and BANKERS TRUST (DELAWARE), as Owner
Trustee to TRUST AGREEMENT dated as of May 6, 1999 between FRANKLIN RECEIVABLES
LLC, as seller, and BANKERS TRUST (DELAWARE), as Owner Trustee.
ARTICLE I
Definitions
SECTION 1.1 Capitalized Terms. For all purposes of this Agreement,
the following terms shall have the meanings set forth below
"Agreement" shall mean this Trust Agreement, as the same may be
amended and supplemented from time to time.
"Basic Documents" shall mean this Agreement, the Sale and Servicing
Agreement, the Indenture, the Purchase Agreement, the Spread Account Agreement,
the Insurance Agreement, the Indemnification Agreement, the Note Depository
Agreement and the other documents and certificates delivered in connection
therewith.
"Benefit Plan" shall have the meaning assigned to such term in
Section 3.17.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from
time to time.
"Certificate" means a certificate evidencing the beneficial interest
of a Certificateholder in the Trust, substantially in the form of Exhibit A
attached hereto.
"Certificate Distribution Account" shall have the meaning assigned
to such term in Section 5.1.
"Certificate of Trust" shall mean the Certificate of Trust in the
form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Paying Agent" shall mean any paying agent or co-paying
agent appointed pursuant to Section 3.9.
"Certificateholder" or "Holder" shall mean the Person in whose name
a Trust Certificate is registered on the Certificate Register.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
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"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
E.A. Delle Donne Corporate Center Montgomery Building, 1011 Centre Road, Suite
200, Wilmington, Delaware 19805, with a copy of all notices and other documents
to be also furnished to Bankers Trust Company, 4 Albany Street, 10th Floor, New
York, New York 10006, Attention: Corporate Trust and Agency Group, Structured
Finance, or at such other address as the Owner Trustee may designate by notice
to the Certificateholders and the Seller, or the principal corporate trust
office of any successor Owner Trustee (the address of which the successor owner
trustee will notify the Certificateholders and the Seller).
"Delaware Trustee" shall have the meaning assigned to such term in
Section 10.1.
"ERISA" shall have the meaning assigned to such term in Section
3.17.
"Expenses" shall have the meaning assigned to such term in Section
8.2.
"Holder" or "Certificateholder" shall mean the Person in whose name
a Trust Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such term
in Section 8.2.
"Indenture" shall mean the Indenture between the Trust, as issuer,
and The Chase Manhattan Bank, as trustee and indenture collateral agent, dated
as of May 1, 1999, as the same may be amended and supplemented from time to
time.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and all other property of the Trust from time to
time, including any rights of the Owner Trustee and the Trust pursuant to the
Sale and Servicing Agreement.
"Owner Trustee" shall mean Bankers Trust (Delaware), a Delaware
banking corporation not in its individual capacity but solely as owner trustee
under this Agreement, and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9.
"Percentage Interest" shall mean with respect to any Trust
Certificate, the percentage interest of ownership in the Trust represented
thereby as set forth on the face thereof.
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"Record Date" shall mean, with respect to any Distribution Date, the
close of business on the last day of the calendar month preceding such
Distribution Date.
"Responsible Officer" shall mean, when used with respect to the
Owner Trustee, any officer assigned to the Corporate Trust Office of the Owner
Trustee, including any Vice President, any Assistant Vice President, any
Assistant Treasurer, any Managing Director, any trust officer or any other
officer of the Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers or any agent acting under a
power of attorney from the Owner Trustee, having responsibility for the
administration of this Trust Agreement, as the case may be, and also, with
respect to a particular matter relating to the Trust, any other officer of the
Owner Trustee to whom such matter is referred because of such officer's
knowledge of and familiarity with such matter. Any notice given to the address
and in the manner specified in Section 11.4 hereof shall be deemed to be given
to a Responsible Officer.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, Franklin Receivables LLC, as seller, Franklin
Resources, Inc., as representative, and Franklin Capital Corporation, as
servicer, dated as of May 1, 1999, as the same may be amended and supplemented
from time to time.
"Secretary of State" shall mean the Secretary of State of the State
of Delaware.
"Security Insurer" shall mean MBIA Insurance Corporation, or its
successor in interest.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall mean Franklin Receivables LLC as the Seller of the
Receivables and each successor to Franklin Receivables LLC (in the same
capacity), to the extent permitted hereunder.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" shall mean a Certificate.
SECTION 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture.
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(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles as in effect on the
date of this Agreement or any such certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall
control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
ARTICLE II
Organization
SECTION 2.1 Name. The Trust created hereby shall be known as
"Franklin Auto Trust 1999-1" in which name the Owner Trustee may engage in the
transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office, or at the office of the Delaware
Trustee, if one exists, or at such other address as the Owner Trustee may
designate by written notice to the Certificateholders, the Security Insurer and
the Seller.
SECTION 2.3 Purposes and Powers. (a) The purpose of the Trust is,
and the Trust shall have the power and authority, to engage in the following
activities:
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(i) to issue the Notes pursuant to the Indenture and the
Trust Certificates pursuant to this Agreement, and to sell the Notes
and the Certificates;
(ii) with the proceeds of the sale of the Notes, to pay
the organizational, start-up and transactional expenses of the Trust
and to pay the balance to the Seller pursuant to the Sale and
Servicing Agreement;
(iii) to acquire, receive and accept from time to time
the Owner Trust Estate, to assign, grant, transfer, pledge, mortgage
and convey the Owner Trust Estate (other than the Certificate
Distribution Account) to the Indenture Collateral Agent pursuant to
the Indenture for the benefit of the Security Insurer and the
Trustee on behalf of the Noteholders and to hold, manage and
distribute to the Certificateholders pursuant to the terms of the
Sale and Servicing Agreement any portion of the Owner Trust Estate
released from the Lien of, and remitted to the Trust pursuant to,
the Indenture;
(iv) to enter into and perform its obligations under the
Basic Documents to which it is a party;
(v) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vi) subject to compliance with the Basic Documents to
which the Trust is a party, to engage in such other activities as
may be required in connection with conservation of the Owner Trust
Estate and the making of distributions to the Certificateholders and
the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4 Appointment of Owner Trustee. The Seller hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate. The
Seller hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $200. The Owner Trustee hereby
acknowledges receipt in trust from the Seller, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Seller shall
pay organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
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SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the obligations of the Trust under the Basic Documents to which the
Trust is a party. It is the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business trust. It is the
intention of the parties hereto that, solely for federal income tax purposes,
the Trust shall be disregarded as an entity apart from its owner, the Seller, in
the event that the Seller is the sole Certificateholder for federal income tax
purposes, or treated as a partnership if there is more than one
Certificateholder for federal income tax purposes. The parties agree that,
unless otherwise required by appropriate tax authorities, the Trust will file or
cause to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a division of the Seller,
or as a partnership, as the case may be, for such tax purposes. Effective as of
the date hereof, the Owner Trustee shall have all rights, powers and duties set
forth herein and to the extent not inconsistent herewith, in the Business Trust
Statute with respect to accomplishing the purposes of the Trust. The Owner
Trustee shall file the Certificate of Trust with the Secretary of State.
SECTION 2.7 Liability of the Seller . (a) The Seller shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
(b) No Holder, other than to the extent set forth in clause
(a), shall have any personal liability for any liability or obligation of the
Trust.
SECTION 2.8 Title to Trust Property. (a) Legal title to all the
Owner Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided Percentage Interest
therein only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title or interest by any Certificateholder of
its ownership interest in the Owner Trust Estate shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Owner Trust Estate.
SECTION 2.9 Situs of Trust. The Trust will be located in the State
of Delaware. All bank accounts maintained by the Owner Trustee on behalf of the
Trust shall be located in the State of Delaware or the State of New York.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York. The Trust
shall not have any employees in any state other than Delaware; provided,
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however, that nothing herein shall restrict or prohibit the Owner Trustee, in
its individual capacity, the Servicer or any agent of the Trust from having
employees within or without the State of Delaware. The only office of the Trust
will be at the Corporate Trust Office in Delaware.
SECTION 2.10 Representations and Warranties of the Seller. The
Seller hereby represents and warrants to the Owner Trustee that:
(a) Organization and Good Standing. The Seller is duly
organized and validly existing as a Delaware limited liability company with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(b) Due Qualification. The Seller is duly qualified to do
business as a limited liability company in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property, the conduct of its business and the
performance of its obligations under this Agreement and the Basic
Documents requires such qualification.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Trust and the
Seller has duly authorized such sale and assignment and deposit to the
Trust by all necessary action; and the execution, delivery and performance
of this Agreement has been duly authorized by the Seller by all necessary
action.
(d) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the certificate of formation or limited liability company agreement
of the Seller, or any material indenture, agreement or other instrument to
which the Seller is a party or by which it is bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the best of
the Seller's knowledge, any order, rule or regulation applicable to the
Seller of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(e) No Consent Required. No consent, license, approval or
authorization or registration or declaration with, any Person or with any
governmental authority, bureau or agency is required in connection with
the execution, delivery or performance of this Agreement and the Basic
Documents, except for such as have been obtained, effected or made.
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(f) No Proceedings. There are no proceedings or investigations
pending or, to its knowledge threatened against it before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over it or its properties (A)
asserting the invalidity of this Agreement or any of the Basic Documents,
(B) seeking to prevent the issuance of the Certificates or the Notes or
the consummation of any of the transactions contemplated by this Agreement
or any of the Basic Documents, (C) seeking any determination or ruling
that might materially and adversely affect its performance of its
obligations under, or the validity or enforceability of, this Agreement or
any of the Basic Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates.
SECTION 2.11 [Reserved]
SECTION 2.12 Covenants of the Certificateholders. Each
Certificateholder by becoming a holder of a Certificate agrees:
(a) to be bound by the terms and conditions of the
Certificates of which such Certificateholder is the beneficial owner and of this
Agreement, including any supplements or amendments hereto and to perform the
obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of the Trust, the Owner Trustee, the Security Insurer and all other
Certificateholders present and future;
(b) to hereby appoint the Seller so long as it is a
Certificateholder as such Certificateholder's agent and attorney-in-fact to sign
any federal income tax information return filed on behalf of the Trust and agree
that, if requested by the Trust, it will sign such federal income tax
information return in its capacity as holder of an interest in the Trust. Each
Certificateholder also hereby agrees that in its tax returns it will not take
any position inconsistent with those taken in any tax returns filed by the
Trust;
(c) if such Certificateholder is other than an individual or
other entity holding its Certificate through a broker who reports securities
sales on Form 1099-B, to notify the Owner Trustee in writing of any transfer by
it of a Certificate in a taxable sale or exchange, within 30 days of the date of
the transfer; and
(d) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for the Trust to be
adjudicated as bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Trust or a substantial part of its property, or cause or permit
the Trust to make any assignment for the benefit of its creditors, or admit in
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writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
SECTION 2.13 Federal Income Tax Allocations. Net income of the Trust
for any month as determined for Federal income tax purposes (and each item of
income, gain, loss, credit and deduction entering into the computation thereof)
shall be allocated:
(a) for so long as (i) all of the Trust Certificates are owned
by the Seller, the Trust shall be disregarded as an entity separate from the
Seller such that net income of the Trust for any month as determined solely for
federal income tax purposes (and each item of income, gain, loss, credit and
deduction entering into the computation thereof) shall be allocated to the
Seller and treated in the same manner as if the Trust were a division or branch
of the Seller; and
(b) in the event that the Seller transfers (as such term is
defined for federal income tax purposes) any Trust Certificates and there is
more than one owner of Trust Certificates for federal income tax purposes, net
income of the Trust for any month as determined solely for federal income tax
purposes (and each item of income, gain, loss, credit and deduction entering
into the computation thereof) shall be allocated pro rata to the
Certificateholders based on their Percentage Interests.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership. Upon the formation of the Trust by
the contribution by the Seller pursuant to Section 2.5 and until the issuance of
the Trust Certificates, the Seller shall be the sole beneficiary of the Trust.
SECTION 3.2 The Trust Certificates. The Trust Certificates shall be
issued in minimum denominations of 1% Percentage Interest in a single class. The
Trust Certificates shall be initially issued to the Seller in a Percentage
Interest of 100%. The Trust Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of an authorized officer of the Owner
Trustee, and the Owner Trustee shall have the power and authority and it is
hereby authorized and empowered, in the name and on behalf of the Trust to
authorize, execute, issue and deliver the Trust Certificates. Trust Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be validly issued and entitled to the benefit of this
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of such
Trust Certificates or did not hold such offices at the date of authentication
and delivery of such Trust Certificates. A transferee of a Trust Certificate
shall become a Certificateholder, and shall be entitled to the rights and
subject to the obligations
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of a Certificateholder hereunder, upon due registration of such Trust
Certificate in such transferee's name pursuant to Section 3.4.
SECTION 3.3 Authentication of Trust Certificates. Concurrently with
the initial sale of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Trust Certificates in an
aggregate Percentage Interest equal to 100% to be executed on behalf of the
Trust, authenticated and delivered to or upon the written order of the Seller,
signed by its chairman of the board, its president or any vice president,
without further corporate action by the Seller, in authorized denominations. No
Trust Certificate shall entitle its holder to any benefit under this Agreement,
or shall be valid for any purpose, unless there shall appear on such Trust
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A, executed by the Owner Trustee or Bankers Trust Company as the
Owner Trustee's authentication agent, by manual signature; such authentication
shall constitute conclusive evidence that such Trust Certificate shall have been
duly authenticated and delivered hereunder. All Trust Certificates shall be
dated the date of their authentication.
SECTION 3.4 Registration of Transfer and Exchange of Trust
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of the Trust Certificates and of
transfers and exchanges of the Trust Certificates as herein provided. Bankers
Trust Company shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate
at the office or agency maintained pursuant to Section 3.8, and, upon
satisfaction of the conditions set forth below, the Owner Trustee shall execute,
authenticate and deliver, (or shall cause Bankers Trust Company as its
authenticating agent to authenticate and deliver), in the name of the designated
transferee or transferees, one or more new Trust Certificates in authorized
denominations of a like Percentage Interest dated the date of authentication by
the Owner Trustee or any authenticating agent. At the option of a Holder, the
Trust Certificates may be exchanged for other Trust Certificates of the same
class in authorized denominations of a like Percentage Interest upon surrender
of the Trust Certificates to be exchanged at the office or agency maintained
pursuant to Section 3.8.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Certificate Registrar, which requirements include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended. Each Trust
Certificate surrendered for registration of transfer or exchange
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shall be canceled and subsequently disposed of by the Owner Trustee in
accordance with its customary practice. In addition, each such Certificateholder
shall comply with Section 2.12(c)
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may, but shall not be obligated to, require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Trust Certificates.
Notwithstanding the foregoing, the Owner Trustee need not make and
the Certificate Registrar need not register, transfers or exchanges of, Trust
Certificates for a period of 15 days preceding the due date for any payment with
respect to any Trust Certificates.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates.
If (a) any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate and (b)
there shall be delivered to the Certificate Registrar, the Owner Trustee and
(unless an Insurer Default shall have occurred and be continuing) the Security
Insurer, such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Trust Certificate shall
have been acquired by a protected purchaser, the Owner Trustee on behalf of the
Trust shall execute and the Owner Trustee or Bankers Trust Company, as the Owner
Trustee's authenticating agent, shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Trust Certificate, a
new Trust Certificate of like Percentage Interest. In connection with the
issuance of any new Trust Certificate under this Section, the Owner Trustee or
the Certificate Registrar may, but shall not be obligated to, require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Trust Certificate issued
pursuant to this Section shall constitute conclusive evidence of an ownership
interest in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Trust Certificate shall be found at any time.
SECTION 3.6 Persons Deemed Certificateholders. Every person by
virtue of becoming a Certificateholder in accordance with this Agreement shall
be deemed to be bound by the terms of this Agreement. Prior to due presentation
of a Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar and the Security Insurer and any agent of the Owner
Trustee, the Certificate Registrar and the Security Insurer, may treat the
Person in whose name any Trust Certificate shall be registered in the
Certificate Register as the Holder of such Trust Certificate for the purpose of
receiving distributions pursuant to Section 5.2 and for all other purposes
whatsoever, and none of the Seller, the Servicer, the Owner Trustee, the
Certificate Registrar or the Security Insurer nor any agent of the Owner
Trustee, the Certificate Registrar, or the Security Insurer shall be bound by
any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Seller or (unless an Insurer Default shall have occurred and be
continuing) the Security Insurer and the
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Representative within 15 days after receipt by the Owner Trustee of a request
therefore from the Servicer or the Representative in writing, a list, in such
form as the Servicer may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more Holders
of Trust Certificates or one or more Holders of Trust Certificates evidencing
not less than a Percentage Interest of 25% apply in writing to the Owner
Trustee, and such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Trust Certificates and such application is accompanied by a copy of
the communication that such applicants propose to transmit, then the Owner
Trustee shall, within five Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Each Holder, by receiving and holding a Trust
Certificate, shall be deemed to have agreed not to hold any of the Seller, the
Servicer, the Representative, the Owner Trustee or the Security Insurer or any
agent thereof accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee shall
maintain in the Borough of Manhattan, the City of New York, an office or offices
or agency or agencies where Trust Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Trust Certificates and the Basic Documents
may be served. The Owner Trustee initially designates Bankers Trust Company, 4
Albany Street-10th floor, New York, New York 10006, as its principal corporate
trust office for such purposes. The Owner Trustee shall give prompt written
notice to the Seller, the Certificateholders and (unless an Insurer Default
shall have occurred and be continuing) the Security Insurer of any change in the
location of the Certificate Register or any such office or agency.
SECTION 3.9 Appointment of Paying Agent. The Paying Agent shall make
distributions to the Certificateholders from the Certificate Distribution
Account pursuant to Section 5.2 and shall report the amounts of such
distributions to the Owner Trustee in writing, unless the Paying Agent is the
Owner Trustee. Any Paying Agent shall have the revocable power to withdraw funds
from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole discretion
that the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be Bankers
Trust Company and any co-Paying Agent chosen by the Owner Trustee, and
acceptable to the Servicer and the Security Insurer. The Paying Agent shall be
permitted to resign upon 30 days' written notice to the Owner Trustee and the
Servicer. In the event that the Owner Trustee shall no longer be the Paying
Agent, the Owner Trustee shall appoint a successor to act as Paying Agent (which
shall be a bank or trust company). The Owner Trustee shall cause such successor
Paying Agent or any additional Paying Agent appointed by the Owner Trustee to
execute and deliver to the Owner Trustee an instrument in which such successor
Paying Agent or additional Paying Agent shall agree with the Owner Trustee that
as Paying Agent, such successor Paying Agent or additional Paying Agent will
hold all sums, if any, held by it for payment to the Certificateholders in trust
for the benefit of the
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Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4, 7.8, 8.1 and 8.2 shall apply to the Owner Trustee also
in its role as Paying Agent, for so long as the Owner Trustee shall act as
Paying Agent and, to the extent applicable, to any other Paying Agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include any
co-Paying Agent unless the context requires otherwise.
SECTION 3.10 [Reserved]
SECTION 3.11 [Reserved]
SECTION 3.12 [Reserved]
SECTION 3.13 [Reserved]
SECTION 3.14 [Reserved]
SECTION 3.15 [Reserved]
SECTION 3.16 [Reserved]
SECTION 3.17 Trust Certificate Transfer Restrictions. (a) The Trust
Certificates may not be acquired by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title 1 of ERISA, (ii) a plan described in Section 4975(e) (1) of the Code or
(iii) any entity whose underlying assets include plan assets by reason of such
plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding a Trust Certificate, the Holder thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan. The Owner Trustee shall
have no duty to determine whether the Trust Certificates are owned by a Benefit
Plan.
(b) With the exception of the transfer to the Seller hereunder
and any transfer to FCC Receivables Corp., the Trust Certificates may not be
offered or sold except to Qualified Institutional Buyers in reliance on the
exemption from the registration requirements of the Securities Act provided by
Rule 144A thereunder.
Each purchaser of the Trust Certificates will be deemed to have
represented and agreed as follows:
(i) It is a Qualified Institutional Buyer as defined in Rule
144A promulgated under the Securities Act and is acquiring the Trust
Certificates for its own institutional account or for the account of
a Qualified Institutional Buyer.
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(ii) It understands that the Trust Certificates will be
offered in a transaction not involving any public offering within
the meaning of the Securities Act, and that, if in the future it
decides to resell, pledge or otherwise transfer any Trust
Certificates, such Trust Certificates may be resold, pledged or
transferred only (a) to the Issuer (upon redemption), (b) to a
person who the seller reasonably believes is a Qualified
Institutional Buyer that purchases for its own account or for the
account of a Qualified Institutional Buyer to whom notice is given
that the resale, pledge or transfer is being made in reliance on
Rule 144A or (c) pursuant to an effective registration statement
under the Securities Act.
(iii) It understands that the Trust Certificates will bear a
legend substantially to the following effect:
THE TRUST CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR
"BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING ANY TRUST CERTIFICATE,
AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH TRUST CERTIFICATE IS BEING
ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY
BE RESOLD, PLEDGED OR TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION
THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (3) IN A
TRANSACTION COMPLYING WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER JURISDICTION.
NO INTEREST IN THIS TRUST CERTIFICATE MAY BE ACQUIRED BY OR FOR THE
ACCOUNT OF (i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED,
("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A
PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (INCLUDING, WITHOUT LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS
AND KEOGH PLANS), OR (iii) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN
ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY. BY ACCEPTING AND
HOLDING THIS CERTIFICATE, THE HOLDER HEREOF AND THE
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CERTIFICATE OWNER SHALL EACH BE DEEMED TO HAVE REPRESENTED AND WARRANTED
THAT IT IS NOT A BENEFIT PLAN.
ARTICLE IV
Actions by Owner Trustee
SECTION 4.1 Prior Notice to Certificateholders with Respect to
Certain Matters. With respect to the following matters, the Owner Trustee shall
not take action unless at least 30 days before the taking of such action, the
Owner Trustee shall have notified the Certificateholders and the Security
Insurer in writing of the proposed action and neither the Certificateholders (in
accordance with Section 4.5) nor (so long as an Insurer Default shall not have
occurred) the Security Insurer shall have notified the Owner Trustee in writing
prior to the 30th day after such notice is given that it has withheld consent or
provided alternative direction (provided that no consent or direction of the
Certificateholders pursuant to this Section 4.1 shall be effective without the
consent of the Security Insurer):
(a) the initiation of any material claim or lawsuit by the
Trust except claims or lawsuits brought in connection with the collection of the
Receivables and the compromise of any material action, claim or lawsuit brought
by or against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Receivables);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute or unless such amendment would not materially and
adversely affect the interests of the Certificateholders);
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder or the Security Insurer is
required;
(d) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder or the Security Insurer is
not required and such amendment materially and adversely affects the interest of
the Certificateholders or the Security Insurer;
(e) the amendment, change or modification of the Sale and
Servicing Agreement, except to cure any ambiguity or defect or to amend or
supplement any provision in a manner that would not materially and adversely
affect the interests of the Certificateholders;
(f) the consent to the calling, or waiver of any default of
any Basic Document;
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(g) the consent to the assignment by the Indenture Trustee or
the Servicer of their respective obligations under any Basic Document;
(h) except as provided in this Agreement dissolve, terminate
or liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other
entity, or convey or transfer all or substantially all of the Trust's assets to
any other entity;
(j) cause the Trust to incur, assume or guaranty any
indebtedness other than as set forth in this Agreement or the other Basic
Documents;
(k) perform any act that to the actual knowledge of a
Responsible Officer of the Owner Trustee conflicts with any of the Basic
Documents;
(l) perform any act which would make it impossible to carry on
the ordinary business of the Trust as described in this Agreement;
(m) confess a judgment against the Trust;
(n) cause the Trust to lend any funds to any entity;
(o) change the Trust's purpose and powers from those
enumerated in this Agreement; or
(p) possess Trust assets or assign the Trust's right to
property for other than a Trust purpose.
The Servicer shall notify the Certificateholders and the Security Insurer in
writing of any appointment of a successor Note Registrar, Certificate Paying
Agent or Certificate Registrar within five Business Days thereof.
SECTION 4.2 Action by Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the direction
of the Controlling Party in accordance with the Basic Documents to (a) remove
the Servicer under the Sale and Servicing Agreement pursuant to Section 8.1
thereof or (b) except as expressly provided in the Basic Documents, sell the
Receivables after the termination of the Indenture. The Owner Trustee shall take
the actions referred to in the preceding sentence only upon written instructions
signed by the Certificateholders or the Controlling Party, as the case may be,
and the furnishing of indemnification satisfactory to the Owner Trustee by the
Certificateholders.
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to, and shall not, commence a
voluntary proceeding in bankruptcy relating to the Trust without the prior
written consent of the Security Insurer (unless
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an Insurer Default shall have occurred and be continuing) and the delivery to
the Owner Trustee by each Certificateholder of a certificate certifying that it
reasonably believes that the Trust is insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3 nor shall the Owner Trustee be
obligated to determine if a Certificateholder's direction violates this Section
4.4 or to follow any such direction, if given.
SECTION 4.5 Majority Control. Except as otherwise specifically
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Trust Certificates evidencing not
less than a majority of the Percentage Interests. Except as otherwise
specifically provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by Holders of
Certificates evidencing not less than a majority of the Percentage Interests at
the time of the delivery of such notice.
SECTION 4.6 Rights of Security Insurer. Notwithstanding anything to
the contrary in the Basic Documents, without the prior written consent of the
Security Insurer (so long as no Insurer Default shall have occurred and be
continuing), the Owner Trustee shall not (i) initiate any claim, suit or
proceeding by the Trust or compromise any claim, suit or proceeding brought by
or against the Trust, other than with respect to the enforcement of any
Receivable or any rights of the Trust thereunder, (ii) authorize the merger or
consolidation of the Trust with or into any other business trust or other entity
(other than in accordance with Section 3.10 of the Indenture) or (iii) amend the
Certificate of Trust.
SECTION 4.7 Execution of Documents. Notwithstanding anything herein
to the contrary, the Owner Trustee is authorized, empowered and directed, on
behalf of the Trust, to execute, deliver, issue and authenticate the
Certificates, to execute, deliver and issue the Notes and to execute and deliver
each Basic Document to which the Trust or the Owner Trustee is or is to be a
party and any other document, instrument, certificate or other writing that may
be necessary, convenient or incidental thereto. Any such execution, delivery,
issuance and authentication is hereby ratified and confirmed in all respects and
does not and will be deemed not to conflict with, constitute or result in a
breach or violation of, or a default under, any provision of or any duty under
this Trust Agreement.
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ARTICLE V
Application of Trust Funds: Certain Duties
SECTION 5.1 Establishment of Certificate Distribution Account. (a)
The Owner Trustee, for the benefit of the Certificateholders and the Security
Insurer, shall establish and maintain in the name of the Trust an Eligible
Deposit Account (the "Certificate Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Certificateholders and the Security Insurer.
(b) The Owner Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Certificate Distribution Account
and in all proceeds thereof. If, at any time, the Certificate Distribution
Account ceases to be an Eligible Deposit Account, the Owner Trustee shall within
30 calendar days establish a new Certificate Distribution Account as an Eligible
Deposit Account and shall transfer or cause to be transferred any cash and/or
any investments to such new Certificate Distribution Account.
(c) All amounts held in the Certificate Distribution Account shall,
to the extent permitted by applicable laws, rules and regulations, be invested,
by the Owner Trustee at the Servicer's written direction (which may be by
standing instructions), in Eligible Investments that mature not later than one
Business Day prior to the Distribution Date for the Monthly Period to which such
amounts relate. Investments in Eligible Investments shall be made in the name of
the Trust, and such investments shall not be sold or disposed of prior to their
maturity. Subject to the other provisions hereof, the Owner Trustee shall have
sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Owner Trustee. All Investment Earnings on funds in the
Certificate Distribution Account shall be distributed on the next Distribution
Date pursuant to Section 5.6 of the Sale and Servicing Agreement.
SECTION 5.2 Application of Funds in Certificate Distribution
Account. (a) On each Distribution Date, the Owner Trustee will cause the Paying
Agent to, based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 4.9 of the Sale
and Servicing Agreement, distribute pro rata to Certificateholders based on
their Percentage Interests, to the extent of the funds available, amounts
deposited in the Certificate Distribution Account pursuant to Sections 5.6(b) of
the Sale and Servicing Agreement on such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall cause the
Paying Agent to send to each Certificateholder the statement provided to the
Owner Trustee and the Paying Agent by the Servicer pursuant to Section 5.8 of
the Sale and Servicing Agreement on such Distribution Date.
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(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the amount otherwise distributable to the Certificateholder in accordance with
this Section. The Owner Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificateholders sufficient funds for
the payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee or any Certificateholder from contesting any
such tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Certificateholder shall be treated as
cash distributed to such Certificateholder at the time it is withheld by the
Trust and remitted to the appropriate taxing authority. If there is a reasonable
possibility that withholding tax is payable with respect to a distribution (such
as a distribution to a non-US Certificateholder), the Owner Trustee may in it
sole discretion withhold such amounts in accordance with this clause (c). In the
event that a Holder wishes to apply for a refund of any such withholding tax,
the Owner Trustee shall reasonably cooperate with such Certificateholder in
making such claim so long as such Certificateholder agrees to reimburse the
Owner Trustee for any reasonable out-of-pocket expenses incurred. The Servicer
shall facilitate compliance with this Section 5.2(c) by performance of its
duties under the Sale and Servicing Agreement.
SECTION 5.3 [Reserved]
SECTION 5.4 Method of Payment. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Distribution Date
in accordance with Section 5.2(b) shall be made to each Certificateholder of
record on the preceding Record Date either by wire transfer, in immediately
available funds, to the account of such Holder at a bank or other entity, if (i)
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five Business Days prior to such
Distribution Date or (ii) such Certificateholder is the Seller, or as set forth
in any written notice from the Seller to the Owner Trustee, an Affiliate
thereof, or, if not, by check mailed to such Certificateholder at the address of
such holder appearing in the Certificate Register. Notwithstanding the
foregoing, the final distribution in respect of any Trust Certificate (whether
on the Final Scheduled Distribution Date or otherwise) will be payable only upon
presentation and surrender of such Trust Certificate at the office or agency
maintained for that purpose by the Owner Trustee pursuant to Section 3.8.
SECTION 5.5 No Segregation of Monies; No Interest. Subject to
Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law. The Owner
Trustee shall not be liable for any interest thereon.
SECTION 5.6 Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. In accordance with
Sections 10.1(b)(iii) and 10.1(c) of the Sale and Servicing Agreement, the
Servicer shall (a) maintain (or cause to be maintained) the books of the Trust
on a year ended September 30 based on the accrual method of accounting, (b)
deliver (or cause to be delivered) to each Certificateholder, as may be required
by the Code and
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applicable Treasury Regulations, such information as may be required (including,
if applicable, Schedule K-1) to enable each Certificateholder to prepare its
Federal and state income tax returns, (c) prepare or cause to be prepared, and
file or cause to be filed, all tax returns, if any, relating to the Trust
(including, if applicable, a partnership information return, Form 1065), to make
such elections as may from time to time be required or appropriate under any
applicable state or Federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a division or branch of its 100% owner,
or as a partnership, as the case may be, for Federal income tax purposes and (d)
collect or cause to be collected any withholding tax as described in and in
accordance with Section 5.2(c) with respect to income or distributions to the
Certificateholders. The Servicer shall make all elections pursuant to this
Section as directed by the Seller. The Owner Trustee shall, on behalf of the
Trust and upon written direction of the Servicer, sign all tax information
returns furnished to it in execution form by the Servicer, and filed pursuant to
this Section 5.6 and any other returns as may be required by law and so
furnished to it by the Servicer, and in doing so shall rely entirely upon, and
shall have no liability for information provided by, or calculations provided
by, the Servicer. In the event the Trust is characterized as a partnership for
federal income tax purposes, the Servicer shall cause the Trust to elect under
Section 1278 of the Code to include in income currently any market discount that
accrues with respect to the Receivables, and the Trust shall not make the
election provided under Section 754 of the Code.
SECTION 5.7 Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.6, the Owner Trustee shall sign on
behalf of the Trust the tax returns of the Trust, if any, furnished to it in
execution form by the Servicer, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents shall be
signed by the Seller so long as it is a Certificateholder, in its capacity as
"tax matters partner."
(b) In the event the Trust is characterized as a partnership
for federal income tax purposes, and the Seller is a Certificateholder, the
Seller shall be the "tax matters partner" of the Trust pursuant to the Code.
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is named
as a party and each certificate or other document presented in connection
therewith attached as an exhibit to or contemplated by the Basic Documents to
which the Trust is named as a party and any amendment thereto, in each case, in
such form as the Seller shall approve as evidenced conclusively by the Owner
Trustee's execution thereof, and on behalf of the Trust, to direct the Trustee
to authenticate and deliver Class A-1 Notes in the aggregate principal amount of
$66,500,000 and Class A-2 Notes in the aggregate principal amount of
$40,023,000. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions
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required of the Trust pursuant to the Basic Documents. The Owner Trustee is
further authorized from time to time to take such action as the Servicer
recommends to it in writing with respect to the Basic Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and the Basic Documents to which the
Trust is a party and to administer the Trust in the interest of the
Certificateholders, subject to the Basic Documents and in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder and
under the Basic Documents to the extent the Servicer has agreed in the Sale and
Servicing Agreement, or the Seller has agreed hereunder or thereunder, to
perform any act or to discharge any duty of the Owner Trustee hereunder or of
the Trust under any Basic Document, and the Owner Trustee shall not be liable
for the default or failure of the Servicer or the Seller to carry out its
obligations hereunder or thereunder.
SECTION 6.3 Action upon Instruction. (a) Subject to Article IV, the
Security Insurer (so long as an Insurer Default shall not have occurred and be
continuing) or the Certificateholders (if an Insurer Default shall have occurred
and be continuing) (the "Instructing Party") shall have the exclusive right to
direct the actions of the Owner Trustee in the management of the Trust. Such
direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Basic Document, the Owner Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within 10 days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Basic Documents, as it shall deem to be
in the best interests of the Certificateholders and the Security Insurer, and
shall have no liability to any Person for such action or inaction.
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(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders and the Security Insurer, and shall have no liability to any
Person for such action or inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation or termination statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Basic
Document. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any Liens
on any part of the Owner Trust Estate that result from actions by, or claims
against, the Owner Trustee (solely in its individual capacity) and that are not
related to the ownership or the administration of the Owner Trust Estate.
SECTION 6.5 No Action Except under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents
or (iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6 Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation
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for Federal income tax purposes. The Certificateholders shall not direct the
Owner Trustee to take action that would violate the provisions of this Section.
SECTION 6.7 Notice of Default Under Indenture. Within 10 business
days of receipt of a written notice of Default under the Indenture by a
Responsible Officer of the Owner Trustee, the Owner Trustee shall provide a copy
of such notice to each Certificateholder.
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee in its individual capacity also agrees to disburse all moneys actually
received by it constituting part of the Owner Trust Estate upon the terms of the
Basic Documents and this Agreement. The Owner Trustee in its individual capacity
shall not be answerable or accountable hereunder or under any Basic Document
under any circumstances, except (i) for its own willful misconduct, bad faith or
negligence (ii) in the case of the breach of any representation or warranty
contained in Section 7.3 expressly made by the Owner Trustee, in its individual
capacity, (iii) for liabilities arising from the failure of the Owner Trustee to
perform obligations expressly undertaken by it in the last sentence of Section
6.4 hereof, (iv) for any investments issued by the Owner Trustee or any branch
or affiliate thereof in its commercial capacity or (v) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by the Owner Trustee in its individual capacity. In particular, but not
by way of limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the Servicer, the Seller, the Controlling Party, the Security Insurer or any
Certificateholder;
(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Basic Document if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or the Certificates;
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(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Seller or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty or obligation to the
Seller, the Servicer, the Representative, the Security Insurer, the Trustee, the
Indenture Collateral Agent, any Noteholder or to any Certificateholder, other
than as expressly provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Representative, the Security Insurer, the Trustee, the
Servicer, the Certificateholders or the Seller under any of the Basic Documents
or otherwise and the Owner Trustee shall have no obligation or liability to
insure compliance by the Representative, the Security Insurer, the Servicer, the
Certificateholders or the Seller with any agreement to which it is a party or to
perform the obligations of the Trust under this Agreement or the Basic Documents
that are required to be performed by the Trustee under the Indenture, the
Servicer under the Sale and Servicing Agreement or the Seller under this
Agreement; and
(g) the Owner Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Agreement or otherwise or
in relation to this Agreement or any Basic Document, at the request, order or
direction of any of the Certificateholders, unless such Certificateholders have
offered to the Owner Trustee security or indemnity satisfactory to it against
the costs, expenses and liabilities that may be incurred by the Owner Trustee
therein or thereby. The right of the Owner Trustee to perform any discretionary
act enumerated in this Agreement or in any Basic Document shall not be construed
as a duty, and, the Owner Trustee shall not be answerable for other than its
negligence, bad faith or willful misconduct in the performance of any such act.
SECTION 7.2 Furnishing of Documents. The Owner Trustee shall furnish
to the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3 Representations and Warranties. The Owner Trustee in its
individual capacity hereby represents and warrants to the Seller, the Security
Insurer, the Representative, and for the benefit of the Certificateholders,
that:
(a) It is a Delaware banking corporation, duly organized and
validly existing in good standing under the laws of the State of Delaware and
having an office within the State of Delaware. It has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement.
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(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or by-laws.
SECTION 7.4 Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper reasonably believed by it to be genuine and believed by it to
be signed by the proper party or parties. The Owner Trustee may accept a duly
certified copy of a resolution of the board of directors or other governing body
of any corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof conclusively
rely on a certificate, signed by the president or any vice president or by the
treasurer, secretary or other authorized officers of the relevant party, as to
such fact or matter, and such certificate shall constitute full protection to
the Owner Trustee for any action reasonably taken or omitted to be taken by it
in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any Basic Document herein.
SECTION 7.5 Not Acting in Individual Capacity. Except as provided
herein or in any other Basic Document, in accepting the trusts hereby created
Bankers Trust (Delaware) acts solely as Owner Trustee hereunder and not in its
individual capacity and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this Agreement or any Basic
Document shall look only to the Owner Trust Estate for payment or satisfaction
thereof.
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SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or
Receivables. The recitals contained herein and in the Trust Certificates (other
than the signature and countersignature of the Owner Trustee on the Trust
Certificates) shall be taken as the statements of the Seller and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Basic Document or of the Trust Certificates (other than the signature and
countersignature of the Owner Trustee on the Trust Certificates) or the Notes,
or of any Receivable or related documents. The Owner Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Receivable, or the perfection and priority of
any security interest created by any Receivable in any Financed Vehicle or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments to
be distributed to the Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation: the existence, condition and
ownership of any Financed Vehicle; the existence and enforceability of any
insurance thereon; the existence and contents of any Receivable or any computer
or other record thereof; the validity of the assignment of any Receivable to the
Trust or of any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by the Seller or
the Servicer with any warranty or representation made under any Basic Document
or in any related document or the accuracy of any such warranty or
representation or any action of the Trustee or the Servicer or any subservicer
taken in the name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Seller, the Trustee
and the Servicer in banking transactions with the same rights as it would have
if it were not Owner Trustee.
SECTION 7.8 Payments from Owner Trust Estate. All payments to be
made by the Owner Trustee under this Agreement or any of the Basic Documents to
which the Trust or the Owner Trustee is a party shall be made only from the
income and proceeds of the Owner Trust Estate and only to the extent that the
Owner Trust shall have received income or proceeds from the Owner Trust Estate
to make such payments in accordance with the terms hereof. Bankers Trust
(Delaware), or any successor thereto, in its individual capacity, shall not be
liable for any amounts payable under this Agreement or any of the Basic
Documents to which the Trust or the Owner Trustee is a party.
SECTION 7.9 Doing Business in Other Jurisdictions. Notwithstanding
anything contained to the contrary, neither Bankers Trust (Delaware) or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware, unless
the Certificateholder shall have given the Owner Trustee
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an indemnity therefor reasonably satisfactory to it; (ii) result in any fee, tax
or other governmental charge under the laws of the State of Delaware becoming
payable by Bankers Trust (Delaware) (or any successor thereto, unless the
Certificateholder shall have given the Owner Trustee an indemnity therefor
reasonably satisfactory to it); or (iii) subject Bankers Trust (Delaware) (or
any successor thereto) to personal jurisdiction in any jurisdiction other than
the State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Bankers Trust (Delaware) (or any successor
thereto) or the Owner Trustee, as the case may be, contemplated hereby.
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive from Franklin Capital Corporation as compensation for its services
hereunder such fees as have been separately agreed upon before the date hereof
between Franklin Capital Corporation and the Owner Trustee, and the Owner
Trustee shall be entitled to be reimbursed by Franklin Capital Corporation for
its other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel
as the Owner Trustee may employ.
SECTION 8.2 Indemnification. The Seller shall be liable as primary
obligor for, and shall indemnify the Owner Trustee, the Certificate Registrar,
the Paying Agent and their successors, assigns, agents and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits of
any kind and nature whatsoever, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) related thereto
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Seller shall not be liable
for or required to indemnify the Owner Trustee from and against Expenses arising
or resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
SECTION 8.4 Non-recourse Obligations. Notwithstanding anything in
this Agreement or any Basic Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for the Trust that all obligations
of the Trust to the Owner Trustee
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individually or as Owner Trustee for the Trust shall be recourse to the Owner
Trust Estate only and specifically shall not be recourse to the assets of any
Certificateholder.
ARTICLE IX
Dissolution and Termination of Trust
SECTION 9.1 Termination of Trust Agreement. (a) This Agreement and
the Trust shall terminate and be of no further force or effect upon the latest
of (i) the maturity or other liquidation of the last Receivable (including the
purchase by the Servicer at its option of the corpus of the Trust as described
in Section 9.1 of the Sale and Servicing Agreement) and the subsequent
distribution of amounts in respect of such Receivables as provided in the Basic
Documents or (ii) the payment to the Certificateholders of all amounts required
to be paid to them pursuant to this Agreement and the payment to the Security
Insurer of all amounts payable or reimbursable to it, provided, however, that in
no event shall the trust created by this Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
living on the date of this Agreement of Rose Kennedy of the Commonwealth of
Massachusetts; and provided, further, that the rights to indemnification under
Section 8.2 shall survive the termination of the Trust. The Servicer shall
promptly notify the Owner Trustee and the Security Insurer of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder, or Holder, shall not
(x) operate to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's or Holder's legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding up of all or any part of the Trust or Owner Trust Estate nor (z)
otherwise affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Seller nor
any Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall surrender their Trust
Certificates to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to the
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Servicer given pursuant to Section 9.1(c) of the Sale and
Servicing Agreement, stating (i) the Distribution Date upon or with respect to
which final payment of the Trust Certificates shall be made upon presentation
and surrender of the Trust Certificates at the office of the Paying Agent
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Trust
Certificates at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Paying Agent (if other than the Owner Trustee) at the
time such notice is given to the Certificateholders. Upon presentation and
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surrender of the Trust Certificates, the Paying Agent shall cause to be
distributed to the Certificateholders amounts distributable on such Distribution
Date pursuant to Section 5.2.
In the event that all of the Certificateholders shall not have
surrendered their Trust Certificates for cancellation within six months after
the date specified in the above mentioned written notice, the Owner Trustee
shall give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Trust Certificates shall not have been surrendered for cancellation, the
Owner Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid by the
Seller from the funds and other assets that shall remain subject to this
Agreement. Any funds remaining in the Trust after exhaustion of such remedies
shall be distributed, subject to applicable escheat laws, by the Owner Trustee
to the Seller. The Certificateholders shall thereafter look solely to the Seller
as general unsecured creditors.
(d) Any funds remaining in the Trust after funds for final
distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Seller.
(e) Upon dissolution and completion of the winding up of the
Trust, the Owner Trustee shall cause the Certificate of Trust to be canceled by
filing a certificate of cancellation with the Secretary of State in accordance
with the provisions of Section 3810 of the Business Trust Statute and thereupon
the Trust and this Agreement shall terminate.
SECTION 9.2 [Reserved]
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; and (iii) having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by Federal or State
authorities. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2. In addition, at all
times the Owner Trustee or a co-trustee shall be a person that satisfies the
requirements of Section 3807(a) of the Business Trustee Statute (the "Delaware
Trustee").
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SECTION 10.2 Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer and the Security Insurer. Upon
receiving such notice of resignation, the Servicer shall promptly appoint a
successor Owner Trustee acceptable to the Security Insurer (so long as an
Insurer Default shall not have occurred) by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Owner Trustee
and one copy to the successor Owner Trustee, provided that the Servicer shall
have received written confirmation from each of the Rating Agencies that the
proposed appointment will not result in an increased capital charge to the
Security Insurer by either of the Rating Agencies. If no successor Owner Trustee
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Owner Trustee or the
Security Insurer (so long as an Insurer Default shall not have occurred) may
petition any court of competent jurisdiction for the appointment of a successor
Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer with the consent of the Security Insurer, or the
Security Insurer (in each case, so long as an Insurer Default shall not have
occurred) may remove the Owner Trustee. If the Servicer shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the Servicer
shall promptly appoint a successor Owner Trustee acceptable to the Security
Insurer by written instrument, in triplicate, one copy of which instrument shall
be delivered to the outgoing Owner Trustee so removed, one copy to the Security
Insurer and one copy to the successor Owner Trustee and shall pay all fees owed
to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.3 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Servicer shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Servicer, the Security Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement and the
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<PAGE> 37
Servicer and the predecessor Owner 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 Owner Trustee all such rights,
powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Servicer shall mail notice thereof to all
Certificateholders, the Security Insurer, the Trustee, the Noteholders and the
Rating Agencies. If the Servicer shall fail to mail such notice within 10 days
after acceptance of appointment by the successor Owner Trustee, the successor
Owner Trustee shall cause such notice to be mailed at the expense of the
Servicer.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder; provided, however, that such corporation shall be eligible pursuant
to Section 10.1, without the execution or filing of any instrument or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; and provided further that the Owner Trustee shall mail
notice of such merger, sale, conversion or consolidation to the Rating Agencies.
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Vehicle may at the time be located,
the Servicer and the Owner Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Owner Trustee and the Security Insurer (so long as an Insurer Default shall
not have occurred) to act as co-trustee, jointly with the Owner Trustee, or
separate trustee or separate trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person, in such capacity, such title to the Owner
Trust Estate, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Servicer and
the Owner Trustee may consider necessary or desirable. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee subject, unless an Insurer Default shall
have occurred and be continuing, to the approval of the Security Insurer (which
approval shall not be unreasonably withheld) alone shall have the power to make
such appointment. No co-trustee or separate trustee under this Agreement shall
be required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
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<PAGE> 38
Each 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 the Owner Trustee shall be conferred upon and
exercised or performed by the Owner Trustee and such separate
trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately
without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act
or acts are to be performed, the Owner Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under
this Agreement; and
(iii) the Servicer and the Owner Trustee acting jointly
may at any time accept the resignation of or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer and the Security Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI
Miscellaneous
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<PAGE> 39
SECTION 11.1 Supplements and Amendments. (a) This Agreement may be
amended by the Seller and the Owner Trustee, with the prior written consent of
the Security Insurer (so long as an Insurer Default shall not have occurred and
be continuing) and with prior written notice to the Rating Agencies, without the
consent of any of the Noteholders or the Certificateholders (i) to cure any
ambiguity, to correct any defect or supplement any provisions in this Agreement
which may be inconsistent with any other provision herein, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement or the Insurance Agreement; provided, however, that
such action shall not, adversely affect in any material respect the interests of
any Noteholder; provided further that such action shall not adversely affect in
any material respect the interests of any Certificateholder without the consent
of the Holders of Certificates evidencing not less than a majority in Percentage
Interest; and provided further that if an Insurer Default has occurred and is
continuing and the Security Insurer has not consented to such action, such
action shall not materially and adversely affect the interest of the Security
Insurer. An amendment shall be deemed not to adversely affect the interests of
any Noteholder in any material respect if either each Rating Agency confirms in
writing that such amendment will not result in a reduction or withdrawal of such
rating or none of Rating Agencies, within 10 days' after receipt of notice of
such amendment, shall have notified the Seller, the Servicer or the Issuer in
writing that such amendment will result in a reduction or withdrawal of the then
current rating of the Notes.
(b) This Agreement may also be amended from time to time, with
the prior written consent of the Security Insurer (so long as an Insurer Default
shall not have occurred and be continuing), by the Seller and the Owner Trustee,
with prior written notice to the Rating Agencies, with the consent of the
Holders of Notes evidencing not less than a majority of the Outstanding Amount
of the Notes and, to the extent the Certificates are affected thereby, the
consent of the Holders of Certificates evidencing not less than a majority in
Percentage Interest for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that subject to the express rights of the Security Insurer
under the Basic Documents, no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made for
the benefit of the Noteholders or the Certificateholders, (ii) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the Percentage
Interest required to consent to any such amendment, without the consent of the
Holders of all the outstanding Notes and Holders of all outstanding Certificates
or (iii) if an Insurer Default shall have occurred and be continuing, and the
Security Insurer has not consented to such action, such action shall not
adversely affect in any material respect the interests of the Security Insurer.
Promptly after the execution of any such amendment or consent, the
Servicer shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Trustee and each of the Rating
Agencies.
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<PAGE> 40
(c) It shall not be necessary for the consent of the
Certificateholders, the Noteholders or the Trustee pursuant to this Section to
approve the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of the Certificateholders
provided for in this Agreement or in any other Basic Document) and of evidencing
the authorization of the execution thereof by the Certificateholders shall be
subject to such reasonable requirements as the Owner Trustee may prescribe.
(d) Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the filing of such amendment
with the Secretary of State.
(e) Prior to the execution of any amendment to this Agreement
or the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise. The Servicer shall furnish copies of any such amendments
to this Agreement to each Rating Agency and the Security Insurer.
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided beneficial ownership
interest therein only in accordance with Articles V and IX. No transfer, by
operation of law or otherwise, of any right, title or interest of the
Certificateholders to and in their ownership interest in the Owner Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for Section
2.7, the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Security Insurer, the Seller, the Certificateholders, the Servicer
and, to the extent expressly provided herein, the Trustee and the Noteholders,
and nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.4 Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed certified mail, return receipt requested and shall be deemed to have
been duly given upon receipt, if to the Owner Trustee, addressed to the
Corporate Trust Office; if to the Seller, addressed to 47 West 200 South, Suite
500, Salt Lake City, UT 84101, Attention Jennifer J. Bolt, with a copy to
Franklin Resources, Inc., 777 Mariners Island Blvd., San Mateo, CA 94404,
Attention: General Counsel; if to the
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<PAGE> 41
Security Insurer, addressed to MBIA Insurance Corporation, 113 King Street,
Armonk, NY 10504, Attention: Insured Portfolio Management SF; or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Successors and Assigns. This Agreement shall inure to
the benefit of, the Representative, the Security Insurer, the Owner Trustee and
its successors, each Certificateholder and its successors and permitted assigns
and be binding upon the parties hereto and their respective successors and
permitted assigns. Any request, notice, direction, consent, waiver or other
instrument or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder. Except as otherwise provided in this
Agreement, no other Person shall have any right or obligation hereunder. Without
limiting the generality of the foregoing, all covenants and agreements in this
Agreement which confer rights upon the Security Insurer shall be for the benefit
of and run directly to the Security Insurer, and the Security Insurer shall be
entitled to rely on and enforce such covenants, subject, however, to the
limitations on such rights provided in this Agreement and the Basic Documents.
The Security Insurer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Note Policy) upon
delivery of a written notice to the Owner Trustee.
SECTION 11.8 [Reserved]
SECTION 11.9 No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Trustee and each
Noteholder by accepting the benefits of this Agreement, hereby covenant and
agree that they will not at any time institute against the Seller, or join in
any institution against the Seller of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Trust Certificates, the Notes, this Agreement or
any of the Basic Documents.
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<PAGE> 42
SECTION 11.10 No Recourse. Each Certificateholder by accepting a
Trust Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial ownership interests in the Trust only and do not represent
interests in or obligations of the Seller, the Servicer, the Owner Trustee, the
Trustee, the Security Insurer or any Affiliate thereof and no recourse by such
Certificateholder may be had against such parties or their assets, except as may
be expressly set forth or contemplated in this Agreement, the Trust Certificates
or the Basic Documents.
SECTION 11.11 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13 [Reserved]
SECTION 11.14 Servicer. The Servicer is authorized to prepare, or
cause to be prepared, execute and deliver on behalf of the Trust all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Trust or the Owner Trustee to prepare, file or deliver
pursuant to the Basic Documents. Upon written request, the Owner Trustee shall
execute and deliver to the Servicer a limited power of attorney appointing the
Servicer the Trust's agent and attorney-in-fact to prepare, or cause to be
prepared, execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.
SECTION 11.15. Third Party Beneficiary. The Security Insurer shall
be a third party beneficiary hereof and, except as expressly limited by the
terms hereof, so long as no Insurer Default constituting a failure to pay under
the Note Policy shall have occurred and be continuing, shall be entitled to
enforce the provisions hereof as if a party hereto.
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<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
BANKERS TRUST (DELAWARE),
as Owner Trustee
By: /s/ M. Lisa Wilkins
______________________________
Name: M. Lisa Wilkins
Title: Assistant Secretary
FRANKLIN RECEIVABLES LLC,
as Seller
By: FRANKLIN CAPITAL CORPORATION
its managing member
By: /s/ Jennifer J. Bolt
______________________________
Name: Jennifer J. Bolt
Title: President
Acknowledged and agreed as to
Section 8.1:
FRANKLIN CAPITAL CORPORATION
By: /s/ Jennifer J. Bolt
_______________________________
Name: Jennifer J. Bolt
Title: President
37
<PAGE> 44
EXHIBIT A
No. 1 100% Percentage Interest
SEE REVERSE FOR CERTAIN DEFINITIONS
THE TRUST CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR "BLUE
SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING ANY TRUST CERTIFICATE, AGREES FOR
THE BENEFIT OF THE ISSUER THAT SUCH TRUST CERTIFICATE IS BEING ACQUIRED FOR ITS
OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR
TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION THEREOF OR OTHERWISE), (2)
TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (3)
IN A TRANSACTION COMPLYING WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION.
NO INTEREST IN THIS TRUST CERTIFICATE MAY BE ACQUIRED BY OR FOR THE
ACCOUNT OF (1) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA")) THAT IS
SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (2) A PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (INCLUDING, WITHOUT
LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS AND KEOGH PLANS), OR (3) ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF SUCH PLAN'S INVESTMENT
IN THE ENTITY (EACH A "BENEFIT PLAN"). BY ACCEPTING AND HOLDING THIS
CERTIFICATE, THE HOLDER HEREOF AND THE CERTIFICATE OWNER SHALL EACH BE DEEMED TO
HAVE REPRESENTED AND WARRANTED THAT IT IS NOT A BENEFIT PLAN.
A-1
<PAGE> 45
FRANKLIN AUTO TRUST 1999-1
ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Trust, as defined below, the property of which includes a pool of motor vehicle
retail installment sale contracts secured by new and used automobiles and light
trucks, and sold to the Trust by Franklin Receivables LLC.
(This Trust Certificate does not represent an interest in or obligation of
Franklin Receivables LLC or any of its Affiliates, except to the extent
described below.)
THIS CERTIFIES THAT FRANKLIN RECEIVABLES LLC is the registered owner
of 100% Percentage Interest nonassessable, fully-paid, beneficial ownership
interest in Franklin Auto Trust 1999-1 (the "Trust") formed by Franklin
Receivables LLC, a limited liability company (the "Seller").
The Trust was created pursuant to an Amended and Restated Trust
Agreement dated as of May 1, 1999 (the "Trust Agreement"), between the Seller
and Bankers Trust (Delaware), not in its individual capacity but solely as owner
trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement.
This Certificate is one of the duly authorized Trust Certificates
designated as "Asset Backed Certificates" (herein called the "Trust
Certificates"). Under the Indenture dated as of May 1, 1999, between the Trust
and Chase Manhattan Bank as trustee and indenture collateral agent, the Trust
also issued two classes of Notes designated as "Class A-1 5.52% Asset Backed
Notes" (the "Class A-1 Notes"), and "Class A-2 6.05% Asset Backed Notes" (the
"Class A-2 Notes" and together with the Class A-1 Notes, the "Notes"). This
Trust Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the holder of this
Trust Certificate by virtue of the acceptance hereof assents and by which such
holder is bound. The property of the Trust includes a pool of prime, non-prime
and sub-prime motor vehicle retail installment sale contracts secured by new and
used automobiles and light trucks, (the "Receivables"), all monies received on
the Receivables on or after May 1, 1999, security interests in the vehicles
financed thereby, certain bank accounts and the proceeds thereof, proceeds from
claims on certain insurance policies and certain other rights under the Trust
Agreement and the Sale and Servicing Agreement.
Under the Trust Agreement, there will be distributed on the 15th day
of each month or, if such 15th day is not a Business Day, the next Business Day
(the "Distribution Date"), commencing in June 1999 to the Person in whose name
this Trust Certificate is registered at the close of business on the last day of
the calendar month immediately preceding the Distribution Date (the "Record
Date") such Certificateholder's Percentage Interest in the amount to be
distributed to Certificateholders on such Distribution Date.
A-2
<PAGE> 46
The holder of this Trust Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, as applicable.
It is the intent of the Seller, the Servicer, and the
Certificateholders that, for purposes of Federal income taxes, the Trust will be
disregarded as an entity apart from its owner if there is only one owner for
Federal income tax purposes, or, if there is more than one owner for Federal
income tax purposes, will be treated as a partnership the partners of which are
the Certificateholders. The Certificateholders by acceptance of a Trust
Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Trust and the Trust Certificates for such tax purposes as just
described.
Each Certificateholder, by its acceptance of a Trust Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Trust or the Seller, or join in any institution against the Trust or
the Seller of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Trust Certificates, the Notes, the Trust Agreement or any of the Basic
Documents.
Distributions on this Trust Certificate will be made as provided in
the Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Trust Certificate Register without the
presentation or surrender of this Trust Certificate or the making of any
notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Trust Certificate will
be made after due notice by the Owner Trustee of the pendency of such
distribution and only upon presentation and surrender of this Trust Certificate
at the office or agency maintained for the purpose by the Owner Trustee in the
Borough of Manhattan, the City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Trust Certificate shall not entitle the holder hereof to any benefit under
the Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
THIS TRUST CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
A-3
<PAGE> 47
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Trust Certificate to be duly
executed.
Date: May 27, 1999
FRANKLIN AUTO TRUST 1999-1
By: BANKERS TRUST (DELAWARE),
solely as Owner Trustee and not in its individual
capacity
By: ________________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates of Franklin Auto Trust 1999-1
referred to in the within-mentioned Trust Agreement.
Date: May 27, 1999
BANKERS TRUST (DELAWARE),
solely as Owner Trustee and not in its individual
capacity
By: ________________________________
Authorized Signatory
OR
BANKERS TRUST (DELAWARE)
solely as Owner Trustee and not in its individual
capacity
By: Bankers Trust Company, as Authenticating Agent
By: ________________________________
Authorized Signatory
A-4
<PAGE> 48
(Reverse of Trust Certificate)
The Trust Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Owner Trustee or any of their
respective Affiliates and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated herein or in the
Trust Agreement, the Indenture or the Basic Documents. In addition, this Trust
Certificate is not guaranteed by any governmental agency or instrumentality and
is limited in right of payment to certain collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth
herein and in the Sale and Servicing Agreement. The Trust Certificates are
limited in right of payment to certain collections and recoveries respecting the
Receivables, all as more specifically set forth in the Sale and Servicing
Agreement. A copy of each of the Sale and Servicing Agreement and the Trust
Agreement may be examined during normal business hours at the principal office
of the Seller, and at such other places, if any, designated by the Seller, by
any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller and the rights of the Certificateholders under the
Trust Agreement at any time by the Seller and the Owner Trustee with the prior
written consent of the Security Insurer (so long as an Insurer Default shall not
have occurred and be continuing) and with the consent of the holders of the
Notes and the Trust Certificates evidencing not less than a majority of the
outstanding principal balance of the Notes and a majority in Percentage Interest
of the Certificates. Any such consent by the holder of this Trust Certificate
shall be conclusive and binding on such holder and on all future holders of this
Trust Certificate and of any Trust Certificate issued upon the transfer hereof
or in exchange hereof or in lieu hereof whether or not notation of such consent
is made upon this Trust Certificate. The Trust Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
holders of any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Trust Certificate is
registerable in the Certificate Register upon surrender of this Trust
Certificate for registration of transfer at the offices or agencies of the
Certificate Registrar maintained by the Owner Trustee in the Borough of
Manhattan, the City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Trust Certificates in authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is Bankers Trust Company.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, Trust Certificates are exchangeable for new Trust
Certificates in authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same.
A-5
<PAGE> 49
No service charge will be made for any such registration of transfer or
exchange, but the Owner Trustee or the Certificate Registrar may require payment
of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the person in whose name
this Trust Certificate is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of all
property held as part of the Owner Trust Estate. The Servicer may at its option
purchase the corpus of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable, subject to certain restrictions, only as of the last
day of any Monthly Period as of which the Pool Balance is 10% or less of the
Original Pool Balance.
A-6
<PAGE> 50
ASSIGNMENT
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
________________________________________________________________________________
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constitutes and appoints _______________________________________________
attorney to transfer said Trust Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
Signature Guaranteed:
*
- ----------
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Trust Certificate in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
A-7
<PAGE> 51
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
FRANKLIN AUTO TRUST 1999-1
THIS Certificate of Trust of Franklin Auto Trust 1999-1 (the
"Trust"), is being duly executed and filed by _________________________________,
as trustee, to form a business trust under the Delaware Business Trust Act (12
Del. Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is FRANKLIN
AUTO TRUST 1999-1.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is _______________________, ________________,
__________________, _______________, Delaware _________, Attention:____________.
B-1
<PAGE> 52
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust.
BANKERS TRUST (DELAWARE),
not in its individual capacity but
solely as owner trustee of the Trust.
By:____________________________________
Name:
Title:
B-2
<PAGE> 1
Exhibit 4.2
Execution Copy
================================================================================
FRANKLIN AUTO TRUST 1999-1
$66,500,000 CLASS A-1 5.52% Asset Backed Notes
$40,023,000 CLASS A-2 6.05% Asset Backed Notes
--------------------------------
INDENTURE
between
FRANKLIN AUTO TRUST 1999-1,
Issuer
and
THE CHASE MANHATTAN BANK,
Trustee and Indenture Collateral Agent
Dated as of May 1, 1999
================================================================================
<PAGE> 2
CROSS REFERENCE TABLE
TIA Indenture
Section Section
310 (a) (1) ........................................... 6.11
(a) (2) ........................................... 6.11
(a) (3) ........................................... 6.10; 6.11
(a) (4) ........................................... N.A.
(a) (5) ........................................... 6.11
(b) ........................................... 6.8; 6.11
(c) ........................................... N.A.
311 (a) ........................................... 6.12
(b) ........................................... 6.12
(c) ........................................... N.A.
312 (a) ........................................... 7.1
(b) ........................................... 7.2
(c) ........................................... 7.2
313 (a) ........................................... 7.4
(b) (1) ........................................... 7.4
(b) (2) ........................................... 7.4
(c) ........................................... 11.5
(d) ........................................... 7.3
314 (a) ........................................... 3.9; 7.3
(b) ........................................... 11.15
(c) (1) ........................................... 11.1
(c) (2) ........................................... 11.1
(c) (3) ........................................... 11.1
(d) ........................................... 11.1
(e) ........................................... 1.1; 11.1
(f) ........................................... 11.1
315 (a) ........................................... 6.1
(b) ........................................... 6.5; 11.5
(c) ........................................... 6.1
(d) ........................................... 6.1
(e) ........................................... 5.14
316 (a) (last sentence) ................................ 1.1
(a) (1)(A).......................................... 5.12
(a) (1)(B).......................................... 5.13
(a) (2) ........................................... N.A.
(b) ........................................... 5.7; 5.8
(c) ........................................... N.A
317 (a) (1) ........................................... 5.3
(a) (2) ........................................... 5.3
(b) ........................................... 3.3
318 (a) ........................................... 11.7
(b) ........................................... N.A.
(c) ........................................... 11.7
- -------------------
(1) Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of this Indenture.
(2) N.A. means Not Applicable.
<PAGE> 3
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions...................................................3
SECTION 1.2 Incorporation by Reference of Trust Indenture Act............11
SECTION 1.3 Rules of Construction........................................12
ARTICLE II
The Notes
SECTION 2.1 Form.........................................................12
SECTION 2.2 Execution, Authentication and Delivery.......................13
SECTION 2.3 Temporary Notes..............................................13
SECTION 2.4 Registration; Registration of Transfer and Exchange..........14
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes...................15
SECTION 2.6 Persons Deemed Owner.........................................16
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest........16
SECTION 2.8 Cancellation.................................................17
SECTION 2.9 Release of Collateral........................................17
SECTION 2.10 Book-Entry Notes.............................................18
SECTION 2.11 Notices to Clearing Agency...................................19
SECTION 2.12 Definitive Notes.............................................19
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest............................19
SECTION 3.2. Maintenance of Office or Agency..............................20
SECTION 3.3 Money for Payments To Be Held in Trust.......................20
SECTION 3.4 Existence....................................................21
SECTION 3.5 Protection of Trust Estate...................................22
SECTION 3.6 Opinions as to Trust Estate..................................22
SECTION 3.7 Performance of Obligations; Servicing of Receivables.........23
i
<PAGE> 4
SECTION 3.8 Negative Covenants...........................................24
SECTION 3.9 Annual Statement as to Compliance............................25
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms...........25
SECTION 3.11 Successor or Transferee......................................27
SECTION 3.12 No Other Business............................................28
SECTION 3.13 No Borrowing.................................................28
SECTION 3.14 Servicer's Obligations.......................................28
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities............28
SECTION 3.16 Capital Expenditures.........................................28
SECTION 3.17 Compliance with Laws.........................................28
SECTION 3.18 Restricted Payments..........................................29
SECTION 3.19 Notice of Events of Default..................................29
SECTION 3.20 Further Instruments and Acts.................................29
SECTION 3.21 Amendments of Sale and Servicing Agreement and Trust
Agreement....................................................29
SECTION 3.22 Income Tax Characterization..................................29
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture......................29
SECTION 4.2 Application of Trust Money...................................31
SECTION 4.3 Repayment of Moneys Held by Paying Agent.....................31
ARTICLE V
Remedies
SECTION 5.1 Events of Default............................................31
SECTION 5.2 Rights Upon Event of Default.................................33
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee......................................................34
SECTION 5.4 Remedies.....................................................36
SECTION 5.5 Optional Preservation of the Receivables.....................38
SECTION 5.6 Priorities...................................................38
SECTION 5.7 Limitation of Suits..........................................39
SECTION 5.8 Unconditional Rights of Noteholders To Receive Principal
and Interest.................................................39
SECTION 5.9 Restoration of Rights and Remedies...........................40
SECTION 5.10 Rights and Remedies Cumulative...............................40
SECTION 5.11 Delay or Omission Not a Waiver...............................40
ii
<PAGE> 5
SECTION 5.12 Control by Noteholders.......................................40
SECTION 5.13 Waiver of Past Defaults......................................41
SECTION 5.14 Undertaking for Costs........................................41
SECTION 5.15 Waiver of Stay or Extension Laws.............................42
SECTION 5.16 Action on Notes..............................................42
SECTION 5.17 Performance and Enforcement of Certain Obligations...........42
SECTION 5.18 Claims Under Note Policy.....................................43
SECTION 5.19 Preference Claims............................................44
ARTICLE VI
The Trustee and the Indenture Collateral Agent
SECTION 6.1 Duties of Trustee............................................44
SECTION 6.2 Rights of Trustee............................................47
SECTION 6.3 Individual Rights of Trustee.................................48
SECTION 6.4 Trustee's Disclaimer.........................................48
SECTION 6.5 Notice of Defaults...........................................48
SECTION 6.6 Reports by Trustee to Holders................................49
SECTION 6.7 Compensation and Indemnity...................................49
SECTION 6.8 Replacement of Trustee.......................................50
SECTION 6.9 Successor Trustee by Merger..................................51
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee................51
SECTION 6.11 Eligibility; Disqualification................................53
SECTION 6.12 Preferential Collection of Claims Against Issuer.............53
SECTION 6.13 Appointment and Powers.......................................53
SECTION 6.14 Performance of Duties........................................54
SECTION 6.15 Limitation on Liability......................................54
SECTION 6.16 Reliance Upon Documents......................................55
SECTION 6.17 Successor Indenture Collateral Agent.........................55
SECTION 6.18 Compensation.................................................57
SECTION 6.19 Representations and Warranties of the Indenture Collateral
Agent........................................................57
SECTION 6.20 Waiver of Setoffs............................................57
SECTION 6.21 Control by the Controlling Party.............................58
iii
<PAGE> 6
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish To Trustee Names and Addresses of
Noteholders..................................................58
SECTION 7.2 Preservation of Information; Communications to Noteholders...58
SECTION 7.3 Reports by Issuer............................................58
SECTION 7.4 Reports by Trustee...........................................59
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money..........................................59
SECTION 8.2 Trust Accounts...............................................60
SECTION 8.3 General Provisions Regarding Accounts........................60
SECTION 8.4 Release of Trust Estate......................................61
SECTION 8.5 Opinion of Counsel...........................................61
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.......62
SECTION 9.2 Supplemental Indentures with Consent of Noteholders..........63
SECTION 9.3 Execution of Supplemental Indentures.........................65
SECTION 9.4 Effect of Supplemental Indenture.............................65
SECTION 9.5 Conformity With Trust Indenture Act..........................65
SECTION 9.6 Reference in Notes to Supplemental Indentures................65
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption...................................................66
SECTION 10.2 Form of Redemption Notice....................................66
SECTION 10.3 Notes Payable on Redemption Date.............................67
iv
<PAGE> 7
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc....................67
SECTION 11.2 Form of Documents Delivered to Trustee.......................69
SECTION 11.3 Acts of Noteholders..........................................70
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies........70
SECTION 11.5 Notices to Noteholders; Waiver...............................71
SECTION 11.6 Alternate Payment and Notice Provisions......................72
SECTION 11.7 Conflict with Trust Indenture Act............................72
SECTION 11.8 Effect of Headings and Table of Contents.....................72
SECTION 11.9 Successors and Assigns.......................................72
SECTION 11.10 Separability.................................................73
SECTION 11.11 Benefits of Indenture........................................73
SECTION 11.12 Legal Holidays...............................................73
SECTION 11.13. Governing Law...............................................73
SECTION 11.14 Counterparts.................................................73
SECTION 11.15 Recording of Indenture.......................................73
SECTION 11.16 Trust Obligation.............................................74
SECTION 11.17 No Petition..................................................74
SECTION 11.18 Inspection...................................................74
SECTION 11.19 No Joint Venture.............................................75
SECTION 11.20 Security Insurer as Controlling Party........................75
v
<PAGE> 8
EXHIBITS
EXHIBIT A - SCHEDULE OF RECEIVABLES
EXHIBIT B - SALE AND SERVICING AGREEMENT
EXHIBIT C - NOTE DEPOSITORY AGREEMENT
EXHIBIT D-1 - FORM OF CLASS A-1 NOTES
EXHIBIT D-2 - FORM OF CLASS A-2 NOTES
EXHIBIT E FORM OF NOTE POLICY
vi
<PAGE> 9
INDENTURE dated as of May 1, 1999, between FRANKLIN AUTO TRUST
1999-1, a Delaware business trust, as issuer (the "Issuer"), and THE CHASE
MANHATTAN BANK, as trustee (the "Trustee") and Indenture Collateral Agent (as
defined below).
Each party agrees as follows for the benefit of the other party and
for the Security Insurer and the equal and ratable benefit of the Holders of the
Issuer's Class A-1 5.52% Asset Backed Notes (the "Class A-1 Notes") and Class
A-2 6.05% Asset Backed Notes (the "Class A-2 Notes" and, together with the Class
A-1 Notes, the "Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer has agreed to assign
the Collateral (as defined below) as collateral to the Indenture Collateral
Agent for the benefit of the Trustee on behalf of the Noteholders and the
Security Insurer.
MBIA Insurance Corporation (the "Security Insurer") has issued and
delivered a note guaranty insurance policy, dated the Closing Date (with
endorsements, if any, the "Note Policy"), pursuant to which the Security Insurer
guarantees the Insured Obligations (as defined in the Note Policy).
As an inducement to the Security Insurer to issue and deliver the
Note Policy, the Trustee, the Servicer, Franklin Resources, Inc., the Seller and
the Security Insurer have executed and delivered the Insurance and Reimbursement
Agreement, dated as of May 27, 1999 (as amended from time to time, the
"Insurance Agreement").
As an additional inducement to the Security Insurer to issue the
Note Policy, and as security for the performance by the Issuer of the Insurer
Issuer Secured Obligations and as security for the performance by the Issuer of
the Trustee Issuer Secured Obligations, the Issuer has agreed to assign the
Collateral as collateral to the Indenture Collateral Agent for the benefit of
the Issuer Secured Parties, as their respective interests may appear.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Collateral Agent at the
Closing Date, for the benefit of the Issuer Secured Parties to secure the Issuer
Secured Obligations, all of the Issuer's right, title and interest in and to (a)
the Receivables, all monies representing interest and principal payments
received thereunder after the Cutoff Date and, with respect to Precomputed
Receivables, monies representing interest and principal payments received
thereunder prior to the Cutoff Date that are due on or after the Cutoff Date;
(b) an assignment of the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and any other interest of the Issuer in the
Financed Vehicles; (c) any proceeds with respect to the Receivables repurchased
by a Dealer, pursuant to a Dealer Agreement, as a result of a breach of
representation or warranty in the related Dealer Agreement; (d) any proceeds
with respect to the Receivables from claims on any physical damage, credit life
or disability insurance policies covering Financed Vehicles or Obligors and any
proceeds from the liquidation of the
1
<PAGE> 10
Receivables; (e) all funds on deposit from time to time in the Trust Accounts,
and in all investments and proceeds thereof and all rights of the Issuer therein
(including all income thereon); (f) the Receivables Files, (g) the Issuer's
rights and benefits, but none of its obligations or burdens, under the Sale and
Servicing Agreement (including all rights of the Seller under the Purchase
Agreement assigned to the Issuer pursuant to the Sale and Servicing Agreement);
and (h) all present and future claims, demands, causes and choses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction except as
set forth herein, and to secure compliance with the provisions of this
Indenture, all as provided in this Indenture.
The Indenture Collateral Agent, for the benefit of the Trustee on
behalf of the Holders of the Notes and for the benefit of the Security Insurer
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to perform its duties required
in this Indenture to the best of its ability to the end that the interests of
the Holders of the Notes and the Security Insurer may be adequately and
effectively protected.
2
<PAGE> 11
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. A Person shall not be
deemed to be an Affiliate of any person solely because such other Person has the
contractual right or obligation to manage such Person unless such other Person
controls such Person through equity ownership or otherwise.
"Authorized Officer" means, with respect to the Issuer and the
Servicer, any officer (or agent acting under a power of attorney) of the Owner
Trustee or the Servicer, as applicable, who is authorized to act for the Owner
Trustee or the Servicer, as applicable, in matters relating to the Issuer or the
Servicer and who is identified on the list of Authorized Officers delivered by
each of the Owner Trustee and the Servicer to the Trustee on the Closing Date
(as such list may be modified or supplemented from time to time thereafter).
"Basic Documents" means the Certificate of Trust, the Trust
Agreement, the Sale and Servicing Agreement, this Indenture, the Note Depository
Agreement, the Purchase Agreement, the Spread Account Agreement, the Insurance
Agreement, the Indemnification Agreement and other documents and certificates
delivered in connection therewith.
"Book Entry Notes" means a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10.
"Business Day" means a day other than a Saturday, a Sunday or other
day on which commercial banks located in the states of California or New York
are authorized or obligated to be closed.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class A-1 Notes" means the Class A-1 5.52% Asset Backed Notes,
substantially in the form of Exhibit D-1.
3
<PAGE> 12
"Class A-1 Interest Rate" means 5.52% per annum (computed on the
basis of a 360-day year of twelve 30-day months.
"Class A-2 Notes" means the Class A-2 6.05% Asset Backed Notes,
substantially in the form of Exhibit D-2.
"Class A-2 Interest Rate" means 6.05% per annum (computed on the
basis of a 360-day year of twelve 30-day months).
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means May 27, 1999.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of
this Indenture.
"Controlling Party" means the Security Insurer, so long as no
Insurer Default shall have occurred and be continuing, and the Trustee acting at
the direction of 66% of the Noteholders, for so long as an Insurer Default shall
have occurred and be continuing.
"Corporate Trust Office" means the principal office of the Trustee
at which at any particular time its corporate trust business shall be
administered, which office at date of the execution of this Agreement is located
at 450 West 33rd Street, 14th Floor, New York, New York 10001-2697, Attention:
Capital Markets Fiduciary Services: Franklin 1999-1 or at such other address as
the Trustee may designate from time to time by notice to the Noteholders, the
Security Insurer, the Servicer and the Issuer, or the principal corporate trust
office of any successor Trustee (the address of which the successor Trustee will
notify the Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
4
<PAGE> 13
"Executive Officer" means, with respect to any corporation, the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any general
partner thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon or a
security interest in or right of set-off against, deposit, or set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended and supplemented from
time to time.
"Indenture Collateral Agent" means, initially, The Chase Manhattan
Bank, in its capacity as collateral agent on behalf of the Issuer Secured
Parties, including its successors in interest, until and unless a successor
Person shall have become the Indenture Collateral Agent pursuant to Section 6.17
hereof, and thereafter "Indenture Collateral Agent" shall mean such successor
Person.
5
<PAGE> 14
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Seller and any Affiliate of any of the foregoing persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Collateral Agent under the circumstances described
in, and otherwise complying with, the applicable requirements of Section 11.1,
prepared by an Independent appraiser or other expert appointed by an Issuer
Order and approved by the Indenture Collateral Agent in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read the definition of "Independent" in this Indenture and that the signer is
Independent within the meaning thereof.
"Insurance Agreement Trigger Event " has the meaning specified
therefor in the Insurance Agreement.
"Insurer Issuer Secured Obligations" means all amounts and
obligations which the Issuer may at any time owe to the Security Insurer under
this Indenture, the Insurance Agreement or any other Basic Document.
"Interest Rate" means, with respect to the (i) Class A-1 Notes, the
Class A-1 Interest Rate and (ii) Class A-2 Notes, the Class A-2 Interest Rate.
"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"Issuer Secured Obligations" means the Insurer Issuer Secured
Obligations and the Trustee Issuer Secured Obligations.
"Issuer Secured Parties" means each of the Trustee in respect of the
Trustee Issuer Secured Obligations and the Security Insurer in respect of the
Insurer Issuer Secured Obligations.
"Note" means a Class A-1 Note and a Class A-2 Note.
"Note Depository Agreement" means the agreement among the Issuer,
the Trustee, the Servicer and The Depository Trust Company, as the initial
Clearing Agency, dated May 26, 1999 substantially in the form of Exhibit C.
6
<PAGE> 15
"Note Policy" means the note guaranty insurance policy issued by the
Security Insurer with respect to the Notes, including any endorsements thereto,
if any, in the form of Exhibit E.
"Note Policy Claim Amount" has the meaning specified in the Note
Policy.
"Note Owner" means, with respect to a Book-Entry Note, the person
who is the owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.
"Notice" has the meaning specified in Section 5.18(b).
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Owner Trustee, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 and TIA
ss. 314, and delivered to the Trustee. Unless otherwise specified, any reference
in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Owner Trustee.
"Opinion of Counsel" means one or more written opinions of counsel
who may, except as otherwise expressly provided in this Indenture, be employees
of or counsel to the Issuer, the Seller or the Servicer and who shall be
satisfactory to the Controlling Party and addressed to the Controlling Party,
and which shall comply with any applicable requirements of Section 11.01, and
shall be in form and substance satisfactory to the Controlling Party, and shall
be addressed to the Controlling Party.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor, satisfactory
to the Trustee); and
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(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held by a
bona fide purchaser;
provided, however, that Notes which have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Security Insurer has been paid as subrogee hereunder or reimbursed pursuant
to the Insurance Agreement as evidenced by a written notice from the Security
Insurer delivered to the Trustee, and the Security Insurer shall be deemed to be
the Holder thereof to the extent of any payments thereon made by the Security
Insurer; provided, further, that in determining whether the Holders of the
requisite Outstanding Amount of the Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Seller or any Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that a Responsible Officer of
the Trustee either actually knows to be so owned or has received written notice
thereof shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon the Notes,
the Seller or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all
Notes, or class of Notes, as applicable, Outstanding at the date of
determination.
"Paying Agent" means the Trustee or any other Person acceptable to
the Security Insurer that meets the eligibility standards for the Trustee
specified in Section 6.11 and is authorized by the Issuer to make the payments
to and distributions from the Collection Account and the Note Distribution
Account, including payment of principal of or interest on the Notes on behalf of
the Issuer.
"Payment Date" means a Distribution Date.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Claim" has the meaning specified in Section 5.19(b).
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
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"Record Date" means, with respect to a Payment Date or Redemption
Date, the close of business on the last Business Day immediately preceding such
Payment Date or Redemption Date.
"Redemption Date" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or a payment to Noteholders pursuant to Section
10.1(c), the Payment Date specified by the Servicer or the Issuer pursuant to
Section 10.1(a) or (c) as applicable.
"Redemption Price" means (a) in the case of a redemption of the
Notes pursuant to Section 10.1(a), an amount equal to the unpaid principal
amount of each class of Notes being redeemed plus accrued and unpaid interest
thereon to but excluding the Redemption Date and any amounts then owing to the
Security Insurer or (b) in the case of a payment made to Noteholders pursuant to
Section 10.1(c), the amount on deposit in the Note Distribution Account, but not
in excess of the amount specified in clause (a) above.
"Responsible Officer" means, with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any Vice
President, Assistant Vice President, Assistant Treasurer, Assistant Secretary,
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and having direct
responsibility for this Indenture and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement dated as of May 1, 1999, among the Issuer, the Representative, the
Seller and the Servicer, substantially in the form of Exhibit B as the same may
be amended or supplemented from time to time.
"Schedule of Receivables" means the listing of the Receivables set
forth in Exhibit A (which Exhibit may be in the form of microfiche);
"State" means any one of the 50 states of the United States of
America or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.7(e).
"Termination Date" means the latest of (i) the expiration of the
Note Policy and the return of the Note Policy to the Security Insurer for
cancellation, (ii) the date on which the Security Insurer shall have received
payment and performance of all Insurer Issuer Secured Obligations and (iii) the
date on which the Trustee shall have received payment and performance of all
Trustee Issuer Secured Obligations.
"Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of this Indenture for the benefit
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of the Noteholders and the Security Insurer (including all property and
interests Granted to the Indenture Collateral Agent), including all proceeds
thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically provided.
"Trustee" means The Chase Manhattan Bank, a New York banking
corporation, not in its individual capacity but as trustee under this Indenture,
or any successor trustee under this Indenture.
"Trustee Issuer Secured Obligations" means all amounts and
obligations which the Issuer may at any time owe to the Trustee for the benefit
of the Noteholders under this Indenture or the Notes.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
(a) Except as otherwise specified herein, the following terms have
the respective meanings set forth in the Sale and Servicing Agreement as in
effect on the Closing Date for all purposes of this Indenture, and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms:
Section of Sale and
Term Servicing Agreement
- ---- -------------------
Annual Percentage Rate or APR......................... Section 1.1
Certificateholders.................................... Section 1.1
Closing Date.......................................... Section 1.1
Collection Account.................................... Section 1.1
Collection Period..................................... Section 1.1
Contract.............................................. Section 1.1
Deficiency Notice..................................... Section 1.1
Determination Date.................................... Section 1.1
Distribution Amount................................... Section 1.1
Distribution Date..................................... Section 1.1
Draw Date............................................. Section 1.1
Eligible Deposit Account.............................. Section 1.1
Eligible Investments.................................. Section 1.1
Final Scheduled Distribution Date..................... Section 1.1
Final Scheduled Maturity Date......................... Section 1.1
Financed Vehicle...................................... Section 1.1
Interest Period....................................... Section 1.1
Note Distribution Account............................. Section 1.1
Insolvency Proceeds................................... Section 1.1
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Insurance Agreement................................... Section 1.1
Insurance Agreement Trigger Event..................... Section 1.1
Insurer Default....................................... Section 1.1
Interest Period....................................... Section 1.1
Monthly Period........................................ Section 1.1
Note Distribution Account............................. Section 1.1
Noteholders' Distributable Amount..................... Section 1.1
Noteholders' Interest Distributable Amount............ Section 1.1
Noteholders' Percentage............................... Section 1.1
Noteholders' Principal Distributable Amount........... Section 1.1
Obligor............................................... Section 1.1
Original Pool Balance................................. Section 1.1
Owner Trustee......................................... Section 1.1
Parity Date........................................... Section 1.1
Person................................................ Section 1.1
Pool Balance.......................................... Section 1.1
Precomputed Receivable................................ Section 1.1
Purchase Agreement.................................... Section 1.1
Purchased Receivable.................................. Section 1.1
Rating Agency......................................... Section 1.1
Rating Agency Condition............................... Section 1.1
Receivable............................................ Section 1.1
Presentation.......................................... Section 1.1
Security Insurer...................................... Section 1.1
Seller................................................ Section 1.1
Servicer.............................................. Section 1.1
Servicer Default...................................... Section 1.1
Simple Interest Receivable............................ Section 1.1
Total Distribution Amount............................. Section 1.1
Trust Accounts........................................ Section 1.1
Trust Agreement....................................... Section 1.1
(b) Capitalized terms used herein and not otherwise defined herein
or in the Sale and Servicing Agreement have the meanings assigned to them in the
Trust Agreement.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
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"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE II
The Notes
SECTION 2.1 Form. The Class A-1 Notes and the Class A-2 Notes and in
each case together with the Trustee's certificate of authentication, shall be in
substantially the form set forth in Exhibits D-1 and D-2 respectively, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may, consistently herewith, be determined by the officers executing such Notes,
as evidenced by their execution of the Notes. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
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Each Note shall be dated the date of its authentication. The terms
of the Notes set forth in Exhibits D-1 and D-2 are part of the terms of this
Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall upon receipt of the Note Policy and Issuer Order
authenticate and deliver Class A-1 Notes for original issue in an aggregate
principal amount of $66,500,000 and Class A-2 Notes for original issue in the
aggregate principal amount of $40,023,000. The aggregate principal amounts of
the Class A-1 Notes and Class A-2 Notes outstanding at any time may not exceed
such amounts except as provided in Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples thereof (except for one Note of each class which may be
issued in a denomination other than an integral multiple of $1,000).
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes
upon surrender of the temporary Notes at the office or agency of the Issuer to
be maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary
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Notes shall in all respects be entitled to the same benefits under this
Indenture as Definitive Notes.
SECTION 2.4 Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Trustee shall be "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2, if
the requirements of Section 8-401(1) of the UCC are met the Issuer shall execute
and upon its request the Trustee shall authenticate and the Noteholder shall
obtain from the Trustee, in the name of the designated transferee or
transferees, one or more new Notes, in any authorized denominations, of the same
class and a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes
in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, if the requirements
of Section 8-401(1) of the UCC are met the Issuer shall execute and upon its
request the Trustee shall authenticate and the Noteholder shall obtain from the
Trustee, the Notes which the Noteholder making the exchange is entitled to
receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in
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substitution for, Stamp, all in accordance with the Exchange Act, and (ii)
accompanied by such other documents as the Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Note Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
The preceding provisions of this section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee and the Security Insurer (unless an Insurer
Default shall have occurred and be continuing) such security or indemnity as may
be required by it to hold the Issuer, the Trustee and the Security Insurer
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Trustee that such Note has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the UCC are met, the Issuer
shall execute and upon its request the Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note; provided, however, that if any such destroyed, lost or
stolen Note, but not a mutilated Note, shall have become or within seven days
shall be due and payable, or shall have been called for redemption, instead of
issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen
Note when so due or payable or upon the Redemption Date without surrender
thereof. If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the Issuer,
the Trustee and the Security Insurer shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at
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any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Notes duly
issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee, any agent of the
Issuer, the Trustee, the Security Insurer and any of their respective agents may
treat the Person in whose name any Note is registered (as of the day of
determination) as the owner of such Note for the purpose of receiving payments
of principal of and interest, if any, on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and none of the Issuer, the
Security Insurer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the forms of the Class A-1
Note and the Class A-2 Note set forth in Exhibits D-1 and D-2, respectively, and
such interest shall be payable on each Payment Date as specified therein. Any
installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid, to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.12, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a Payment
Date or on the Final Scheduled Distribution Date (and except for the Redemption
Price for any Note called for redemption pursuant to Section 10.1(a)) which
shall be payable as provided below. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on
each Payment Date as provided in the forms of the Class A-1 Note and the Class
A-2 Note set forth in Exhibits D-1 and D-2, respectively. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable, if not previously paid, on the date on which an Event of Default shall
have occurred and be continuing, if the Trustee or the Holders of the Notes
representing not less than a majority of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2. All principal payments on each class of Notes shall be made pro
rata to the Noteholders of such class entitled thereto. The Trustee shall notify
the Person in whose name a Note is registered at the close of business on the
Record Date preceding the Payment Date on which the Issuer expects that the
final installment of principal of and interest on such Note will be paid. Such
notice shall be mailed or transmitted by facsimile prior to such final Payment
Date and shall specify that such final installment will be payable only upon
presentation and surrender of such
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Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment. Notices in connection with
redemptions of Notes shall be mailed to Noteholders as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Notes,
the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Interest Rate in any lawful
manner. The Issuer may pay such defaulted interest to the Persons who are
Noteholders on a subsequent special record date, which date shall be at least
five Business Days prior to the payment date. The Issuer shall fix or cause to
be fixed any such special record date and payment date, and, at least 15 days
before any such special record date, the Issuer shall mail to each Noteholder
and the Trustee a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
(d) Promptly following the date on which all principal of and
interest on the Notes has been paid in full and the Notes have been surrendered
to the Trustee, the Trustee shall, if the Security Insurer has paid any amount
in respect of the Notes under the Note Policy or otherwise which has not been
reimbursed to it, deliver such surrendered Notes to the Security Insurer; and
upon reimbursement by the Issuer of any amounts paid by the Security Insurer in
respect of such Notes under the Note Policy or otherwise, the Security Insurer
shall deliver such Notes to the Trustee for cancellation.
SECTION 2.8 Cancellation. Subject to Section 2.7(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by the Trustee. Subject to Section 2.7(d), the
Issuer may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. Subject to Section 2.7(d), all canceled Notes may
be held or disposed of by the Trustee in accordance with its standard retention
or disposal policy as in effect at the time unless the Issuer shall direct by an
Issuer Order that they be destroyed or returned to it; provided that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Trustee.
SECTION 2.9 Release of Collateral. The Indenture Collateral Agent
shall, on or after the Termination Date, release any remaining portion of the
Trust Estate from the lien created by this Indenture and deposit in the
Collection Account any funds then on deposit in any other Trust Account. The
Indenture Collateral Agent shall release property from the lien created by this
Indenture pursuant to this Section 2.9 only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.1.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to
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The Depository Trust Company, the initial Clearing Agency, by, or on behalf of,
the Issuer. Such Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no Note
Owner will receive a Definitive Note representing such Note Owner's interest in
such Note, except as provided in Section 2.12. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Issuer, the Note Registrar and the Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the Notes
and the giving of instructions or directions hereunder) as the sole Holder
of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Note Depository Agreement,
unless and until Definitive Notes are issued pursuant to Section 2.12, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of and
interest on the Notes to such Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes evidencing
a specified percentage of the Outstanding Amount of the Notes, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Note Owners
and/or Clearing Agency Participants owning or representing, respectively,
such required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Trustee; and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payment of reproduction
and postage expenses associated with the distribution of such reports,
from the Trustee at the Corporate Trust Office.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
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SECTION 2.12 Definitive Notes. If (i) the Servicer advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Notes, and the
Servicer is unable to locate a qualified successor, (ii) the Servicer at its
option advises the Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (iii) after the occurrence of an Event of
Default, Note Owners representing beneficial interests aggregating at least a
majority of the Outstanding Amount of the Notes advise the Trustee through the
Clearing Agency in writing that the continuation of a book entry system through
the Clearing Agency is no longer in the best interests of the Note Owners, then
the Clearing Agency shall notify all Note Owners and the Trustee of the
occurrence of any such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Trustee of the typewritten
Note or Notes representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Note Registrar or
the 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 Notes, the Trustee shall recognize
the Holders of the Definitive Notes as Note-holders.
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest on the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing, the
Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Payment Date deposited therein pursuant to the Sale
and Servicing Agreement (i) for the benefit of the Class A-l Notes, to Class A-1
Noteholders and (ii) for the benefit of the Class A-2 Notes, to Class A-2
Noteholders. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Trustee to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
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SECTION 3.3 Money for Payments To Be Held in Trust. As provided in
Sections 8.2(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account shall be made on behalf of the Issuer by the
Trustee or by another Paying Agent, and no amounts so withdrawn from the
Collection Account and the Note Distribution Account for payments of Notes shall
be paid over to the Issuer except as provided in this Section.
At least one Business Day before each Payment Date and Redemption
Date, the Issuer shall deposit or cause to be deposited in immediately available
funds in the Note Distribution Account an aggregate sum sufficient to pay the
amounts then becoming due under the Notes, such sum to be held in trust for the
benefit of the Persons entitled thereto and (unless the Paying Agent is the
Trustee) shall promptly notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee and the Security Insurer an instrument in
which such Paying Agent shall agree with the Trustee (and if the Trustee acts as
Paying Agent, it hereby so agrees), subject to the provisions of this Section,
that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
(ii) give the Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) of which it has actual knowledge in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Trustee all sums held by it in trust for the payment of Notes if at
any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the
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Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such a payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Subject to applicable laws with respect to the escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be discharged from such trust and
be paid to the Issuer on Issuer Request with the consent of the Security Insurer
(unless an Insurer Default shall have occurred and be continuing), and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that if
such money or any portion thereof had been previously deposited by the Security
Insurer or the Indenture Collateral Agent with the Trustee for the payment of
principal or interest on the Notes, to the extent any amounts are owing to the
Security Insurer, such amounts shall be paid promptly to the Security Insurer
upon receipt of a written request by the Security Insurer to such effect, and
provided, further, that the Trustee or such Paying Agent, before being required
to make any such repayment, shall at the expense of the Issuer cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the Issuer.
The Trustee shall also adopt and employ, at the expense of the Issuer, any other
reasonable means of notification of such repayment (including, but not limited
to, mailing notice of such repayment to Holders whose Notes have been called but
have not been surrendered for redemption or whose right to or interest in moneys
due and payable but not claimed is determinable from the records of the Trustee
or of any Paying Agent, at the last address of record for each such Holder).
SECTION 3.4 Existence. Except as otherwise permitted by the
provisions of Section 3.10, the Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.5 Protection of Trust Estate. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Estate
(other than tax liens, mechanics' liens, and other liens specified in Section
3.8(iii)(B)), and the Issuer shall take all actions necessary to obtain and
maintain, in favor of the Indenture Collateral Agent, for the benefit of the
Issuer Secured Parties, a first lien on and a first priority, perfected security
interest in the Trust Estate (other than with
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respect to tax liens, mechanics' liens, and other liens specified in Section
3.8(iii)(B)). The Issuer will from time to time prepare (or shall cause to be
prepared), execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(i) Grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Indenture Collateral Agent for the
benefit of the Issuer Secured Parties created by this Indenture or carry
out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Estate and the rights of
the Indenture Collateral Agent in such Trust Estate against the claims of
all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the Trust
Estate when due.
The Issuer hereby designates the Indenture Collateral Agent its agent and
attorney-in-fact to execute any financing statement or continuation statement
reasonably required pursuant to this Section.
SECTION 3.6 Opinions as to Trust Estate. (a) On the Closing Date,
the Issuer shall furnish to the Trustee, the Indenture Collateral Agent and the
Security Insurer an Opinion of Counsel (if then required by the TIA) either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as
are necessary to perfect and make effective the first priority lien and security
interest in favor of the Indenture Collateral Agent, for the benefit of the
Issuer Secured Parties, created by this Indenture and reciting the details of
such action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and security interest effective.
(b) Within 30 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than three months after
the Closing Date, the Issuer shall cause the Servicer to furnish to the Trustee,
Indenture Collateral Agent and the Security Insurer an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as are necessary to
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maintain the lien and perfected first priority security interest created by this
Indenture and reciting the details of such action or stating that in the opinion
of such counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion of such
counsel, be required to maintain such lien and security interest of this
Indenture until January 30 in the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables.
(a) The Issuer will not take any action and will use its best efforts not to
permit any action to be taken by others that would release any Person from any
of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the
Security Insurer (so long as no Insurer Default shall have occurred and be
continuing, in such case, acceptable to the Trustee) to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Trustee and the Security Insurer in an Officer's Certificate
of the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Servicer to assist the Issuer in performing its
duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to preparing (or causing to be prepared) and filing (or causing to
be filed) all UCC financing statements and continuation statements required to
be filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Trustee, the Security Insurer or the Holders
of at least a majority of the Outstanding Amount of the Notes.
(d) If a responsible officer of the Owner Trustee shall have actual
knowledge of the occurrence of a Servicer Default under the Sale and Servicing
Agreement, the Issuer shall promptly notify the Trustee, the Security Insurer
and the Rating Agencies thereof in accordance with Section 11.4, and shall
specify in such notice the action, if any, the Issuer is taking in respect of
such default. If a Servicer Default shall arise from the failure of the Servicer
to perform any of its duties or obligations under the Sale and Servicing
Agreement or Insurance Agreement, the Issuer shall take all reasonable steps
available to it to remedy such failure.
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(e) If an Insurer Default shall have occurred and be continuing and
if the Trustee has given notice of termination to the Servicer of the Servicer's
rights and powers pursuant to Section 8.1 of the Sale and Servicing Agreement,
as promptly as possible thereafter, the Trustee shall appoint a successor
servicer in accordance with Section 8.2 of the Sale and Servicing Agreement.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Trustee. As soon as a Successor Servicer (other than the Trustee) is
appointed, the Issuer shall notify the Trustee of such appointment, specifying
in such notice the name and address of such Successor Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer, the Seller or the Representative of their respective
duties under the Basic Documents (x) without the prior consent of the Security
Insurer (unless an Insurer Default shall have occurred and be continuing) or (y)
if the effect thereof would adversely affect the Holders of the Notes.
SECTION 3.8 Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Basic
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Trust
Estate, unless directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the principal
or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against
any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien in favor of the Indenture Collateral Agent
created by this Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (B) permit any lien, charge,
excise, claim, security interest, mortgage or other encumbrance (other
than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof (other than tax liens, mechanics'
liens and other liens, in each case on a Financed Vehicle and arising
solely as a result of an action or omission of the related Obligor), (C)
permit the lien of this Indenture not to constitute a valid first priority
(other than with respect to any such tax, mechanics' or other lien)
perfected security interest in the Trust Estate or (D) amend, modify or
fail to comply with the provisions of the Basic Documents without the
prior written consent of the Controlling Party.
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SECTION 3.9 Annual Statement as to Compliance. The Issuer will
deliver to the Trustee and the Security Insurer, within 120 days after the end
of each fiscal year of the Issuer (commencing with the fiscal year ended
September 30, 1999), and otherwise in compliance with the requirements of TIA
Section 314(a)(4) an Officer's Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year and of
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a default
in the compliance of any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status
thereof.
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms. (a)
The Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any state and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee and the
Security Insurer (so long as no Insurer Default shall have occurred and be
continuing), the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Trustee and the Security Insurer (so
long as no Insurer Default shall have occurred and be continuing)) to the
effect that such transaction will not have any material adverse tax
consequence to the Trust, the Security Insurer, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation
or merger and such
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supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction have
been complied with (including any filing required by the Exchange Act);
and
(vii) the Issuer shall have given the Security Insurer written
notice of such consolidation or merger at least 20 Business Days prior to
the consummation of such action and shall have received the prior written
approval of the Security Insurer so long as no Insurer Default shall have
occurred and be continuing, of such consolidation or merger and the Issuer
or the Person (if other than the Issuer) formed by or surviving such
consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (a) greater than zero and (b) not less
than the net worth of the Issuer immediately prior to giving effect to
such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all
of its properties or assets, including those included in the Trust Estate, to
any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America or
any state, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, and the Security Insurer (so long as no Insurer Default shall
have occurred and be continuing), the due and punctual payment of the
principal of and interest on all Notes and the performance or observance
of every agreement and covenant of this Indenture and each of the Basic
Documents on the part of the Issuer to be performed or observed, all as
provided herein, (C) expressly agree by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of Holders of the Notes,
(D) unless otherwise provided in such supplemental indenture, expressly
agree to indemnify, defend and hold harmless the Issuer against and from
any loss, liability or expense arising under or related to this Indenture
and the Notes and (E) expressly agree by means of such supplemental
indenture that such Person (or if a group of persons, then one specified
Person) shall prepare (or cause to be prepared) and make all filings with
the Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Trustee and the Security Insurer (so
long as no Insurer Default shall have occurred and be continuing)) to the
effect that such transaction will
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not have any material adverse tax consequence to the Trust, the Security
Insurer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such conveyance or
transfer and such supplemental indenture comply with this Article III and
that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Security Insurer written
notice of such conveyance or transfer at least 20 Business Days prior to
the consummation of such action and shall have received the prior written
approval of the Security Insurer of such conveyance or transfer, and the
Issuer or the Person that acquires the properties or assets of the Issuer
by such conveyance or transfer has a net worth, immediately after such
conveyance or transfer, that is (a) greater than zero and (b) not less
than the net worth of the Issuer immediately prior to giving effect to
such conveyance or transfer.
SECTION 3.11 Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties
of the Issuer pursuant to Section 3.10 (b), Franklin Auto Trust 1999-1 will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery of written notice to the Trustee stating that Franklin Auto Trust
1999-1 is to be so released.
SECTION 3.12 No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic Documents
and activities incidental thereto.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations owing from time to time
to the Security Insurer under the Insurance Agreement and (iii) any other
Indebtedness permitted by or arising under the Basic Documents or the Issuer's
compliance therewith. The proceeds of the Notes shall be used exclusively to
fund the Issuer's purchase of the Receivables and the other assets specified in
the Sale and Servicing Agreement, to Fund the Spread Account and to pay the
Issuer's organizational, transactional and start-up expenses.
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SECTION 3.14 Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.8 of the Sale and
Servicing Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this Indenture,
the Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17 Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Basic Document.
SECTION 3.18 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Security Insurer, the Trustee, the
Indenture Collateral Agent and the Certificateholders as permitted by, and to
the extent funds are available for such purpose under, the Sale and Servicing
Agreement or Trust Agreement. The Issuer will not, directly or indirectly, make
payments to or distributions from the Collection Account except in accordance
with this Indenture and the Basic Documents.
SECTION 3.19 Notice of Events of Default. Upon a responsible officer
of the Owner Trustee having actual knowledge thereof, the Issuer agrees to give
the Trustee, the Security Insurer and the Rating Agencies prompt written notice
of each Event of Default hereunder, each Insurance Agreement Trigger Event and
each default on the part of the Servicer or the Seller of its obligations under
the Sale and Servicing Agreement.
SECTION 3.20 Further Instruments and Acts. Upon request of the
Trustee or the Security Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
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SECTION 3.21 Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 11.1 of the
Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate
the requirements thereunder that the Trustee, the Security Insurer or the
Holders of the Notes consent to amendments thereto as provided therein.
SECTION 3.22 Income Tax Characterization. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Issuer will treat the Notes as indebtedness.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13, and 3.22, (v) the rights, obligations and immunities of the
Trustee hereunder (including the rights of the Trustee under Section 6.7 and the
obligations of the Trustee under Section 4.2) and (vi) the rights of Noteholders
as beneficiaries hereof with respect to the property so deposited with the
Trustee payable to all or any of them, and the Trustee, on demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.5 and (ii) Notes
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section
3.3) have been delivered to the Trustee for cancellation and the
Note Policy has expired and been returned to the Security Insurer
for cancellation; or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable,
(ii) will become due and payable at their respective
Final Scheduled Distribution Dates within one year, or
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(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Collateral Agent cash or direct obligations of or
obligations guaranteed by the United States of America (which will
mature prior to the date such amounts are payable), in trust for
such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation when due to the Final Scheduled
Distribution Date or Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.1(a)), as the case may
be;
(B) the Issuer has paid or caused to be paid all Insurer Issuer
Secured Obligations and all Trustee Issuer Secured Obligations; and
(C) the Issuer has delivered to the Trustee, the Indenture
Collateral Agent and the Security Insurer an Officer's Certificate, an
Opinion of Counsel and, if required by the TIA, the Trustee, the Indenture
Collateral Agent or the Security Insurer (so long as an Insurer Default
shall not have occurred and be continuing) an Independent Certificate from
a firm of certified public accountants, each meeting the applicable
requirements of Section 11.1(a) and each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with
the Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.3 and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.
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ARTICLE V
Remedies
SECTION 5.1 Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when the same
becomes due and payable, and such default shall continue for a period of
five days after receipt of notice thereof from the Trustee (solely for
purposes of this clause, a payment on the Notes funded by the Security
Insurer shall be deemed to be a payment made by the Issuer); or
(ii) default in the payment of the principal of or any installment
of the principal of any Note when the same becomes due and payable on the
related Final Scheduled Distribution Date (solely for purposes of this
clause, a payment on the Notes funded by the Security Insurer shall be
deemed to be a payment made by the Issuer); or
(iii) so long as an Insurer Default shall not have occurred and be
continuing, an Insurance Agreement Trigger Event shall have occurred and
be continuing; provided, however, that the occurrence and continuance of
an Insurance Agreement Trigger Event shall not constitute an Event of
Default unless the Security Insurer shall, upon prior written notice to
the Rating Agencies, have delivered to the Issuer and the Trustee and not
rescinded a written notice specifying that such Insurance Agreement
Trigger Event constitutes an Event of Default under this Indenture; or
(iv) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any representation
or warranty of the Issuer made in this Indenture or in any certificate or
other writing delivered pursuant hereto or in connection herewith proving
to have been incorrect in any material respect as of the time when the
same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days (or for such longer period,
not in excess of 90 days, as may be reasonably necessary to remedy such
default; provided that such default is capable of remedy within 90 days or
less and the Servicer on behalf of the Owner Trustee delivers an Officer's
Certificate to the Trustee to the effect that the Issuer has commenced, or
will promptly commence and diligently pursue, all reasonable efforts to
remedy such default) after there shall have been given, by registered or
certified mail, to the Issuer by the Security Insurer (so long as no
Insurer Default shall have occurred and be continuing) or the Trustee or
to the Issuer and the Trustee by the Holders of at least
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25% of the Outstanding Amount of the Notes, a written notice specifying
such default or incorrect representation or warranty and requiring it to
be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(v) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case under any applicable
Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for
any substantial part of the Trust Estate, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(vi) the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of
an order for relief in an involuntary case under any such law, or the
consent by the Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust
Estate, or the making by the Issuer of any general assignment for the
benefit of creditors, or the failure by the Issuer generally to pay its
debts as such debts become due, or the taking of action by the Issuer in
furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee and the Security Insurer,
within five days after the occurrence thereof, written notice in the form of an
Officer's Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clause (iii), its status and what
action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.2 Rights Upon Event of Default. (a) If an Insurer Default
shall not have occurred and be continuing and an Event of Default shall have
occurred and be continuing, the Security Insurer may cause the Notes to become
immediately due and payable at par, together with accrued interest thereon. If
an Event of Default shall have occurred and be continuing, the Controlling Party
may exercise any of the remedies specified in Section 5.4(a). In the event of
any acceleration of any Notes by operation of this Section 5.2, the Trustee
shall continue to be entitled to make claims under the Note Policy pursuant to
Section 5.18 hereof for Note Policy Claim Amount on the Notes. Payments under
the Note Policy following acceleration of any Notes shall be applied by the
Trustee:
FIRST: to Noteholders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for interest; and
SECOND: to Noteholders for amounts due and unpaid on the Notes for
principal, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal.
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(b) In the event any Notes are accelerated due to an Event of
Default, the Security Insurer shall have the right (in addition to its
obligation to pay Note Policy Claim Amount on the Notes in accordance with the
Note Policy), but not the obligation, to make payments under the Note Policy or
otherwise of interest and principal (to the extent of the Principal
Distributable Amount) due on such Notes, in whole or in part, on any date or
dates following such acceleration as the Security Insurer, in its sole
discretion, shall elect.
(c) If an Insurer Default shall have occurred and be continuing and
an Event of Default shall have occurred and be continuing, the Trustee in its
discretion may, or if so requested in writing by Holders holding Notes
representing not less than a majority of the Outstanding Amount of the Notes,
declare by written notice to the Issuer that the Notes become, whereupon they
shall become, immediately due and payable at par, together with accrued interest
thereon.
(d) If an Insurer Default shall have occurred and be continuing,
then at any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article V provided, the Holders
of Notes representing a majority of the Outstanding Amount of the Notes, by
written notice to the Issuer and the Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had
not occurred; and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee (a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of the Notes, the whole amount then due and
payable on such
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Notes for principal and interest, with interest upon the overdue principal, and,
to the extent payment at such rate of interest shall be legally enforceable,
upon overdue installments of interest, at the applicable Interest Rate and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel.
(b) Each Issuer Secured Party hereby irrevocably and unconditionally
appoints the Controlling Party as the true and lawful attorney-in-fact of such
Issuer Secured Party for so long as such Issuer Secured Party is not the
Controlling Party, with full power of substitution, to execute, acknowledge and
deliver any notice, document, certificate, paper, pleading or instrument and to
do in the name of the Controlling Party as well as in the name, place and stead
of such Issuer Secured Party such acts, things and deeds for or on behalf of and
in the name of such Issuer Secured Party under this Indenture (including
specifically under Section 5.4) and under the Basic Documents which such Issuer
Secured Party could or might do or which may be necessary, desirable or
convenient in such Controlling Party's sole discretion to effect the purposes
contemplated hereunder and under the Basic Documents and, without limitation,
following the occurrence of an Event of Default, exercise full right, power and
authority to take, or defer from taking, any and all acts with respect to the
administration, maintenance or disposition of the Trust Estate.
(c) If an Event of Default occurs and is continuing and no Insurer
Default shall have occurred and be continuing, the Trustee may with the consent
of the Controlling Party and shall at the direction of the Controlling Party,
and if an Event of Default occurs and is continuing and an Insurer Default shall
have occurred and be continuing, the Trustee may in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders by such
appropriate Proceedings as the Trustee or the Controlling Party shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
(d) Reserved.
(e) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of any Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
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(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence,
bad faith or willful misconduct) and of the Noteholders allowed in such
proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or person performing similar functions in any such proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
or the Holders of Notes allowed in any judicial proceedings relative to
the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence, bad faith
or willful misconduct.
(f) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Noteholder in any
such proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar person.
(g) All rights of action and of asserting claims under this
Indenture or under any of the Notes, may be enforced by the Trustee without the
possession of any of the Notes or the production thereof in any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment, subject to the payment of the expenses, disbursements
and compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
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(h) In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture),
the Trustee shall be held to represent all the Holders of the Notes, and it
shall not be necessary to make any Noteholder a party to any such proceedings.
SECTION 5.4 Remedies. (a) If an Event of Default shall have occurred
and be continuing, the Controlling Party may do one or more of the following
(subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer and
any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Trustee and the Holders of the Notes; and
(iv) direct the Indenture Collateral Agent to sell the Trust Estate
or any portion thereof or rights or interest therein, at one or more
public or private sales called and conducted in any manner permitted by
law; provided, however, that
(A) if the Security Insurer is the Controlling Party, the
Security Insurer may not sell or otherwise liquidate the Trust
Estate following an Event of Default or an Insurance Agreement
Trigger Event unless
(I) such Event of Default or Insurance Agreement Trigger
Event arises from the insolvency of the Trust or the Seller;
or
(II) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge
in full all amounts then due and unpaid upon such Notes for
principal and interest; or
(B)if the Trustee is the Controlling Party, the Trustee may
not sell or otherwise liquidate the Trust Estate following an
Event of Default unless
(I) such Event of Default is of the type described in
Section 5.1(i) or (ii); or
(II) either
(x) the Holders of 100% of the Outstanding Amount
of the Notes consent thereto,
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(y) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid upon
such Notes for principal and interest, or
(z) the Trustee determines that the Trust Estate
will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as
they would have become due if the Notes had not been
declared due and payable, and the Trustee provides prior
written notice to the Rating Agencies and obtains the
consent of Holders of 66-2/3% of the Outstanding Amount
of the Notes.
In determining such sufficiency or insufficiency with respect to
clause (A) (II) or B (II) (y) and (z), the Controlling Party may, but need not,
obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.5 Optional Preservation of the Receivables. If the Trustee
is the Controlling Party and if the Notes have been declared to be due and
payable under Section 5.2 following an Event of Default and such declaration and
its consequences have not been rescinded and annulled, the Trustee may, but need
not, elect to maintain possession of the Trust Estate. In determining whether to
maintain possession of the Trust Estate, the Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Trust Estate for such purpose.
SECTION 5.6 Priorities.
(a) Following (1) the acceleration of the Notes pursuant to Section
5.2 or (2) if an Insurer Default shall have occurred and be continuing, the
occurrence of an Event of Default pursuant to Section 5.1(i), 5.1(ii), 5.1(iv),
5.1(v) or 5.1(vi) of this Indenture or (3) the receipt of Insolvency Proceeds
pursuant to Section 9.1(b) of the Sale and Servicing Agreement, the Distribution
Amount, including any money or property collected pursuant to Section 5.4 of the
Indenture and any such Insolvency Proceeds, shall be applied by the Trustee on
the related Payment Date in the following order of priority:
FIRST: to pay any amounts due and owing to the Trustee, Indenture
Collateral Agent and the Owner Trustee for compensation, reimbursement of
expenses or indemnification as provided hereunder or the other Basic
Documents and to the Servicer pursuant to Section 5.6(b)(i) of the Sale
and Servicing Agreement;
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SECOND: to Noteholders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for interest;
THIRD: to Noteholders for amounts due and unpaid on the Notes for
principal, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal;
FOURTH: amounts due and owing and required to be distributed to the
Security Insurer pursuant to priority (ii) of Section 5.6(b) of the Sale
and Servicing Agreement and not previously distributed; and
FIFTH: to or upon the order of the Owner Trustee for distribution
pursuant to Section 5.2(a) of the Trust Agreement,
(b) The Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date the Issuer shall mail to each Noteholder and the Trustee a notice
that states the record date, the payment date and the amount to be paid.
SECTION 5.7 Limitation of Suits. No Holder of any Note shall have
any right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of
the Notes have made written request to the Trustee to institute such
proceeding in respect of such Event of Default in its own name as Trustee
hereunder;
(iii) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to it against the costs, expenses and liabilities
to be incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such proceedings;
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes; and
(vi) an Insurer Default shall have occurred and be continuing;
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it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee shall proceed in accordance with the request of the greater majority of
the Outstanding Amount of the Notes, as determined by reference to such
requests.
SECTION 5.8 Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.9 Restoration of Rights and Remedies. If the Controlling
Party or any Noteholder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such Noteholder, then and in every such case the Issuer, the Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Noteholders shall continue as
though no such proceeding had been instituted.
SECTION 5.10 Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Controlling Party or to the Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11 Delay or Omission Not a Waiver. No delay or omission of
the Controlling Party or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
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SECTION 5.12 Control by Noteholders. If the Trustee is the
Controlling Party, the Holders of a majority of the Outstanding Amount of the
Notes shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee with respect to the Notes
or exercising any trust or power conferred on the Trustee; provided that:
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) subject to the express terms of Section 5.4, any direction to
the Trustee to sell or liquidate the Trust Estate shall be by the Holders
of Notes representing not less than 100% of the Outstanding Amount of the
Notes;
(iii) if the conditions set forth in Section 5.5 have been satisfied
and the Trustee elects to retain the Trust Estate pursuant to such
Section, then any direction to the trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to sell
or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.13 Waiver of Past Defaults. The Security Insurer may on
behalf of all Holders of the Notes, waive any past Default, provided that if an
Insurer Default shall have occurred and be continuing, prior to the declaration
of the acceleration of the maturity of the Notes as provided in Section 5.2(c),
the Holders of Notes of not less than a majority of the Outstanding Amount of
the Notes may waive any past Default or Event of Default and its consequences
except a Default (a) in payment of principal of or interest on any of the Notes,
(b) in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of the Holder of each Note or (c) which waiver would
materially adversely affect the Security Insurer. In the case of any such
waiver, the Issuer, the Trustee and the Holders of the Notes shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 5.14 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed,
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that any court may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to (a) any suit instituted by
the Trustee, (b) any suit instituted by any Noteholder, or group of Noteholders,
in each case holding in the aggregate more than 10% of the Outstanding Amount of
the Notes or (c) any suit instituted by any Noteholder for the enforcement of
the payment of principal of or interest on any Note on or after the respective
due dates expressed in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
SECTION 5.15 Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 5.16 Action on Notes. The Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Trustee or the Noteholders shall be impaired by the recovery of any
judgment by the Trustee against the Issuer or by the levy of any execution under
such judgment upon any portion of the Trust Estate or upon any of the assets of
the Issuer.
SECTION 5.17 Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Trustee to do so and at the Servicer's
expense, the Issuer agrees to take all such lawful action as the Trustee may
request to compel or secure the performance and observance by the
Representative, the Seller and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Servicing
Agreement in accordance with the terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Sale and Servicing Agreement to the extent and in the
manner directed by the Trustee, including the transmission of notices of default
on the part of the Seller or the Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by the Seller or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If the Trustee is the Controlling Party and if an Event of
Default has occurred and is continuing, the Trustee may, and, at the direction
(which direction shall be in writing or by telephone (confirmed in writing
promptly thereafter)) of the Holders of 66-2/3% of the Outstanding Amount of the
Notes shall, exercise all rights, remedies, powers, privileges and
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claims of the Issuer against the Seller or the Servicer under or in connection
with the Sale and Servicing Agreement, including the right or power to take any
action to compel or secure performance or observance by the Seller or the
Servicer of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under the
Sale and Servicing Agreement, and any right of the Issuer to take such action
shall be suspended.
SECTION 5.18 Claims Under Note Policy.
(a) If the Note Policy Claim Amount, if any, for such Payment Date
is greater than zero, the Trustee shall on the related Deficiency Claim Date
immediately furnish to the Security Insurer and the Fiscal Agent (as defined in
the Note Policy) a completed Deficiency Notice. Amounts paid by the Security
Insurer pursuant to a claim submitted under this Section 5.18(a) shall be
deposited by the Trustee into the Note Distribution Account for payment to
Noteholders on the related Payment Date.
(b) Any notice delivered by the Trustee to the Security Insurer
pursuant to subsection 5.18(a) shall specify the Note Policy Claim Amount
claimed under the Note Policy and subject to the terms of the Note Policy, shall
constitute a "Notice" under the Note Policy. The Security Insurer is required to
pay to the Trustee the Note Policy Claim Amount in accordance with the terms of
the Note Policy. Any payment made by the Security Insurer under the Note Policy
shall be applied solely to the payment of the Notes, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Noteholder any Note Policy Claim Amount from the Security Insurer and (ii)
deposit the same in the Note Distribution Account for distribution to
Noteholders as provided in Section 3.1 or Section 5.2 of this Indenture. Any and
all Note Policy Claim Amount disbursed by the Trustee from claims made under the
Note Policy shall not be considered payment by the Trust with respect to such
Notes, and shall not discharge the obligations of the Trust with respect
thereto. The Security Insurer shall, to the extent it makes any payment with
respect to the Notes, become subrogated to the rights of the recipients of such
payments to the extent of such payments. Subject to and conditioned upon any
payment with respect to the Notes by or on behalf of the Security Insurer, the
Trustee shall assign to the Security Insurer all rights to the payment of
interest or principal with respect to the Notes which are then due for payment
to the extent of all payments made by the Security Insurer, and the Security
Insurer may exercise any option, vote, right, power or the like with respect to
the Notes to the extent that it has made payment pursuant to the Note Policy. To
evidence such subrogation, the Note Registrar shall note the Security Insurer's
rights as subrogee upon the register of Noteholders upon receipt from the
Security Insurer of proof of payment by the Security Insurer of any Noteholders'
Interest Distributable Amount or Noteholders' Principal Distributable Amount.
The foregoing subrogation shall in all cases be subject to the rights of the
Noteholders to receive all Note Policy Claim Amount in respect of the Notes.
(d) The Trustee shall keep a complete and accurate record of all
funds deposited by the Security Insurer into the Collection Account and the
allocation of such funds to
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payment of interest on and principal paid in respect of any Note. The Security
Insurer shall have the right to inspect such records at reasonable times upon
one Business Day's prior notice to the Trustee.
(e) The Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Security Insurer under the Note Policy.
Notwithstanding any other provision of this Agreement or any Basic Document, the
Noteholders are not entitled to institute proceedings directly against the
Security Insurer.
SECTION 5.19 Preference Claims. (a) In the event that the Trustee
has received a certified copy of a final non-appealable order of the court of
applicable jurisdiction that any Noteholders' Interest Distributable Amount or
Principal Distributable Amount paid on a Note has been avoided in whole or in
part as a preference payment in the event of the insolvency of the Issuer, the
Seller, the Servicer or Franklin Resources, Inc. under the United States
Bankruptcy Code (11 U.S.C.), (a "Note Preference Amount") the Trustee shall so
notify the Security Insurer, shall comply with the provisions of the Note Policy
to obtain payment by the Security Insurer of such Note Preference Amount and
shall, at the time it provides notice to the Security Insurer, notify Holders of
the Notes by mail that, in the event that any Noteholder's payment is so
recoverable, such Noteholder will be entitled to payment pursuant to the terms
of the Note Policy. The Trustee shall furnish to the Security Insurer its
records evidencing the payments of principal of and interest on Notes, if any,
which have been made by the Trustee and subsequently recovered from Noteholders,
and the dates on which such payments were made. Pursuant to the terms of the
Note Policy, the Security Insurer will make such payment on behalf of the
Noteholder in the manner set forth in the Note Policy.
(b) The Trustee shall promptly notify the Security Insurer of any
proceeding or the institution of any action (of which the Trustee has actual
knowledge) seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Trustee hereby agree that so long as
an Insurer Default shall not have occurred and be continuing, the Security
Insurer may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
without limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Security Insurer, but subject
to reimbursement as provided in the Insurance Agreement. In addition, and
without limitation of the foregoing, as set forth in Section 5.18(c), the
Security Insurer shall be subrogated to, and each Noteholder and the Trustee
hereby delegate and assign, to the fullest extent permitted by law, the rights
of the Trustee and each Noteholder in the conduct of any proceeding with respect
to a Preference Claim, including, without limitation, all rights of any party to
an adversary proceeding with respect to any court order issued in connection
with any such Preference Claim.
ARTICLE VI
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The Trustee and the Indenture Collateral Agent
SECTION 6.1 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, and of which a Responsible Officer of the Trustee
shall have actual knowledge, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of negligence or bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; however, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture and, if applicable, the Basic Documents to which the
Trustee is a party, provided, however, that the Trustee shall not be
responsible for the accuracy or content of any of the aforementioned
documents and the Trustee shall have no obligation to verify or
re-computate any numeral information provided to it pursuant to the Basic
Documents.
(c) Neither the Trustee nor the Indenture Collateral Agent may be
relieved from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proven that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.12.
(d) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.
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(e) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Trustee 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 it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(h) The Trustee shall, upon reasonable prior notice to the Trustee,
permit any representative of the Security Insurer, at the Security Insurer's
expense, during the Trustee's normal business hours, to examine all books of
account, records, reports and other papers of the Trustee relating to the Notes,
to make copies and extracts therefrom and to discuss the Trustee's affairs and
actions, as such affairs and actions relate to the Trustee's duties with respect
to the Notes, with the Trustee's officers and employees responsible for carrying
out the Trustee's duties with respect to the Notes.
(i) The Trustee shall, and hereby agrees that it will, perform all
of the obligations and duties required of it under the Sale and Servicing
Agreement.
(j) The Trustee shall, and hereby agrees that it will, hold the Note
Policy in trust, and will hold any proceeds of any claim on the Note Policy in
trust solely for the use and benefit of the Noteholders.
(k) Without limiting the generality of this Section 6.1 and except
during such time, if any, as the Trustee shall be successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in accordance
with the terms of this Indenture and the Sale and Servicing Agreement and
subject to the other provisions of this Indenture, the Trustee shall have no
duty (i) to see to any recording, filing or depositing of this Indenture or any
agreement referred to herein or any financing statement evidencing a security
interest in the Financed Vehicles, or to see to the maintenance of any such
recording or filing or depositing or to any recording, refiling or redepositing
of any thereof, (ii) to see to any insurance of the Financed Vehicles or
Obligors or to effect or maintain any such insurance, (iii) to see to the
payment or discharge of any tax, assessment or other governmental charge or any
Lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust, (iv) to confirm or verify the contents of any
reports or certificates delivered to the Trustee pursuant to this Indenture or
the Sale and Servicing Agreement believed by the Trustee to be genuine and to
have been signed or presented by the proper party or parties, or (v) to inspect
the Financed Vehicles at any time or ascertain or inquire as to the performance
or observance of any of the Issuer's, the Seller's or the Servicer's
representations, warranties or covenants or the Servicer's
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duties and obligations as Servicer and as custodian of the Receivable Files
under the Sale and Servicing Agreement.
(l) Whenever any action under the Basic Documents requires the
approval or disapproval of Certificateholders, the Trustee shall, in accordance
with, and subject to, Section 2.13 of the Trust Agreement, instruct the
Certificateholders to act in accordance with the written directions, received
from Holders of a majority of the Outstanding Amount of the Notes.
(m) Except as otherwise required or permitted by the TIA, nothing
contained herein shall be deemed to authorize the Trustee to engage in any
business operations or any activities other than those set forth in this
Indenture. Specifically, the Trustee shall have no authority to engage in any
business operations, acquire any assets other than those specifically included
in the Collateral under this Indenture or otherwise vary the assets held by the
Issuer. Similarly, the Trustee shall have no discretionary duties other than
performing those ministerial acts set forth above necessary to accomplish the
purpose of this Indenture.
(n) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any Default or Event of Default unless a Responsible
Officer of the Trustee shall have received written notice thereof. In the
absence of receipt of such notice, the Trustee may conclusively assume that
there is no Default or Event of Default.
(o) Anything in this Indenture to the contrary notwithstanding, in
no event shall the Trustee be liable for special, indirect or consequential loss
or damage of any kind whatsoever (including but no limited to lost profits),
even if the Trustee has been advised of the likelihood of such loss or damage
regardless of the form of action.
SECTION 6.2 Rights of Trustee. (a) Subject to Section 6.1, the
Trustee may conclusively rely on and shall be protected in acting upon or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper person. Subject to Section 6.1, the
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officer's Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate or Opinion of Counsel.
(c) The 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 or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of,
Franklin Capital Corporation, or any other such agent, attorney, custodian or
nominee appointed with due care by it hereunder.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
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(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Notes shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to institute, conduct
or defend any litigation under this Indenture or in relation to this Indenture,
at the request, order or direction of any of the Holders of Notes or the
Controlling Party, pursuant to the provisions of this Indenture, unless such
Holders of Notes or the Controlling Party shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; provided, however, that the Trustee
shall, upon the occurrence of an Event of Default (that has not been cured) of
which a Responsible Officer of the Trustee shall have actual knowledge, exercise
the rights and powers vested in it by this Indenture with reasonable care and
skill.
(g) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by the Security
Insurer (so long as no Insurer Default shall have occurred and be continuing) or
(if an Insurer Default shall have occurred and be continuing) by the Holders of
Notes evidencing not less than 25% of the Outstanding Amount thereof; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture or the
Sale and Servicing Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding; the
reasonable expense of every such examination shall be paid by the Person making
such request, or, if paid by the Trustee, shall be reimbursed by the Person
making such request upon demand.
SECTION 6.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Trust Estate or the Notes, it shall not be accountable for
the Issuer's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
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SECTION 6.5 Notice of Defaults. If a Default occurs and is
continuing and if it is either known by, or written notice of the existence
thereof has been delivered to, a Responsible Officer of the Trustee, the Trustee
shall mail to each Noteholder notice of the Default within 90 days after such
knowledge or notice occurs and to the Security Insurer such notice promptly
after such knowledge or notice occurs. Except in the case of a Default in
payment of principal of or interest on any Note (including payments pursuant to
the mandatory redemption provisions of such Note), the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
SECTION 6.6 Reports by Trustee to Holders. The Trustee shall deliver
to each Noteholder such information as may be reasonably required to enable such
Holder to prepare its Federal and state income tax returns.
SECTION 6.7 Compensation and Indemnity. (a) The Issuer shall, or
shall cause the Servicer to, pay to the Trustee from time to time compensation
for its services in accordance with a separate agreement between the Servicer
and the Trustee. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Issuer shall or shall cause
the Servicer to reimburse the Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Issuer shall or shall cause the Servicer
to indemnify the Trustee, the Indenture Collateral Agent and their respective
officers, directors, employees and agents against any and all loss, liability or
expense (including attorneys' fees and expenses) incurred by it in connection
with the acceptance or the administration of this trust and the performance of
its duties hereunder. The Trustee shall notify the Issuer and the Servicer
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Issuer and the Servicer shall not relieve the Issuer of its
obligations hereunder or the Servicer of its obligations under Article X of the
Sale and Servicing Agreement. The Issuer shall or shall cause the Servicer to
defend the claim, the Trustee may have separate counsel and the Issuer shall or
shall cause the Servicer to pay the fees and expenses of such counsel. Neither
the Issuer nor the Servicer need reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
willful misconduct, negligence or bad faith.
(b) The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 5.1(iv) or (v)
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
Federal or state bankruptcy, insolvency or similar law. Notwithstanding anything
else set forth in this Indenture or the Basic Documents, the Trustee agrees that
the obligations of the Issuer (but not the Servicer) to the Trustee hereunder
and under the Basic Documents shall be recourse to the Trust Estate only and
specifically shall not be recourse to the assets of any Certificateholder. In
addition, the Trustee agrees that its recourse to the Issuer, the
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Trust Estate, the Certificateholders and the Seller shall be limited to the
right to receive the distributions referred to in Section 5.6(b)(viii) of the
Sale and Servicing Agreement.
SECTION 6.8 Replacement of Trustee. No resignation or removal of the
Trustee and no appointment of a successor Trustee shall become effective until
the acceptance of appointment by the successor Trustee pursuant to this Section
6.8. The Trustee may resign at any time by so notifying the Issuer and the
Security Insurer. The Issuer may with the consent of the Security Insurer and,
at the request of the Security Insurer (unless an Insurer Default shall have
occurred and be continuing) shall, remove the Trustee, if:
(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Trustee in an involuntary case or proceeding under federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law,
shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Trustee or for any substantial
part of the Trustee's property, or ordering the winding-up or liquidation
of the Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as now
or hereafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law is commenced with respect to the
Trustee and such case is not dismissed within 60 days;
(iv) the Trustee commences a voluntary case under any federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator (or
other similar official) for the Trustee or for any substantial part of the
Trustee's property, or makes any assignment for the benefit of creditors
or fails generally to pay its debts as such debts become due or takes any
corporate action in furtherance of any of the foregoing; or
(v) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee acceptable to the Security Insurer (so long as an Insurer Default shall
not have occurred and be continuing). If the Issuer fails to appoint such a
successor Trustee, the Security Insurer may appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer and the Security Insurer.
Thereupon the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights,
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powers and duties of the Trustee under this Indenture subject to satisfaction of
the Rating Agency Condition. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after
notice of resignation or removal of the retiring Trustee, the retiring Trustee,
the Issuer, the Security Insurer (if no Insurer Default shall have occurred and
be continuing), or the Holders of a majority in Outstanding Amount of the Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 6.11, the Security
Insurer (if no Insurer Default shall have occurred and be continuing) or any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 6.8 and payment of all fees and expenses owed to the
retiring Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section, the
Issuer's and the Servicer's obligations under Section 6.7 shall continue for the
benefit of the retiring Trustee.
SECTION 6.9 Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. The Trustee (except if The Chase
Manhattan Bank is the Trustee) shall provide the Security Insurer and Rating
Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have.
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee with the consent of the
Security Insurer (so long as an Insurer Default shall
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not have occurred and be continuing) 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 a 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 Noteholders, such title to the Trust, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the 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 6.11 and no notice
to Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.8 hereof. The appointment of any co-trustee or separate
trustee shall not relieve the Trustee of any of its obligations hereunder.
(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 the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder, including acts or
omissions of predecessor or successor trustees; and
(iii) the 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 the 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 VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any
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separate trustee or co-trustee shall die, dissolve, become insolvent, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall invest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee.
SECTION 6.11 Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it shall have a long term debt
rating of BBB- or better by Standard & Poor's and Baa3 or better by Moody's. The
Trustee shall provide copies of such reports to the Security Insurer upon
request. The Trustee shall comply with TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9);
provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities of
the Issuer are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13 Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints The Chase
Manhattan Bank as the Indenture Collateral Agent with respect to the Collateral,
and The Chase Manhattan Bank hereby accepts such appointment and agrees to act
as Indenture Collateral Agent with respect to the Collateral for the Issuer
Secured Parties, to maintain custody and possession of such Collateral (except
as otherwise provided hereunder) and to perform the other duties of the
Indenture Collateral Agent in accordance with the provisions of this Indenture.
Each Issuer Secured Party hereby authorizes the Indenture Collateral Agent to
take such action on its behalf, and to exercise such rights, remedies, powers
and privileges hereunder, as the Controlling Party may direct and as are
specifically authorized to be exercised by the Indenture Collateral Agent by the
terms hereof, together with such actions, rights, remedies, powers and
privileges as are reasonably incidental thereto. The Indenture Collateral Agent
shall act upon and in compliance with the written instructions of the
Controlling Party delivered pursuant to this Indenture promptly following
receipt of such written instructions; provided that the Indenture Collateral
Agent shall not act in accordance with any instructions (i) which are not
authorized by, or in violation of the provisions of, this Indenture, (ii) which
to its knowledge are in violation of any applicable law, rule or regulation or
(iii) for which the Indenture Collateral Agent has not received reasonable
indemnity. Receipt of such instructions shall not be a condition to the exercise
by the Indenture Collateral Agent of its express duties hereunder, except where
this Indenture provides that the Indenture Collateral Agent is permitted to act
only following and in accordance with such instructions.
SECTION 6.14 Performance of Duties. The Indenture Collateral Agent
shall have no duties or responsibilities except those expressly set forth in
this Indenture and the other
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Basic Documents to which the Indenture Collateral Agent is a party or as
directed by the Controlling Party in accordance with this Indenture. The
Indenture Collateral Agent shall not be required to take any discretionary
actions hereunder except at the written direction and with the indemnification
of the Controlling Party. The Indenture Collateral Agent shall, and hereby
agrees that it will, perform all of the duties and obligations required of it
under the Sale and Servicing Agreement.
SECTION 6.15 Limitation on Liability. (a) Neither the Indenture
Collateral Agent nor any of its directors, officers or employees shall be liable
for any error of judgment, or for any mistake of fact or law or for any action
taken or omitted to be taken by it or them hereunder, or in connection herewith,
except that the Indenture Collateral Agent shall be liable for its negligence,
bad faith or willful misconduct; nor shall the Indenture Collateral Agent be
responsible for the validity, effectiveness, value, sufficiency or
enforceability against the Issuer of this Indenture or any of the Collateral (or
any part thereof). Notwithstanding any term or provision of this Indenture, the
Indenture Collateral Agent shall incur no liability to the Issuer or the Issuer
Secured Parties for any action taken or omitted to be taken by the Indenture
Collateral Agent in connection with the Collateral, except for the negligence,
bad faith or willful misconduct on the part of the Indenture Collateral Agent,
and, further, shall incur no liability to the Issuer Secured Parties except for
negligence, bad faith or willful misconduct in carrying out its duties to the
Issuer Secured Parties. Subject to Section 6.16, the Indenture Collateral Agent
shall be protected and shall incur no liability to any such party in relying
upon the accuracy, acting in reliance upon the contents, and assuming the
genuineness of any notice, demand, certificate, signature, instrument or other
document reasonably believed by the Indenture Collateral Agent to be genuine and
to have been duly executed by the appropriate signatory, and (absent actual
knowledge to the contrary) the Indenture Collateral Agent shall not be required
to make any independent investigation with respect thereto. The Indenture
Collateral Agent shall at all times be free independently to establish to its
reasonable satisfaction, but shall have no duty to independently verify, the
existence or nonexistence of facts that are a condition to the exercise or
enforcement of any right or remedy hereunder or under any of the Basic
Documents. The Indenture Collateral Agent may consult with counsel, and shall
not be liable for any action taken or omitted to be taken by it hereunder in
good faith and in accordance with the advice of such counsel. The Indenture
Collateral Agent shall not be under any obligation to exercise any of the
remedial rights or powers vested in it by this Indenture or to follow any
direction from the Controlling Party unless it shall have received reasonable
security or indemnity satisfactory to the Indenture Collateral Agent against the
costs, expenses and liabilities which might be incurred by it.
(b) No provision of this Indenture shall require the Indenture
Collateral Agent 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 it shall have reasonable grounds to believe
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(c) Without limiting the generality of this Section 6.15, the
Indenture Collateral Agent shall have no duty (i) to see to any recording,
filing or depositing of this
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Indenture or any agreement referred to herein or any financing statement
evidencing a security interest in the Financed Vehicles, or to see to the
maintenance of any such recording or filing or depositing or to any recording,
refiling or redepositing of any thereof, (ii) to see to any insurance of the
Financed Vehicles or Obligors or to effect or maintain any such insurance, (iii)
to see to the payment or discharge of any tax, assessment or other governmental
charge or any Lien or encumbrance of any kind owing with respect to, assessed or
levied against any part of the Trust, (iv) to confirm or verify the contents of
any reports or certificates delivered to the Trustee pursuant to this Indenture
or the Sale and Servicing Agreement believed by the Indenture Collateral Agent
to be genuine and to have been signed or presented by the proper party or
parties, or (v) to inspect the Financed Vehicles at any time or ascertain or
inquire as to the performance or observance of any of the Issuer's, the Seller's
or the Servicer's representations, warranties or covenants or the Servicer's
duties and obligations as Servicer and as custodian of the Receivable Files
under the Sale and Servicing Agreement.
(d) The Indenture Collateral Agent will be regarded as making no
representations and having no responsibilities (except as expressly set forth
herein) as to the validity, sufficiency, value, genuineness, ownership or
transferability of any Notes or Collateral represented thereby, and will not be
required to and will not make any representations as to the validity, value or
genuineness of the Collateral.
(e) The Indenture Collateral Agent may execute any of the powers
hereunder or perform any duties hereunder either directly or through agents or
attorneys; provided, however, that the execution of such powers by any such
agents or attorneys shall not diminish or relieve the Indenture Collateral Agent
for responsibility therefor to the same degree as if the Indenture Collateral
Agent itself had executed such powers.
SECTION 6.16 Reliance Upon Documents. In the absence of negligence,
bad faith or willful misconduct on its part, the Indenture Collateral Agent
shall be entitled to rely on any communication, instrument, paper or other
document reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons and shall have no liability in
acting, or omitting to act, where such action or omission to act is in
reasonable reliance upon any statement or opinion contained in any such document
or instrument.
SECTION 6.17 Successor Indenture Collateral Agent. (a) Merger. Any
Person into which the Indenture Collateral Agent may be converted or merged, or
with which it may be consolidated, or to which it may sell or transfer its trust
business and assets as a whole or substantially as a whole, or any Person
resulting from any such conversion, merger, consolidation, sale or transfer to
which the Indenture Collateral Agent is a party, shall (provided it is otherwise
qualified to serve as the Indenture Collateral Agent hereunder) be and become a
successor Indenture Collateral Agent hereunder and be vested with all of the
title to and interest in the Collateral and all of the trusts, powers,
discretions, immunities, privileges and other matters as was its predecessor
without the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the
contrary
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notwithstanding, except to the extent, if any, that any such action is necessary
to perfect, or continue the perfection of, the security interest of the Issuer
Secured Parties in the Collateral; provided that any such successor shall also
be the successor Trustee under Section 6.9.
(b) Resignation. The Indenture Collateral Agent and any successor
Indenture Collateral Agent may resign at any time by so notifying the Issuer and
the Security Insurer; provided that the Indenture Collateral Agent shall not so
resign unless it shall also resign as Trustee hereunder.
(c) Removal. The Indenture Collateral Agent may be removed by the
Controlling Party at any time (and shall be removed at any time that the Trustee
has been removed), with or without cause, by an instrument or concurrent
instruments in writing delivered to the Indenture Collateral Agent, the other
Issuer Secured Party and the Issuer. A temporary successor may be removed at any
time to allow a successor Indenture Collateral Agent to be appointed pursuant to
subsection (d) below. Any removal pursuant to the provisions of this subsection
(c) shall take effect only upon the date which is the latest of (i) the
effective date of the appointment of a successor Indenture Collateral Agent and
the acceptance in writing by such successor Indenture Collateral Agent of such
appointment and of its obligation to perform its duties hereunder in accordance
with the provisions hereof, and (ii) receipt by the Controlling Party of an
Opinion of Counsel to the effect described in Section 3.6.
(d) Acceptance by Successor. The Controlling Party shall have the
sole right to appoint each successor Indenture Collateral Agent. Every temporary
or permanent successor Indenture Collateral Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the Trustee, each
Issuer Secured Party and the Issuer an instrument in writing accepting such
appointment hereunder and the relevant predecessor shall execute, acknowledge
and deliver such other documents and instruments as will effectuate the delivery
of all Collateral to the successor Indenture Collateral Agent, whereupon such
successor, without any further act, deed or conveyance, shall become fully
vested with all the estates, properties, rights, powers, duties and obligations
of its predecessor. Such predecessor shall, nevertheless, on the written request
of either Issuer Secured Party or the Issuer, execute and deliver an instrument
transferring to such successor all the estates, properties, rights and powers of
such predecessor hereunder. In the event that any instrument in writing from the
Issuer or an Issuer Secured Party is reasonably required by a successor
Indenture Collateral Agent to more fully and certainly vest in such successor
the estates, properties, rights, powers, duties and obligations vested or
intended to be vested hereunder in the Indenture Collateral Agent, any and all
such written instruments shall, at the request of the temporary or permanent
successor Indenture Collateral Agent, be forthwith executed, acknowledged and
delivered by the Trustee or the Issuer, as the case may be. The designation of
any successor Indenture Collateral Agent and the instrument or instruments
removing any Indenture Collateral Agent and appointing a successor hereunder,
together with all other instruments provided for herein, shall be maintained
with the records relating to the Collateral and, to the extent required by
applicable law, filed or recorded by the successor Indenture Collateral Agent in
each place where such filing or recording is necessary to effect the transfer of
the Collateral to the successor Indenture Collateral Agent or to protect or
continue the perfection of the security interests granted hereunder.
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SECTION 6.18 Compensation. The Indenture Collateral Agent shall not
be entitled to any compensation for the performance of its duties hereunder
other than the compensation it is entitled to receive in its capacity as
Trustee.
SECTION 6.19 Representations and Warranties of the Indenture
Collateral Agent. The Indenture Collateral Agent represents and warrants to the
Issuer and to each Issuer Secured Party as follows:
(a) Due Organization. The Indenture Collateral Agent is a New York
banking corporation duly organized, validly existing and in good standing under
the laws of the United States and is duly authorized and licensed under
applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Indenture Collateral Agent has all
requisite right, power and authority to execute and deliver this Indenture and
to perform all of its duties as Indenture Collateral Agent hereunder.
(c) Due Authorization. The execution and delivery by the Indenture
Collateral Agent of this Indenture and the other Basic Documents to which it is
a party, and the performance by the Indenture Collateral Agent of its duties
hereunder and thereunder, have been duly authorized by all necessary corporate
proceedings and no further approvals or filings, including any governmental
approvals, are required for the valid execution and delivery by the Indenture
Collateral Agent, or the performance by the Indenture Collateral Agent, of this
Indenture and such other Basic Documents.
(d) Valid and Binding Indenture. The Indenture Collateral Agent has
duly executed and delivered this Indenture and each other Basic Document to
which it is a party, and each of this Indenture and each such other Basic
Document constitutes the legal, valid and binding obligation of the Indenture
Collateral Agent, enforceable against the Indenture Collateral Agent in
accordance with its terms, except as (i) such enforceability may be limited by
bankruptcy, insolvency, reorganization and similar laws relating to or affecting
the enforcement of creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
SECTION 6.20 Waiver of Setoffs. The Indenture Collateral Agent and
the Trustee hereby expressly waive any and all rights of setoff that the
Indenture Collateral Agent or the Trustee may otherwise at any time have under
applicable law with respect to any Trust Account and agrees that amounts in the
Trust Accounts shall at all times be held and applied solely in accordance with
the provisions hereof.
SECTION 6.21 Control by the Controlling Party. The Indenture
Collateral Agent shall comply with notices and instructions given by the Issuer
only if accompanied by the written consent of the Controlling Party, except that
if any Event of Default shall have occurred
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and be continuing, the Indenture Collateral Agent shall act upon and comply with
notices and instructions given by the Controlling Party alone in the place and
stead of the Issuer.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish To Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee (a)
not more than five days after each Record Date a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders as of
such Record Date, (b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Trustee is the
Note Registrar, no such list shall be required to be furnished. The Trustee or,
if the Trustee is not the Note Registrar, the Issuer shall furnish to the
Security Insurer in writing on an annual basis on each December 31 (beginning on
December 31, 1999) and at such other times as the Security Insurer may request a
copy of the list.
SECTION 7.2 Preservation of Information; Communications to
Noteholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in such
Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA Section 312(c).
SECTION 7.3 Reports by Issuer. (a) The Issuer shall:
(i) deliver to the Trustee, at least 2 Business Days prior to the
date the Issuer is required to file the same with the Commission, hard and
electronic copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations prescribe)
which the Issuer may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission such
additional information, documents and reports with respect to compliance
by the Issuer with the conditions and
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covenants of this Indenture as may be required from time to time by such
rules and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by mail
to all Noteholders described in TIA Section 313(c)) such summaries of any
information, documents and reports required to be filed by the Issuer
pursuant to clauses (i) and (ii) of this Section 7.3(a) as may be required
by rules and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on September 30 of each year.
SECTION 7.4 Reports by Trustee. If required by TIA Section 313(a),
within 60 days after each December 1, beginning with December 1, 1999, the
Trustee shall mail to each Noteholder as required by TIA Section 313(c) a brief
report dated as of such date that complies with TIA Section 313(a). The Trustee
also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders
shall be filed by the Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Trustee if and
when the Notes are listed on any stock exchange and shall provide the
appropriate address or addresses to which each report need be sent.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it or the Indenture Collateral Agent as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Trust Estate, the Trustee may take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.2 Trust Accounts. (a) On or prior to the Closing Date, the
Issuer shall cause the Servicer to establish and maintain, in the name of the
Trustee, for the benefit of the Noteholders, the Certificateholders and the
Security Insurer, the Trust Accounts as provided in Section 5.1 of the Sale and
Servicing Agreement.
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(b) Subject to Section 5.6 of the Sale and Servicing Agreement, on
each Payment Date and Redemption Date, the Trustee shall distribute all amounts
on deposit in the Note Distribution Account to Noteholders in respect of the
Notes to the extent of amounts due and unpaid on the Notes for principal and
interest in the following amounts and in the following order of priority (except
as otherwise provided in Section 5.6):
(i) accrued and unpaid interest on the Notes; provided that if there
are not sufficient funds in the Note Distribution Account to pay the
entire amount of accrued and unpaid interest then due on each class of
Notes, the amount in the Note Distribution Account shall be applied to the
payment of such interest on each class of Notes pro rata on the basis of
the amount of accrued and unpaid interest due on each class of Notes;
(ii) principal to the Holders of the Class A-1 Notes until the
Outstanding Amount of the Class A-1 Notes is reduced to zero; and
(iii) principal to the Holders of the Class A-2 Notes until the
Outstanding Amount of the Class A-2 Notes is reduced to zero.
SECTION 8.3 General Provisions Regarding Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Eligible
Investments and reinvested by the Trustee upon Issuer Order, subject to the
provisions of Section 5.1(b) of the Sale and Servicing Agreement. All income or
other gain from investments of moneys deposited in the Trust Accounts shall be
deposited (or caused to be deposited) by the Trustee in the Collection Account,
and any loss resulting from such investments shall be charged to such account.
The Issuer will not direct the Trustee to make any investment of any funds or to
sell any investment held in any of the Trust Accounts unless the security
interest Granted and perfected in such account will continue to be perfected in
such investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment or sale, if requested by the Trustee, the Issuer shall
deliver to the Trustee and the Security Insurer an Opinion of Counsel,
acceptable to the Trustee and the Security Insurer, to such effect.
(b) [Reserved]
(c) Subject to Section 6.1(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as trustee, in accordance with their terms.
(d) If (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Trustee by
12:00 noon Eastern Time (or such other time as may be agreed by the Issuer and
Trustee) on any Business Day; or (ii) a Default or Event of Default shall have
occurred and be continuing with respect to the Notes but the Notes shall
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not have been declared due and payable pursuant to Section 5.2, or, if such
Notes shall have been declared due and payable following an Event of Default,
amounts collected or receivable from the Trust Estate are being applied in
accordance with Section 5.5 as if there had not been such a declaration; then
the Trustee shall, to the fullest extent practicable, invest and reinvest funds
in the Trust Accounts in investments of the type set forth in clause (g) of the
definition of Eligible Investments.
SECTION 8.4 Release of Trust Estate. (a) Subject to the payment of
its fees and expenses pursuant to Section 6.7, the Indenture Collateral Agent
may, and when required by the provisions of this Indenture or Sale and Servicing
Agreement shall, execute instruments to release property from the, lien of this
Indenture, or convey the Indenture Collateral Agent's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Indenture
Collateral Agent as provided in this Article VIII shall be bound to ascertain
the Indenture Collateral Agent's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) The Indenture Collateral Agent shall, at such time as the Note
Policy shall have terminated in accordance with its terms and there are no Notes
outstanding and all sums due the Security Insurer under the Insurance Agreement
and the Trustee pursuant to Section 6.7 have been paid, release any remaining
portion of the Trust Estate that secured the Notes from the lien of this
Indenture and release to the Issuer or any other Person entitled thereto any
funds then on deposit in the Trust Accounts. The Trustee shall release property
from the lien of this Indenture pursuant to this Section 8.4(b) only upon
receipt of an Issuer Request accompanied by an Officer's Certificate, an Opinion
of Counsel and (if required by the TIA) Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of
Section 11.1.
SECTION 8.5 Opinion of Counsel. The Indenture Collateral Agent shall
receive at least seven days' written notice when requested by the Issuer to take
any action pursuant to Section 8.4(a), accompanied by copies of any instruments
involved, and the Trustee shall also require as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Trustee and not at
the expense of the Trustee, stating the legal effect of any such action,
outlining the steps required to complete the same, and concluding that all
conditions precedent to the taking of such action have been complied with and
such action will not materially and adversely impair the security for the Notes
or the rights of the Noteholders in contravention of the provisions of this
Indenture; provided, however, that such Opinion of Counsel shall not be required
to express an opinion as to the fair value of the Trust Estate. Counsel
rendering any such opinion may rely, without independent investigation, on the
accuracy and validity of any certificate or other instrument delivered to the
Trustee in connection with any such action.
ARTICLE IX
Supplemental Indentures
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SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
(a)Without the consent of the Holders of any Notes but with the consent of the
Security Insurer (unless an Insurer Default shall have occurred and be
continuing) and with prior notice to the Rating Agencies by the Issuer, as
evidenced to the Trustee, the Issuer and the Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Collateral Agent any property subject or
required to be subjected to the lien of this Indenture, or to subject to
the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Collateral Agent;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action
shall not adversely affect the interests of the Holders of the Notes or
the Security Insurer without its consent;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to
or change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such other provisions as
may be expressly required by the TIA.
The Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
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(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with the
prior written consent of the Security Insurer (unless an Insurer Default has
occurred and is continuing) and prior notice to the Rating Agencies by the
Issuer, as evidenced to the Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, adversely affect in
any material respect the interests of any Noteholder or the Security Insurer
without its consent. An amendment described in this clause (b) shall be deemed
not to adversely affect the interests of any Noteholder if either each Rating
Agency confirms in writing that such amendment will not result in a reduction or
withdrawal of the then current rating of each Class of Notes or none of the
Rating Agencies, within 10 days' after receipt of notice of such amendment,
notifies the Seller, the Servicer or the Trust in writing that such amendment
will result in a reduction or withdrawal of the then current ratings of the
Notes.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies, with the consent of the Security Insurer (unless
an Insurer Default shall have occurred and be continuing) and with the consent
of the Holders of not less than a majority of the outstanding Amount of the
Notes, by Act of such Holders delivered to the Issuer and the Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that, subject to
the express rights of the Security Insurer under the Basic Documents, no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Redemption Price with respect thereto, change the
provision of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Trust Estate to payment of principal
of or interest on the Notes, or change any place of payment where, or the
coin or currency in which, any Note or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due
on the Notes on or after the respective due dates thereof (or, in the case
of redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Outstanding Amount of the Notes,
the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
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(iv) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Trustee to direct the Issuer to sell or liquidate
the Trust Estate pursuant to Section 5.4;
(vi) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(vii) modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation
of any of the individual components of such calculation) or to affect the
rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes contained herein;
(viii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein or
in any of the Basic Documents, terminate the lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Note of
the security provided by the lien of this Indenture; or
(ix) adversely affect the interests of the Security Insurer without
its prior consent.
The Trustee may determine whether or not any Notes would be affected
by any supplemental indenture and any such determination shall be conclusive
upon the Holders of all Notes, whether theretofore or thereafter authenticated
and delivered hereunder. The Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
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SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption. (a) The Notes are subject to redemption in
whole, but not in part, at the direction of the Seller pursuant to Section
9.1(a) of the Sale and Servicing Agreement, on any Payment Date on which the
Servicer exercises its option to purchase the Trust Estate pursuant to said
Section 9.1(a), for a purchase price equal to the Redemption Price; provided,
however, that the Issuer has available funds sufficient to pay the Redemption
Price. The Servicer or the Issuer shall furnish the Security Insurer and the
Rating Agencies notice of such redemption. If the Notes are to be redeemed
pursuant to this Section 10.1(a), the Servicer or the Issuer shall furnish
notice of such election to the Trustee not later than 35 days prior to the
Redemption Date and the Issuer shall deposit with the Trustee in the Note
Distribution Account
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the Redemption Price of the Notes to be redeemed whereupon all such Notes shall
be due and payable on the Redemption Date upon the furnishing of a notice
complying with Section 10.2 to each Holder of Notes.
(b) [Reserved]
(c) In the event that the assets of the Trust are sold pursuant to
Section 9.1 of the Sale and Servicing Agreement, all amounts on deposit in the
Note Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon and the Security
Insurer shall receive all amounts then owing to it. If amounts are to be paid to
Noteholders pursuant to this Section 10.1(c), the Servicer or the Issuer shall,
to the extent practicable, furnish notice of such event to the Trustee and the
Security Insurer not later than 45 days prior to the Redemption Date whereupon
all such amounts shall be payable on the Redemption Date.
SECTION 10.2 Form of Redemption Notice. (a) Notice of redemption
under Section 10.1(a) shall be given by the Trustee by facsimile or by
first-class mail, postage prepaid, transmitted or mailed prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption
Date is not applicable and that payments shall be made only upon
presentation and surrender of such Notes and the place where such Notes
are to be surrendered for payment of the Redemption Price (which shall be
the office or agency of the Issuer to be maintained as provided in Section
3.2); and
(iv) that interest on the Notes shall cease to accrue on the
Redemption Date.
Notice of redemption of the Notes shall be given by the Trustee in
the name and at the expense of the Issuer. Failure to give notice of redemption,
or any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Sections 10.1(b) is not
required to be given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1(a)), on the Redemption Date
become due and payable at the
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Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Trustee or the Indenture Collateral
Agent to take any action under any provision of this Indenture, the Issuer shall
furnish to the Trustee or the Indenture Collateral Agent, as the case may be,
and to the Security Insurer if the application or request is made to the
Indenture Collateral Agent (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Collateral Agent that is to be made the
basis for the release of any property or securities subject to the lien of
this Indenture, the Issuer shall, in addition to any obligation imposed in
Section 11.1(a) or elsewhere in this Indenture, furnish to the
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Indenture Collateral Agent and the Security Insurer an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the
Issuer of the Collateral or other property or securities to be so
deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Collateral Agent and the Security Insurer an Officer's Certificate
certifying or stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Issuer shall also deliver to the
Indenture Collateral Agent and the Security Insurer an Independent
Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the
basis of any such withdrawal or release since the commencement of the
then-current fiscal year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or
more of the Outstanding Amount of the Notes, but such a certificate need
not be furnished with respect to any securities so deposited, if the fair
value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than 1% percent of the
Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Liquidated Receivables, whenever any property or securities
are to be released from the lien of this Indenture, the Issuer shall also
furnish to the Indenture Collateral Agent and the Security Insurer an
Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and stating
that in the opinion of such person the proposed release will not impair
the security under this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee and
the Security Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Indenture Collateral Agent and
the Security Insurer an Independent Certificate as to the same matters if
the fair value of the property or securities and of all other property
other than Purchased Receivables and Defaulted Receivables, or securities
released from the lien of this Indenture since the commencement of the
then current calendar year, as set forth in the certificates required by
clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not be
furnished in the case of any release of property or securities if the fair
value thereof as set forth in the related Officer's Certificate is less
than $25,000 or less than 1% percent of the then Outstanding Amount of the
Notes.
(v) Notwithstanding Section 2.9, Section 8.4 or any other provision
of this Section, the Issuer may (A) collect, liquidate, sell or otherwise
dispose of Receivables, Financed Vehicles or related property as and to
the extent permitted or required by the Basic Documents and (B) make cash
payments out of the Trust Accounts as and to the extent permitted or
required by the Basic Documents and shall not be required in
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connection therewith to deliver the certificates and opinions described
above or in Section 8.5.
SECTION 11.2 Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
SECTION 11.3 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such
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instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) The Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested and shall
be deemed to have been duly given upon receipt to the Trustee at its Corporate
Trust Office, or
(b) The Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered, delivered by
overnight courier or mailed certified mail, return receipt requested and shall
be deemed to have been duly given upon receipt to the Issuer addressed to:
Franklin Auto Trust 1999-1, in care of Bankers Trust (Delaware), 1011 Centre
Read, Suite 200, Wilmington Delaware 19805, with a copy to Bankers Trust
Company, 4 Albany Street, 10th Floor, New York, New York 10006, Attention:
Corporate Trust & Agency Group--Structured Finance or at any other address
previously furnished in writing to the Trustee by Issuer. The Issuer shall
promptly transmit any notice received by it from the Noteholders to the Trustee.
(c) The Security Insurer by the Issuer or the Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by registered mail
or personally delivered or telexed or telecopied to the recipient as follows: to
the Security Insurer: MBIA Insurance Corporation, 113 King Street, Armonk, NY
10504, Attention: Insured Portfolio Management - SF, Fax: 914-765-3810, Ph:
(914) 273-4545.
Notices required to be given to the Rating Agencies by the Issuer,
the Trustee or the Owner Trustee shall be in writing, personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10004 and
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(ii) in the case of S&P, at the following address: Standard & Poor's Ratings
Services, 26 Broadway (15th Floor), New York, New York 10004, Attention of Asset
Backed Surveillance Department; or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Trustee or any Paying Agent
to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices, provided that such methods are
reasonable and consented to by the Trustee (which consent shall not be
unreasonably withheld). The Issuer will furnish to the Trustee a copy of each
such agreement and the Trustee will cause payments to be made and notices to be
given in accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
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The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors. All agreements of the Indenture Collateral
Agent in this Indenture shall bind its successors.
SECTION 11.10 Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.11 Benefits of Indenture. The Security Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture so long as no Insurer Default shall have occurred
and be continuing. Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the Security Insurer and the Noteholders, and any other
party secured hereunder, and any other person with an ownership interest in any
part of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture. The Security Insurer may disclaim any of its rights
and powers under this Indenture (in which case the Indenture Trustee may
exercise such right or power hereunder), but not its duties and obligations
under the Note Policy, upon delivery of a written notice to the Trustee.
SECTION 11.12 Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date an which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS (OTHER THAN N.Y. GENERAL OBLIGATIONS LAW ss. 5-1401),
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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SECTION 11.14 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Trustee or any other counsel reasonably
acceptable to the Trustee and the Security Insurer) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
person secured hereunder or for the enforcement of any right or remedy granted
to the Trustee or the Indenture Collateral Agent under this Indenture.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Seller, the
Servicer, the Owner Trustee, the Trustee or the Indenture Collateral Agent on
the Notes or under this Indenture or any certificate or other writing delivered
in connection herewith or therewith, against (i) the Seller, the Servicer, the
Trustee, the Indenture Collateral Agent, or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Seller, the Servicer, the Trustee, the Indenture Collateral Agent or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Seller, the Servicer, the Owner Trustee, the Indenture Collateral
Agent or the Trustee or of any successor or assign of the Seller, the Servicer,
the Trustee, the Indenture Collateral Agent or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Trustee, the Indenture Collateral Agent and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity. For all purposes of this Indenture, in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Article VI, VII and
VIII of the Trust Agreement.
SECTION 11.17 No Petition. The Trustee and the Indenture Collateral
Agent, by entering into this Indenture, and each Noteholder, by accepting a
Note, hereby covenant and agree that they will not prior to one year and one day
after the termination of this Agreement institute against the Seller, or the
Issuer, or join in any institution against the Seller, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Trustee or of the
Security Insurer, during the Issuer's normal business hours, to examine all the
books of account, records, reports, and other papers of the Issuer, to make
copies and extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Issuer's affairs, finances and
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accounts with the Issuer's officers, employees, and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Trustee shall and shall cause its representatives to hold in
confidence all such information except to the extent disclosure may be required
by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Trustee may reasonably determine
that such disclosure is consistent with its Obligations hereunder.
SECTION 11.19 No Joint Venture. Nothing herein contained shall be
deemed or construed to create a co-partnership or joint venture between the
parties hereto and the services of the Servicer shall be rendered as an
independent contractor and not as agent for the Trustee.
SECTION 11.20 Security Insurer as Controlling Party. Each Noteholder
by purchase of the Notes held by it acknowledges that as partial consideration
of the issuance of the Note Policy and pursuant to the terms of this Agreement,
the Security Insurer shall have certain rights hereunder, which rights may be
limited should an Insurer Default occur and be continuing.
[THIS SPACE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Issuer, the Trustee and the Indenture
Collateral Agent have caused this Indenture to be duly executed by their
respective officers, thereunto duly authorized, all as of the day and year first
above written.
FRANKLIN AUTO TRUST 1999-1,
By: BANKERS TRUST (DELAWARE), not in its
individual capacity but solely as Owner
Trustee
By: /s/ Christopher Lew
_____________________________
Name: Christopher Lew
Title: Attorney in Fact
By: THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Trustee
and as Indenture Collateral Agent
By: /s/ Tara Sweeney
_____________________________
Name: Tara Sweeney
Title: Trust Officer
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[Form of Note] EXHIBIT D-1
REGISTERED $66,500,000.00
No. 1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 35242RAC8
ISIN No. US35242RAC88
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is 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.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FRANKLIN AUTO TRUST 1999-1
CLASS A-1 5.52% ASSET BACKED NOTES
Franklin Auto Trust 1999-1, a business trust organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to CEDE & CO., or registered assigns,
the principal sum of SIXTY SIX MILLION FIVE HUNDRED THOUSAND DOLLARS payable on
each Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $66,500,000 and the denominator of which is
$66,500,000 by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-1 Notes pursuant to
Section 3.1 of the Indenture, provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the December 2002
Payment Date (the "Class A-1 Final Payment Date"). The Issuer will pay interest
on this Note at the rate per annum shown above on each Payment Date until the
principal of this Note is paid or made available for payment, on the principal
amount of this Note outstanding on the preceding Payment Date (after
D-1-1
<PAGE> 84
giving effect to all payments of principal made on the preceding Payment Date).
Interest on this Note will accrue for each Payment Date from and including the
fifteenth day of the calendar month preceding the related Payment Date to but
excluding the fifteenth day of the calendar month of the related Payment Date.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a note guaranty insurance
policy (the "Note Policy") issued by MBIA Insurance Corporation (the "Security
Insurer"), pursuant to which the Security Insurer has unconditionally guaranteed
payments of Note Policy Claim Amount on each Payment Date, all as more fully set
forth in the Indenture.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
D-1-2
<PAGE> 85
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
FRANKLIN AUTO TRUST 1999-1
By: BANKERS TRUST (DELAWARE),
not in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
By:________________________________
Name:
Title:
Date:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Notes designated above and referred to
in the within-mentioned Indenture.
Date: May 27, 1999
THE CHASE MANHATTAN BANK, not in
its individual capacity but solely
as Trustee,
By:________________________________
Authorized Signatory
D-1-3
<PAGE> 86
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 5.52% Asset Backed Notes (herein called the "Class
A-1 Notes"), all issued under an Indenture dated as of May 1, 1999 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and The Chase Manhattan Bank, as trustee (the "Trustee",
which term includes any successor Trustee under the Indenture, and the
"Indenture Collateral Agent", which term includes any successor Indenture
Collateral Agent under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A-1 Notes and the Class A-2 Notes (together, the "Notes")
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the
fifteenth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing in June 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-1 Final Scheduled Payment
Date and the Redemption Date, if any, pursuant to Section 10.1(a) or 10.1(c) of
the Indenture. As described above, a portion of the unpaid principal balance of
this Note shall be due and payable on the Redemption Date, if any, pursuant to
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable (i) on the date on
which an Event of Default shall have occurred and be continuing so long as an
Insurer Default shall not have occurred and be continuing and provided that the
Controlling Party declares the Notes to be immediately due and payable or (ii)
if an Insurer Default shall have occurred and be continuing, on the date on
which an Event of Default shall have occurred and be continuing and the Trustee
or the Holders of the Notes representing at least 66-2/3% of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2 of the Indenture. All principal payments on
the Class A-1 Notes shall be made pro rata to the Class A-1 Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
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<PAGE> 87
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Payment Date
shall be binding upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Trustee, in the name
of and on behalf of the Issuer, will notify the Person who was the Holder hereof
as of the Record Date preceding such Payment Date by notice mailed prior to such
Payment Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Trustee's principal Corporate
Trust Office or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Servicer (with the consent of the Security Insurer under certain
circumstances), on any Payment Date on or after the date on which the Pool
Balance is less than or equal to 10% of the Original Pool Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, the Indenture Collateral Agent or
the Trustee on the Notes or under the Indenture or any certificate
D-1-5
<PAGE> 88
or other writing delivered in connection therewith, against (i) the Seller, the
Servicer, the Trustee, the Indenture Collateral Agent or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Seller, the Servicer, the Trustee, the Indenture Collateral Agent or the
Owner Trustee in its individual capacity, any holder of a beneficial interest in
the Issuer, the Seller, the Servicer, the Owner Trustee or the Trustee or of any
successor or assign of the Seller, the Servicer, the Trustee, the Indenture
Collateral Agent or the Owner Trustee in its individual capacity, except as any
such Person may have expressly agreed (it being understood that the Trustee, the
Indenture Collateral Agent and the Owner Trustee have no such obligations in
their individual capacity) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note covenants and agrees that
by accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Seller, or the Issuer or join in any institution
against the Seller, or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings, under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and the Security Insurer and any agent of the
Issuer, the Trustee or the Security Insurer may treat the Person in whose name
this Note (as of the day of determination or as of such other date as may be
specified in the Indenture) is registered as the owner hereof for all purposes,
whether or not this Note be overdue, and neither the Issuer, the Trustee nor any
such agent shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Security Insurer and of the Holders
of Notes representing a majority of the Outstanding Amount of all Notes at the
time Outstanding. The Indenture also contains provisions permitting the Holders
of Notes representing specified percentages of the Outstanding Amount of the
Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
D-1-6
<PAGE> 89
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Trustee and
the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture 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
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Bankers Trust
(Delaware) in its individual capacity, any owner of a beneficial interest in the
Issuer, nor any of their respective partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and indemnifications
have been made by the Owner Trustee for the sole purposes of binding the
interests of the Owner Trustee in the assets of the Issuer. The Holder of this
Note by the acceptance hereof agrees that except as expressly provided in the
Indenture or the Basic Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
D-1-7
<PAGE> 90
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _____________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: ___________ _______________________(1)
Signature Guaranteed:
________________________________________________________________________________
- ----------
(1) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
D-1-8
<PAGE> 91
REGISTERED [Form of Note] Exhibit D-2
$40,023,000.00
No. 1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 35242RAD6
ISIN No. US35242RAD61
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is 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.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FRANKLIN AUTO TRUST 1999-1
CLASS A-2 6.05% ASSET BACKED NOTES
Franklin Auto Trust 1999-1, a business trust organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to CEDE & CO., or registered assigns,
the principal sum of FORTY MILLION TWENTY THREE THOUSAND DOLLARS payable on each
Payment Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $40,023,000 and the denominator of which is
$40,023,000 by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-2 Notes pursuant to
Section 3.1 of the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the December 2006
Payment Date (the "Class A-2 Final Scheduled Payment Date"). The Issuer will pay
interest on this Note at the rate per annum shown above on each Payment Date
until the principal of this Note is paid or made available for payment, on the
principal amount of this Note outstanding on the preceding Payment Date (after
giving effect to all payments of principal made on the preceding Payment Date).
Interest on this Note will accrue for each Payment Date from and including the
fifteenth day of the calendar month preceding the related Payment Date to but
excluding the fifteenth day of the calendar month of
D-2-1
<PAGE> 92
the related Payment Date. Interest will be computed on the basis of a 360-day
year consisting of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a note guaranty insurance
policy (the "Note Policy") issued by MBIA Insurance Corporation (the "Insurer"),
pursuant to which the Insurer has unconditionally guaranteed payments of Note
Policy Claim Amount on each Payment Date, all as more fully set forth in the
Indenture.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
D-2-2
<PAGE> 93
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
FRANKLIN AUTO TRUST 1999-1
By: BANKERS TRUST (DELAWARE), not
in its individual capacity but
solely as Owner Trustee under the
Trust Agreement,
By:________________________________
Name:
Title:
Date:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Notes designated above and referred to
in the within-mentioned Indenture.
Date: May 27, 1999
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Trustee,
By:_________________________________
Authorized Signatory
D-2-3
<PAGE> 94
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-2 6.05% Asset Backed Notes (herein called the "Class
A-2 Notes"), all issued under an Indenture dated as of May 1, 1999 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and The Chase Manhattan Bank, as trustee (the "Trustee",
which term includes any successor Trustee under the Indenture, and the
"Indenture Collateral Agent", which term includes any successor Indenture
Collateral Agent under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class A-1 Notes and the Class A-2 Notes (together, the "Notes")
are and will be equally and ratably secured by the collateral pledged as
security therefor as provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the
fifteenth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing in June 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-2 Final Scheduled Payment
Date and the Redemption Date, if any, pursuant to Section 10.1(a) or 10.1(c) of
the Indenture. As described above, a portion of the unpaid principal balance of
this Note shall be due and payable on the Redemption Date, if any, pursuant to
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable (i) on the date on
which an Event of Default shall have occurred and be continuing so long as an
Insurer Default shall not have occurred and be continuing or (ii) if an Insurer
Default shall have occurred and be continuing, on the date on which an Event of
Default shall have occurred and be continuing and the Trustee or the Holders of
the Notes representing at least 66-2/3% of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class A-2 Notes
shall be made pro rata to the Class A-2 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Holder of this Note (or one or more Predecessor Notes) on
the Note Register as of the close of business on each Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by
D-2-4
<PAGE> 95
wire transfer in immediately available funds to the account designated by such
nominee. Such checks shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Note Register as of the applicable
Record Date without requiring that this Note be submitted for notation of
payment. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Payment Date shall be
binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Payment Date, then the Trustee, in the name of and on behalf of
the Issuer, will notify the Person who was the Holder hereof as of the Record
Date preceding such Payment Date by notice mailed prior to such Payment Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Trustee's principal Corporate Trust Office or at
the office of the Trustee's agent appointed for such purposes located in The
City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A-2 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Servicer (with the consent of the Insurer under certain circumstances), on
any Payment Date on or after the date on which the Pool Balance is less than or
equal to 10% of the Original Pool Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, the Indenture Collateral Agent or
the Trustee on the Notes or under the Indenture or any certificate or other
writing delivered in connection therewith, against (i) the Seller, the Servicer,
the
D-2-5
<PAGE> 96
Trustee, the Indenture Collateral Agent or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director or employee of the Seller,
the Servicer, the Trustee, the Indenture Collateral Agent or the Owner Trustee
in its individual capacity, any holder of a beneficial interest in the Issuer,
the Seller, the Servicer, the Owner Trustee, the Indenture Collateral Agent or
the Trustee or of any successor or assign of the Seller, the Servicer, the
Trustee, the Indenture Collateral Agent or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Trustee, the Indenture Collateral Agent and the Owner
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note covenants and agrees that
by accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Seller, or the Issuer or join in any institution
against the Seller, or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings, under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and the Insurer and any agent of the Issuer, the
Trustee or the Insurer may treat the Person in whose name this Note (as of the
day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and neither the Issuer, the Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of all Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of the Notes,
on behalf of the Holders of all the Notes, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one or more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
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<PAGE> 97
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Trustee and
the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture 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
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Bankers Trust
(Delaware) in its individual capacity, any owner of a beneficial interest in the
Issuer, nor any of their respective partners, beneficiaries, agents, officers,
directors, employees or successors or assigns shall be personally liable for,
nor shall recourse be had to any of them for, the payment of principal of or
interest on, or performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in this Note or the Indenture, it
being expressly understood that said covenants, obligations and indemnifications
have been made by the Owner Trustee for the sole purposes of binding the
interests of the Owner Trustee in the assets of the Issuer. The Holder of this
Note by the acceptance hereof agrees that except as expressly provided in the
Indenture or the Basic Documents, in the case of an Event of Default under the
Indenture, the Holder shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however, that nothing contained
herein shall be taken to prevent recourse to, and enforcement against, the
assets of the Issuer for any and all liabilities, obligations and undertakings
contained in the Indenture or in this Note.
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ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _____________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: __________________________________(1)
Signature Guaranteed:
________________________________________________________________________________
- ----------
(1) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
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<PAGE> 99
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date:
_______________________________, not in
its individual capacity but solely as
Trustee,
By:______________________
Authorized Signatory
D-3-1
<PAGE> 1
Exhibit 4.3
Execution Copy
- --------------------------------------------------------------------------------
SALE AND SERVICING
AGREEMENT
among
FRANKLIN AUTO TRUST 1999-1
Issuer,
FRANKLIN RECEIVABLES LLC
Seller,
FRANKLIN CAPITAL CORPORATION
Servicer,
and
FRANKLIN RESOURCES, INC.,
Representative
Dated as of May 1, 1999
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<PAGE> 2
Table of Contents
Page
----
ARTICLE I
Definitions
SECTION 1.1 Definitions................................................1
SECTION 1.2 Other Definitional Provisions.............................18
ARTICLE II
Conveyance of Receivables
SECTION 2.1 Conveyance of Receivables.................................19
ARTICLE III
The Receivables
SECTION 3.1 Representations and Warranties of Seller..................19
SECTION 3.2 Repurchase upon Breach....................................23
SECTION 3.3 Custody of Receivables Files..............................24
SECTION 3.4 Duties of Servicer as Custodian...........................25
SECTION 3.5 Instructions; Authority To Act............................26
SECTION 3.6 Custodian's Indemnification...............................26
SECTION 3.7 Effective Period and Termination..........................27
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1 Duties of Servicer........................................27
SECTION 4.2 Collection and Allocation of Receivable Payments..........28
SECTION 4.3 Realization upon Receivables..............................28
SECTION 4.4 Financed Vehicle Insurance................................28
SECTION 4.5 Maintenance of Security Interests in Financed Vehicles....28
SECTION 4.6 Covenants of Servicer.....................................29
SECTION 4.7 Purchase of Receivables upon Breach.......................29
SECTION 4.8 Servicing Fee.............................................30
SECTION 4.9 Servicer's Certificate....................................30
SECTION 4.10 Annual Statement as to Compliance; Notice of Default......30
SECTION 4.11 Annual Independent Certified Public Accountants'
Report....................................................31
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SECTION 4.12 Access to Certain Documentation and Information
Regarding Receivables.....................................31
SECTION 4.13 Servicer Expenses.........................................31
SECTION 4.14 Appointment of Subservicer................................31
SECTION 4.15 Obligations under Basic Documents.........................31
ARTICLE V
Distributions; Statements to Certificateholders and Noteholders
SECTION 5.1 Establishment of Trust Accounts...........................32
SECTION 5.2 Collections...............................................35
SECTION 5.3 Application of Collections................................36
SECTION 5.4 Deficiency Notice.........................................36
SECTION 5.5 Additional Deposits.......................................37
SECTION 5.6 Distributions.............................................37
SECTION 5.7 [RESERVED]................................................38
SECTION 5.8 Statements to Certificateholders and Noteholders..........39
SECTION 5.9 Net Deposits..............................................40
SECTION 5.10 Optional Deposits by the Security Insurer.................40
ARTICLE VI
The Seller
SECTION 6.1 Representations of the Seller.............................40
SECTION 6.2 Corporate Existence.......................................42
SECTION 6.3 Liability of Seller; Indemnities..........................43
SECTION 6.4 Merger or Consolidation of, or Assumption of the
Obligations of, Seller....................................43
SECTION 6.5 Limitation on Liability of Seller and Others..............44
SECTION 6.6 Seller May Own Certificates or Notes......................44
ARTICLE VII
The Servicer
SECTION 7.1 Representations of Servicer...............................45
SECTION 7.2 Indemnities of Servicer...................................46
SECTION 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer..................................47
SECTION 7.4 Limitation on Liability of Servicer and Others............48
SECTION 7.5 Servicer Not To Resign....................................48
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ARTICLE VIIA
The Servicer and the Representative
SECTION 7.1A Representations of Franklin Resources.....................48
SECTION 7.2A Limitation on Liability of Franklin Resources and
Others....................................................50
ARTICLE VIII
Default
SECTION 8.1 Servicer Default..........................................50
SECTION 8.2 Appointment of Successor..................................52
SECTION 8.3 [RESERVED]................................................52
SECTION 8.4 Notification to Noteholders and Certificateholders........52
SECTION 8.5 Waiver of Past Defaults...................................52
ARTICLE IX
Termination
SECTION 9.1 Optional Purchase of All Receivables......................53
ARTICLE X
Administrative Duties of the Servicer
SECTION 10.1 Administrative Duties.....................................54
SECTION 10.2 Records...................................................56
SECTION 10.3 Additional Information to be Furnished to the Issuer......56
SECTION 10.4 Replacement Note Policy...................................56
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1 Amendment.................................................57
SECTION 11.2 Protection of Title to Trust..............................58
SECTION 11.3 Notices...................................................60
SECTION 11.4 Assignment................................................61
SECTION 11.5 Limitations on Rights of Others...........................61
SECTION 11.6 Severability..............................................61
SECTION 11.7 Separate Counterparts.....................................61
SECTION 11.8 Headings..................................................62
SECTION 11.9 Governing Law.............................................62
SECTION 11.10 Assignment to Trustee.....................................62
SECTION 11.11 Nonpetition Covenants.....................................62
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<PAGE> 5
SECTION 11.12 Limitation of Liability of Owner Trustee, Trustee and
Indenture Collateral Agent................................62
SECTION 11.13 Independence of the Servicer..............................63
SECTION 11.14 No Joint Venture..........................................63
SECTION 11.15 Third-Party Beneficiaries.................................63
SECTION 11.16 Disclaimer by Security Insurer............................63
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<PAGE> 6
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
EXHIBITS
Exhibit A - Reserved
Exhibit B - Reserved
Exhibit C - Form of Monthly Noteholder and Certificateholder Statement
Exhibit D - Form of Servicer's Certificate
Exhibit E - Form of Note Policy
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<PAGE> 7
SALE AND SERVICING AGREEMENT, dated as of May 1, 1999, among
FRANKLIN AUTO TRUST 1999-1, a Delaware business trust (the "Issuer"), FRANKLIN
RECEIVABLES LLC, a Delaware limited liability company (the "Seller"), FRANKLIN
CAPITAL CORPORATION, a Utah corporation (the "Servicer" or "Franklin Capital"),
and FRANKLIN RESOURCES, INC., a Delaware corporation ("Franklin Resources" or
the "Representative").
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by Franklin Capital through motor vehicle dealers;
WHEREAS the Seller has purchased such receivables from Franklin
Capital and is willing to sell such receivables to the Issuer;
WHEREAS the Servicer is willing to service all such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
Definitions
SECTION 1.1 Definitions. Whenever used in this Agreement, the following
words and phrases shall have the following meanings:
"Actuarial Method" means the method of allocating a fixed level
payment on an obligation between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is equal to the product of
(i) one-twelfth of the fixed rate of interest on such obligation and (ii) the
outstanding principal balance of such obligation.
"Additional Servicing Fee" means, with respect to any Monthly
Period, the fee payable to the Servicer for services rendered during such
Monthly Period, which shall be equal to one-twelfth of the excess, if any, of
(a) the applicable Servicing Fee Rate multiplied by the Pool Balance applicable
to Prime Receivables, Non-Prime Receivables and Sub-Prime Receivables, as
applicable as of the first day of such Monthly Period over (b) 1.25% multiplied
by the Pool Balance as of the first day of such Monthly Period.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. A Person shall not be deemed to be an
<PAGE> 8
Affiliate of any person solely because such other Person has the contractual
right or obligation to manage such Person unless such other Person controls such
Person through equity ownership or otherwise.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that became a Liquidated Receivable during the related
Monthly Period and (ii) any Receivable that was purchased or repurchased by any
Person pursuant to this Agreement during the related Monthly Period) as of the
date of determination.
"Agreement" means this Sale and Servicing Agreement, as the same may
be amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the aggregate
amount advanced under such Receivable toward the purchase price of the Financed
Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service, car club and warranty contracts, other
items customarily financed as part of retail automobile installment sale
contracts or promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges as stated in the related Contract or as
recalculated based upon the terms of such Contract.
"Available Funds" means, with respect to any Determination Date, the
sum of (i) the Collected Funds for such Determination Date (including amounts
withdrawn from the Payahead Account but excluding amounts deposited into the
Payahead Account), (ii) all Purchase Amounts deposited in the Collection Account
during the related Monthly Period, and proceeds of any repurchase by a Dealer
pursuant to Dealer Agreement, (iii) following the acceleration of the Notes
pursuant to Section 5.2 of the Indenture, the amount of money or property
collected pursuant to Section 5.4 of the Indenture since the preceding
Determination Date by the Trustee or Controlling Party for distribution pursuant
to Section 5.6 of the Indenture, and (iv) any Insolvency Proceeds received
pursuant to Section 9.1(b) of this Agreement.
"Base Servicing Fee" means, with respect to any Monthly Period, the
fee payable to the Servicer for services rendered during such Monthly Period,
which shall be equal to one-twelfth of the applicable Servicing Fee Rate
multiplied by the Pool Balance applicable to Prime Receivables, Non-Prime
Receivables and Sub-Prime Receivables, as applicable as of the first day of such
Monthly Period; provided that the Base Servicing Fee shall not be greater than
one-twelfth of 1.25% per annum multiplied by the Pool Balance as of the first
day of such Monthly Period.
"Basic Documents" means the Certificate of Trust, the Trust
Agreement, this Agreement, the Indenture, the Spread Account Agreement, the
Purchase Agreement, the
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<PAGE> 9
Insurance Agreement, the Indemnification Agreement, the Depository Agreement and
other documents and certificates delivered in connection therewith.
"Business Day" means a day other than a Saturday, a Sunday or other
day on which commercial banks located in the states of California or New York
are authorized or obligated to be closed.
"Certificate" means a certificate evidencing the beneficial interest
of a Certificateholder in the Trust.
"Certificate Distribution Account" has the meaning assigned to such
term in the Trust Agreement.
"Certificateholder" means each person in whose name a Certificate is
registered.
"Class" means the Class A-1 Notes or the Class A-2 Notes, as the
context requires.
"Class A-1 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-2 Notes" has the meaning assigned to such term in the
Indenture.
"Closing Date" means May 27, 1999.
"Collected Funds" means, with respect to any Determination Date, the
amount of funds in or to be deposited in the Collection Account representing
collections (excluding amounts constituting the Supplemental Servicing Fee) on
the Receivables during the related Monthly Period, including all Net Liquidation
Proceeds collected during the related Monthly Period (but excluding any Purchase
Amounts).
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of this Agreement.
"Computer Tape" means the computer tapes or other electronic media
furnished by or on behalf of the Seller to the Issuer and its assigns and the
Security Insurer describing certain characteristics of the Receivables as of the
Cutoff Date.
"Contract" means a motor vehicle retail installment sale contract.
"Controlling Party" means the Security Insurer, so long as no
Insurer Default shall have occurred and be continuing, and the Trustee, for so
long as an Insurer Default shall have occurred and be continuing.
"Corporate Trust Office" means (i) with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee, which at the
time of execution of this
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Agreement is 1011 Centre Road Suite 200, Wilmington, Delaware 19805, Attention:
Corporate Trust Department and (ii) with respect to the Trustee and the
Indenture Collateral Agent, the principal corporate office of the Trustee, which
at the time of execution of this Agreement is 450 West 33rd Street, 14th Floor,
New York, New York 10001-2697, Attention: Capital Markets Fiduciary Services.
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments to be made on such Receivable, an amount
equal to the excess of (i) the principal balance of such Receivable immediately
prior to such order over (ii) (a) the principal balance of such Receivable as so
reduced and/or (b) if such court shall have issued an order reducing the
effective rate of interest on such Receivable, the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"Cutoff Date" means as to any Receivable, May 1, 1999.
"Dealer" means a dealer who sold a Financed Vehicle and who
originated and assigned the respective Receivable to Franklin Capital under an
existing agreement between such dealer and Franklin Capital.
"Dealer Agreement" means any agreement between a Dealer and Franklin
Capital relating to the acquisition of Receivables from a Dealer by Franklin
Capital.
"Deficiency Claim Date" means, with respect to any Distribution
Date, the fourth Business Day immediately preceding such Distribution Date.
"Deficiency Notice" shall have the meaning set forth in Section
5.4(a) of this Agreement.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute instruments and
are susceptible of physical delivery ("Physical Property"):
(i) transfer of possession thereof to the Trustee, endorsed to, or
registered in the name of, the Trustee or its nominee or endorsed in
blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Indenture Collateral
Agent; or
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<PAGE> 11
(ii) delivery thereof in registered form to the Indenture Collateral
Agent and
(A) the certificate is endorsed to the Indenture Collateral Agent or
in blank by effective endorsement; or
(B) the certificate is registered in the name of the Indenture
Collateral Agent, upon original issue or registration of transfer by
the Issuer;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to the Indenture
Collateral Agent; or
(ii) the Issuer has agreed that it will comply with instructions
originated by the Indenture Collateral Agent without further consent
by the registered owner;
(d) with respect to any security issued by the U.S. Treasury that is a
book-entry security held through the Federal Reserve System pursuant to Federal
book-entry regulations:
(i) a Federal Reserve Bank by book entry credits the book-entry
security to the securities account (as defined in 31 CFR Part 357)
of a participant (as defined in 31 CFR Part 357) which is also a
securities intermediary; and
(ii) the participant indicates by book entry that the book-entry
security has been credited to the Indenture Collateral Agent
securities account; and
(e) with respect to a security entitlement:
(i) the Indenture Collateral Agent becomes the entitlement holder;
or
(ii) the securities intermediary has agreed that it will comply with
entitlement orders originated by the Indenture Collateral Agent
without further consent by the entitlement holder.
(f) For the purpose of clauses (b) and (c) hereof "delivery" means:
(i) with respect to a certificated security:
(A) the Indenture Collateral Agent acquires possession thereof;
(B) another person (other than a securities intermediary) either
acquires possession thereof on behalf of the Indenture Collateral
Agent or, having previously acquired possession thereof,
acknowledges that it holds for the Indenture Collateral Agent; or
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<PAGE> 12
(C) a securities intermediary acting on behalf of the Indenture
Collateral Agent acquires possession of thereof, only if the
certificate is in registered form and has been specially endorsed to
the Indenture Collateral Agent by an effective endorsement;
(ii) with respect to an uncertificated security:
(A) the issuer registers the Indenture Collateral Agent as the
registered owner, upon original issue or registration of transfer;
or
(B) another person (other than a securities intermediary) either
becomes the registered owner thereof on behalf of the Indenture
Collateral Agent or, having previously become the registered owner,
acknowledges that it holds for the Indenture Collateral Agent;
(g) for purposes of this definition, except as otherwise indicated, the
following terms shall have the meaning assigned to each such term in the UCC:
(i) "certificated security"
(ii) "effective endorsement"
(iii) "entitlement holder"
(iv) "instrument"
(v) "securities account"
(vi) "securities entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Indenture Collateral
Agent shall make appropriate notations on its records, and shall cause the same
to be made on the records of its nominees, indicating that securities are held
in trust pursuant to and as provided in this Agreement.
"Depository Agreement" means the Note Depository Agreement.
"Determination Date" means, with respect to any Distribution Date,
the fifth Business Day immediately preceding such Distribution Date.
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<PAGE> 13
"Distribution Amount" means, with respect to any Distribution Date,
the sum of (i) the Available Funds for the immediately preceding Determination
Date, (ii) the Note Policy Claim Amount, if any, received by the Trustee with
respect to such Distribution Date and (iii) amounts deposited by the Security
Insurer as an Insurer Optional Deposit, if any.
"Distribution Date" means, with respect to each Monthly Period, the
fifteenth day of the following calendar month, or if such day is not a Business
Day, the immediately following Business Day, commencing in June 1999.
"Draw Date" means, with respect to any Distribution Date, the second
Business Day immediately preceding such Distribution Date.
"Eligible Deposit Account" means either (a) an account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of
the Trustee or any other entity specified in this Agreement or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any domestic branch of a
foreign bank), which (i) has either (A) a long-term unsecured debt rating of AAA
or better by Standard & Poor's and Aaa or better by Moody's or (B) a certificate
of deposit rating of A-1+ or better by Standard & Poor's and P-1 or better by
Moody's or any other short-term or certificate of deposit rating acceptable to
the Rating Agencies and to the Security Insurer and (ii) whose deposits are
insured by the FDIC. If so qualified under clause (b) above, the Owner Trustee
or the Trustee may be considered an Eligible Institution.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) 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 the District of Columbia (or
any domestic branch of a foreign bank) and subject to supervision and
examination by Federal or state banking or depository institution authorities
(including depository receipts issued by any such institution or trust company
as custodian with respect to any obligation referred to in clause (a) above or
portion of such obligation for the benefit of the holders of such depository
receipts); provided, however, that at the time of the investment or contractual
commitment to invest therein (which shall be deemed to be made again each time
funds are reinvested following each Distribution Date), the commercial paper or
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<PAGE> 14
other short-term senior unsecured debt obligations (other than such obligations
the rating of which is based on the credit of a Person other than such
depository institution or trust company) of such depository institution or trust
company shall have a credit rating from Standard & Poor's of A-1+ and from
Moody's of P-1;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from Standard & Poor's of
A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for which the
Trustee or the Owner Trustee or any of their respective Affiliates is investment
manager or advisor) having a rating from Standard & Poor's of AAA-m or AAAm-G
and from Moody's of Aaa and having been approved by the Security Insurer;
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
referred to in clause (b) above;
(g) any demand deposit in a trust account maintained by The Chase
Manhattan Bank; provided that such deposits shall consist of direct obligations
of, and obligations guaranteed as to timely payment by, The Chase Manhattan
Bank; and
(h) any other investment which would satisfy the Rating Agency
Condition and is consistent with the ratings of the Notes and which, so long as
no Insurer Default shall have occurred and be continuing, has been approved by
the Security Insurer.
Any of the foregoing Eligible Investments may be purchased by or
through the Owner Trustee or the Trustee or any of their Affiliates.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Distribution Date" means with respect to (i) the
Class A-1 Notes, the December 2002 Distribution Date, and (ii) the Class A-2
Notes, the December 2006 Distribution Date.
"Final Scheduled Maturity Date" means November 30, 2006.
"Financed Vehicle" means a new or used automobile or light-truck,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
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<PAGE> 15
"First Payment Default" means any Receivable for which the first
scheduled payment remains unpaid as of the date upon which the second scheduled
payment has become due.
"Indemnification Agreement" means the Indemnification Agreement
dated May 27, 1999 by and among the Security Insurer, the Seller, the
Representative and Goldman, Sachs & Co.
"Indenture" means the Indenture, dated as of May 1, 1999, among the
Issuer, the Indenture Collateral Agent and the Trustee, as the same may be
amended and supplemented from time to time.
"Indenture Collateral Agent" means the Person acting as Indenture
Collateral Agent under the Indenture, its successors in interest and any
successor Indenture Collateral Agent under the Indenture.
"Insolvency Event" means, with respect to a specified Person, (a)
the filing of a petition against such Person or the entry of a decree or order
for relief by a court having jurisdiction in the premises in respect of such
Person or any substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator, or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such petition, decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or (b) the commencement by
such Person of a voluntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"Insolvency Proceeds" shall have the meaning set forth in Section
9.1(b) of this Agreement.
"Insurance Agreement" means the Insurance and Reimbursement
Agreement, dated as of May 27, 1999, among the Security Insurer, the Trustee,
the Servicer, Franklin Resources and the Seller.
"Insurance Agreement Trigger Event " means an "Insurance Agreement
Trigger Event" as defined in the Insurance Agreement.
"Insurance Policy" means, with respect to a Receivable, any
insurance policy (including the insurance policies described in Section 4.4 of
this Agreement) benefiting the
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holder of the Receivable providing loss or physical damage, credit life, credit
disability, theft, mechanical breakdown or similar coverage with respect to the
Financed Vehicle or the Obligor.
"Insurer's Agent" means The Chase Manhattan Bank.
"Insurer Default" means the occurrence and continuance of any of the
following events:
(a) the Security Insurer shall have failed to make a payment
required under the Note Policy in accordance with its terms;
(b) the Security Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) made
a general assignment for the benefit of its creditors or (iii) had an order for
relief entered against it under the United States Bankruptcy Code or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a final and
nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent, liquidator, rehabilitator or receiver for the Security Insurer or for all
or any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent, liquidator, rehabilitator or receiver
of the Security Insurer (or the taking of possession of all or any material
portion of the property of the Security Insurer); provided, however, that the
Security Insurer's rights shall be immediately reinstated upon cure of such
Insurer Default.
"Insurer Optional Deposit" has the meaning specified in Section 5.10
of this Agreement.
"Interest Rate" means, with respect to (i) the Class A-1 Notes,
5.52% per annum and (ii) the Class A-2 Notes, 6.05% per annum (in each case,
computed on the basis of a 360-day year consisting of twelve 30-day months).
"Investment Earnings" means, with respect to any Distribution Date,
the investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts (other than the Spread Account) and the
Certificate Distribution Account.
"Issuer" means Franklin Auto Trust 1999-1.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor.
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"Lien Certificate" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party which
indicates that the lien of the secured party on the Financed Vehicle is recorded
on the original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the term "Lien
Certificate" shall mean only a certificate or notification, if any, issued to a
secured party.
"Liquidated Receivable" means, with respect to any Determination
Date, a Receivable as to which, as of the last day of the related Monthly
Period, either (i) the Servicer has determined in good faith that all amounts it
expects to recover have been received, (ii) more than $25.00 of a scheduled
payment is 180 or more days delinquent, and the Servicer has repossessed the
Financed Vehicle or the Obligor has filed for bankruptcy, (iii) more than $25.00
of a scheduled payment is 120 or more days delinquent, the Servicer has not
repossessed the Financed Vehicle and the Obligor has not declared bankruptcy or
(iv) the Financed Vehicle has been sold and the proceeds received. In any case,
if more than $25.00 of principal and interest on a Receivable as of the last day
of the related Monthly Period is 180 or more days delinquent, then such
Receivable shall be a Liquidated Receivable and shall have a Principal Balance
of zero.
"Month-End Pool Balance" means, as of the end of any Monthly Period
(other than the initial Monthly Period), the Pool Balance for the immediately
preceding Monthly Period, or in the case of the initial Monthly Period the
Original Pool Balance, less an amount equal to the sum of the following amounts
with respect to the related Monthly Period, computed, with respect to Simple
Interest Receivables, in accordance with the Simple Interest Method, and, with
respect to Precomputed Receivables, in accordance with the Actuarial Method: (i)
that portion of all collections on Receivables allocable to principal, including
full and, with respect to Simple Interest Receivables, partial principal
prepayments, received during such Monthly Period (including, with respect to
Precomputed Receivables, amounts withdrawn from the Payahead Account but
excluding amounts deposited into the Payahead Account) with respect to such
Monthly Period, (ii) the principal balance of each Receivable that was purchased
or repurchased by Franklin Capital, the Seller, the Servicer or any affiliate of
any of them as of the last day of such Monthly Period, (iii) at the option of
the Security Insurer, the outstanding principal balance of those Receivables
that were required to be repurchased by the Seller and Franklin Capital during
such Monthly Period but were not so repurchased, (iv) without duplication of
amounts in clause (ii), the principal balance of each Receivable that became a
Liquidated Receivable during such Monthly Period and (v) the aggregate amount of
Cram Down Losses during such Monthly Period.
"Monthly Period" means, with respect to each Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" means, with respect to Liquidated
Receivables, (i) proceeds from the disposition of the Financed Vehicles relating
to the Liquidated
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Receivables, less reasonable Servicer out-of-pocket costs, including
repossession and resale expenses not already deducted from such proceeds, and
any amounts required by law to be remitted to the Obligor, (ii) any proceeds
from an Insurance Policy or (iii) other monies received from the Obligor or
otherwise.
"Non-Prime Receivables" means those Receivables indicated on
Schedule A hereto as non-prime.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1(a)(ii) of this Agreement.
"Note Policy" means the financial guarantee insurance policy issued
by the Security Insurer to the Trustee for the benefit of the Noteholders with
respect to the Notes, including any endorsements thereto, in the form of Exhibit
E to the Indenture.
"Note Policy Claim Amount" shall have the meaning set forth in
Section 5.4(a) of this Agreement.
"Note Pool Factor" means, with respect to each Class of Notes and
the close of business on any Distribution Date, a seven-digit decimal figure
equal to the outstanding principal amount of such Class of Notes as of such
Distribution Date after giving effect to principal distributions on such date
divided by the original outstanding principal amount of such Class of Notes.
"Noteholder" or "Holder" means the Person in whose name a Note is
registered on the Note Register.
"Noteholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the Noteholders' Interest Distributable
Amount for the preceding Distribution Date, over the amount in respect of
interest that was actually deposited in the Note Distribution Account on such
preceding Distribution Date, plus interest on the amount of interest due but not
paid to Noteholders on the preceding Distribution Date, to the extent permitted
by law, at the respective Interest Rate borne by each Class of Notes from the
fifteenth day of the calendar month preceding such Distribution Date to but
excluding the fifteenth day of the following calendar month.
"Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, the product of, (i) one-twelfth of the
Interest Rate for each Class and (ii) the outstanding principal amount of the
Notes of such Class immediately preceding such Distribution Date.
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"Notes" means the Class A-1 Notes and the Class A-2 Notes.
"Obligor" on a Receivable means the purchaser or co-purchasers of
the Financed Vehicle and any other Person who owes payments under the
Receivable.
"Officer's Certificate" means a certificate signed by the (a)
chairman of the board, the president, any executive vice president or any vice
president and (b) any executive vice president, vice president, treasurer,
assistant treasurer, controller, secretary or assistant secretary of the
Representative, the Seller or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel
who may be an employee of or counsel to the Representatives, the Seller or the
Servicer, which counsel shall be reasonably acceptable to the addressees.
"Original Pool Balance" means $106,523,952.96.
"Owner Trust Estate" has the meaning assigned to such term in the
Trust Agreement.
"Owner Trustee" means Bankers Trust (Delaware), not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, its
successors in interest or any successor Owner Trustee under the Trust Agreement.
"Payahead" means, with respect to each Precomputed Receivable and
any Distribution Date, an amount equal to the excess of (i) the aggregate amount
of payments made by or on behalf of the Obligor on such Distribution Date with
respect to such Precomputed Receivable over (ii) the portion of such payments
which is applied to the Scheduled Payment; provided, however that such amount
shall constitute a "Payahead" only to the extent that such amount, together with
the previous Payahead Balance, is insufficient to prepay the Precomputed
Receivable in full.
"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 5.1(a)(iii) of this Agreement.
"Payahead Balance" means, with respect to each Precomputed
Receivable, an amount equal to the sum, as of the close of business on the last
day of a Monthly Period, of all Payaheads made by or on behalf of the Obligor
with respect to such Precomputed Receivable, as reduced by the application of
the amount of Payaheads required to be applied to Scheduled Payments and to
prepay such Precomputed Receivable in full.
"Person" means any individual, corporation, estate, partnership,
joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
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"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pool Balance" means, as of the end of any Monthly Period, the
aggregate Principal Balance of the Receivables (exclusive of Liquidated
Receivables) at the end of such Monthly Period, after giving effect to all
payments (other than Payaheads remaining in the Payahead Account) received from
Obligors and any Purchase Amounts to be remitted by Franklin Capital, the Seller
or Servicer, as the case may be, on the Determination Date following such
Monthly Period and all losses, including Cram Down Losses, realized on
Receivables liquidated during such Monthly Period.
"Precomputed Receivable" means any Receivable under which the
portions of a payment allocable to interest and principal are determined in
accordance with the Rule of 78s Method.
"Prime Receivables" means those Receivables indicated on Schedule A
hereto as prime.
"Principal Balance" means, with respect to any Receivable, as of any
date, the Amount Financed minus (i) that portion of all amounts received
(including Payaheads applied to scheduled payments) on or prior to such date and
allocable to principal in accordance with (x) in the case of Simple Interest
Receivables, the terms of the Receivable and (y) in the case of Precomputed
Receivables, the Actuarial Method, and (ii) any Cram Down Loss in respect of
such Receivable.
"Principal Distributable Amount" means, with respect to any
Distribution Date, the excess of (i) the aggregate outstanding principal balance
of the Notes as of the preceding Distribution Date (after giving effect to
distributions thereon) or in the case of the first Distribution Date, as of the
Closing Date, over (ii) the Month-End Pool Balance as of the end of the
preceding Monthly Period; provided, however, that, on the Final Scheduled
Distribution Date for any Class of Notes, the Principal Distributable Amount
will not be less than the outstanding principal balance of such Class of Notes.
"Purchase Agreement" means the Purchase Agreement, dated as of May
1, 1999, between the Seller and Franklin Capital pursuant to which the Seller
acquired a portion of the Receivables, as such Agreement may be amended from
time to time.
"Purchase Amount" means, with respect to any Receivable required to
be repurchased or purchased pursuant to Section 3.2 or Section 4.7 of this
Agreement or as to which the Servicer has exercised the purchase option pursuant
to Section 9.1(a) of this Agreement, an amount equal to the sum of (i) 100% of
the Principal Balance thereof and (ii) all accrued and unpaid interest thereon
(including one month's interest thereon, in the month of payment, at the APR
less, so long as Franklin Capital is the Servicer, the Base Servicing Fee).
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"Purchased Receivable" means a Receivable purchased as of the close
of business on the last day of a Monthly Period by the Servicer pursuant to
Section 4.7 of this Agreement, repurchased by the Seller, or the Representative
pursuant to Section 3.2 of this Agreement or purchased by Franklin Capital
pursuant to the Purchase Agreement.
"Rating Agency" means Moody's and Standard & Poor's. If no such
organization or successor maintains a rating on the Notes, "Rating Agency" shall
be a nationally recognized statistical rating organization or other comparable
Person designated by the Seller and acceptable to the Security Insurer (so long
as an Insurer Default shall not have occurred and be continuing), notice of
which designation shall be given in writing by the Servicer to the Trustee, the
Owner Trustee, the Security Insurer and the Servicer.
"Rating Agency Condition" means, with respect to any action or
amendment that either (i) each Rating Agency confirms in writing that such
amendment will not result in a reduction or withdrawal of such rating or (ii)
none of the Rating Agencies, within 10 days after receipt of notice of such
action or amendment, shall have notified the Seller, the Servicer or the Owner
Trustee in writing that such action or amendment will result in a reduction or
withdrawal of the then current rating of any Class of the Notes.
"Realized Losses" means, with respect to any Receivable that becomes
a Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable (immediately prior to it becoming a Liquidated Receivable) over the
Net Liquidation Proceeds to the extent allocable to principal.
"Receivable" means any Contract listed on Schedule A (which Schedule
may be in the form of microfiche).
"Receivable Files" means the documents specified in Section 3.3 of
this Agreement.
"Record Date" means, with respect to each Distribution Date, the day
immediately preceding such Distribution Date, unless otherwise specified in this
Agreement.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Rule of 78s 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 month's digits or any equivalent method
commonly referred to as the "Rule of 78s."
"Schedule of Receivables" has the meaning assigned thereto in
Section 3.1(d) of this Agreement.
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"Scheduled Payment" means, with respect to each Precomputed
Receivable, that portion of the payment required to be made by the Obligor
during the respective Monthly Period sufficient to amortize the Principal
Balance thereof under the Actuarial Method over the term of the Receivable and
to provide interest at the APR.
"Security Insurer" means MBIA Insurance Corporation, a stock
insurance company incorporated under the laws of the State of New York, or any
successor thereto, as issuer of the Note Policy.
"Seller" means Franklin Receivables LLC, a Delaware limited
liability company, and its successors in interest to the extent permitted
hereunder.
"Servicer" means Franklin Capital, as the servicer of the
Receivables, and each successor Servicer pursuant to Section 7.3 or 8.2 of this
Agreement.
"Servicer Default" means an event specified in Section 8.1 of this
Agreement.
"Servicer's Certificate" means an Officer's Certificate of the
Servicer delivered pursuant to Section 4.9 of this Agreement, substantially in
the form of Exhibit D to this Agreement.
"Servicing Fee" has the meaning specified in Section 4.8 of this
Agreement.
"Servicing Fee Rate" means with respect to (i) Prime Receivables,
1.0% per annum, (ii) Non-Prime Receivables, 1.50% per annum and (iii) Sub-Prime
Receivables, 2.0% per annum.
"Simple Interest Method" means the method of allocating a fixed
level payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed rate
of interest multiplied by the unpaid principal balance multiplied by the period
of time elapsed since the preceding payment of interest was made (in some states
assuming 30 day months), divided by the actual number of days in a year (360
days in states which assume 30 day months) and the remainder of such payment is
allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
portions of a payment allocable to interest and principal are determined in
accordance with the Simple Interest Method.
"Spread Account" means a segregated trust account which is also an
Eligible Deposit Account for the benefit of the Security Insurer established and
governed by the Spread Account Agreement.
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"Spread Account Agreement" means the Spread Account and Payment
Agreement, dated as of May 1, 1999, by and among the Seller, the Servicer, the
Representative, the Security Insurer and The Chase Manhattan Bank.
"Spread Account Deposit Amounts" means the amounts required to be
deposited into the Spread Account pursuant to the Spread Account Agreement.
"Standard & Poor's" means Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
"Sub-Prime Receivables" means those Receivables indicated on
Schedule A hereto as sub-prime.
"Supplemental Servicing Fee" means charges collected (from whatever
source) on the Receivables during the related Monthly Period including, in the
case of a Precomputed Receivable that is prepaid in full, the difference (to the
extent not required to be rebated to the Obligor) between the Principal Balance
of such Receivable (plus accrued interest to the date of prepayment) and the
principal balance of such Receivable computed according to the Rule of 78s, and
other late fees, prepayment fees, administrative fees and expenses or similar
charges allowed by applicable law with respect to Receivables, plus reinvestment
proceeds on any payments received in respect of Receivables during the related
Monthly Period.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1(b)
of this Agreement.
"Trust Agreement" means the Amended and Restated Trust Agreement,
dated as of May 1, 1999, between the Seller and the Owner Trustee, as the same
may be amended and supplemented from time to time.
"Trust Officer" means, (i) in the case of the Trustee, the chairman
or vice-chairman of the board of directors, the chairman or vice-chairman of the
executive committee of the board of directors, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller and any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers having direct responsibility for the
administration of this Agreement and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject, and
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(ii) in the case of the Owner Trustee, any officer in the corporate trust office
of the Owner Trustee with direct responsibility for the administration of this
Agreement or any of the Basic Documents on behalf of the Owner Trustee.
"Trust Property" has the meaning assigned thereto in Section 2.1 of
this Agreement.
"Trustee" means the Person acting as Trustee under the Indenture,
its successors in interest and any successor trustee under the Indenture.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York on the date of this Agreement.
SECTION 1.2 Other Definitional Provisions
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Indenture, or, if not defined therein,
in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any instrument governed hereby and
in any certificate or other document made or delivered pursuant hereto or
thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
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(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
Conveyance of Receivables
SECTION 2.1 Conveyance of Receivables. In consideration of the Issuer's
delivery to or upon the order of the Seller on the Closing Date of (x) the net
proceeds from the sale of the Notes, (y) the Certificates and (z) the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Seller does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the obligations
set forth herein), all right, title and interest of the Seller in and to:
(a) the Receivables, all monies representing interest payments and
principal payments received thereunder on and after the Cutoff Date and, with
respect to Precomputed Receivables, all monies representing interest and
principal payments received thereunder prior to the Cutoff Date that are due on
or after the Cutoff Date;
(b) an assignment of the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables and any other interest of the
Seller in such Financed Vehicles;
(c) any proceeds with respect to the Receivables from claims on any
physical damage, credit life or disability insurance policies covering Financed
Vehicles or Obligors and any proceeds from the liquidation of the Receivables;
(d) any proceeds from any Receivable repurchased by a Dealer,
pursuant to a Dealer Agreement, as a result of a breach of representation or
warranty in the related Dealer Agreement;
(e) the related Receivables Files;
(f) all of the Seller's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreement,
including the delivery requirements, the representations and warranties and the
cure and repurchase obligations of Franklin Capital under the Purchase
Agreement; and
(g) the proceeds of any and all of the foregoing (the items
specified in clauses (a) through (g) are referred to herein as the "Trust
Property").
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It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other Trust Property from the Seller to the Trust and the beneficial interest in
and title to the Receivables and the other Trust Property shall not be part of
the Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. In the event that, notwithstanding
the intent of the Seller, the transfer and assignment contemplated hereby is
held not to be a sale, this Agreement shall constitute a grant of a security
interest in the property referred to in this Section 2.1 for the benefit of the
Noteholders, the Certificateholders and the Security Insurer.
ARTICLE III
The Receivables
SECTION 3.1 Representations and Warranties of the Seller. The Seller makes
the following representations and warranties as to the Receivables on which the
Issuer is deemed to have relied in acquiring the Receivables and upon which the
Security Insurer shall be deemed to rely in issuing the Note Policy. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date (unless another date or time period is
otherwise specified or indicated in the particular representation or warranty),
but shall survive the sale, transfer and assignment of the Receivables to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Title. Immediately prior to the transfer and assignment herein
contemplated, the Seller had good and marketable title to each Receivable, free
and clear of all Liens and, immediately upon the transfer thereof, the Trust
shall have good and marketable title to each such Receivable, free and clear of
all Liens (or a valid first priority perfected security interest in such
Receivable); and the transfer of the Receivables to the Trust has been perfected
under the UCC. No Dealer or any other Person has any right to receive proceeds
of any Receivables.
(b) All Filings Made. All filings (including, without limitation,
UCC filings) necessary in any jurisdiction to give the Trust a first priority
perfected ownership interest in the Receivables, and to give the Trustee a first
priority perfected security interest therein, shall have been made.
(c) Characteristics of Receivables. Each Receivable (i) was
originated in the United States of America and is denominated in United States
dollars by (a) a Dealer in connection with the retail sale of a Financed Vehicle
in the ordinary course of such Dealer's business, was fully and properly
executed by the parties thereto, and was purchased by the Seller from Franklin
Capital which in turn shall have purchased such Receivable from such Dealer
under an existing dealer agreement with Franklin Capital or (b) Franklin Capital
or an affiliate of Franklin Capital in the ordinary course of its business and
was fully and properly executed by the parties thereto, shall have been
purchased by the Seller from Franklin Capital and in the case of both (a) and
(b) above, shall have been validly assigned by Franklin Capital to the Seller in
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accordance with its terms, (ii) shall have created or shall create a valid,
subsisting and enforceable first priority perfected security interest in favor
of Franklin Capital in the Financed Vehicle, which security interest has been
assigned by Franklin Capital to the Seller, which in turn shall be assignable by
the Seller to the Trust, (iii) shall contain customary and enforceable
provisions such that the rights and remedies of the holder thereof shall be
adequate for realization against the collateral of the benefits of the security,
(iv) shall provide for level monthly payments (provided that the payment in the
first or last month in the life of the Receivable may be different from the
level payment) that fully amortize the Amount Financed by maturity, (v) in the
case of a Precomputed Receivable, shall provide for, in the event that such
Contract is prepaid, a prepayment that fully pays the Principal Balance and
includes a full month's interest to the date of payment in the month of
prepayment at the interest rate as determined in accordance with the Rule of 78s
Method if such payment is received less than 15 calendar days prior to the
related due date and (vi) has not been amended or collections with respect to
which have been waived, other than as evidenced in the Receivable File relating
thereto.
(d) Schedule of Receivables. The information set forth in Schedule A
to this Agreement (the "Schedule of Receivables") is true and correct in all
material respects as of the Cutoff Date, and no selection procedures believed by
the Seller to be adverse to the Noteholders or the Security Insurer were
utilized in selecting the Receivables. The Computer Tape regarding the
Receivables is true and correct in all material respects as of the Cutoff Date.
(e) Compliance With Law. Each Receivable complied at the time it was
originated or made and complies at the execution of this Agreement in all
material respects with all requirements of applicable Federal, state and local
laws and regulations thereunder, including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Rees-Levering Act, the
Federal Reserve Board's Regulations B and Z, state adaptations of the National
Consumer Act and other consumer credit laws and equal credit opportunity and
disclosure laws.
(f) Binding Obligation. Each Receivable represents the legal, valid
and binding payment obligation in writing of the Obligor thereunder, enforceable
by the holder thereof in accordance with its terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect related
to or affecting creditors' rights generally and subject to general principles of
equity (whether applied in a proceeding at law or in equity); and all parties to
each Receivable had full legal capacity to execute and deliver such Receivable
and all other documents related thereto and to grant the security interest
purported to be granted thereby.
(g) No Government Obligor. None of the Receivables are due from the
United States of America or any State or from any agency, department or
instrumentality of the United States of America or any State.
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(h) Security Interest in Financed Vehicle. Immediately prior to the
sale, assignment and transfer thereof to the Trust, each Receivable is secured
by a validly perfected first priority security interest in the Financed Vehicle
in favor of Franklin Capital as secured party or all necessary and appropriate
actions have been commenced that would result in the valid perfection of a first
priority security interest in the Financed Vehicle in favor of Franklin Capital
as secured party. Immediately after the sale, assignment and transfer thereof to
the Trust, although the Lien Certificate will indicate Franklin Capital as
lienholder and will not indicate the Trust or Owner Trustee as secured party,
each Receivable will be secured by an enforceable and perfected security
interest in the Financed Vehicle in favor of the Trust as secured party for the
benefit of the Noteholders and the Security Insurer, which security interest is
prior to all other Liens in such Financed Vehicle.
(i) Receivables in Force. As of the Closing Date, no Receivable has
been satisfied, subordinated or rescinded, nor has any Financed Vehicle been
released from the Lien granted by the related Receivable in whole or in part
unless another vehicle has been substituted as collateral securing the
Receivable without any other modification to such Receivable.
(j) No Waiver. No provision of a Receivable has been waived except
as reflected in the Receivable File relating to such Receivable.
(k) No Defenses. As of the Closing Date, no right of rescission,
setoff, counterclaim or defense has been asserted or threatened with respect to
any Receivable.
(l) No Liens. To the best of the Seller's knowledge, as of the
Closing Date there are no Liens or claims, including Liens for work, labor,
materials or unpaid state or federal taxes relating to any Financed Vehicle
securing the related Receivable, that are or may be prior to or equal to the
Lien granted by such Receivable.
(m) No Default. No Receivable has a payment that is more than 30
days delinquent as of the Cutoff Date and, except for any delinquency in payment
on any Receivable not more than 30 days delinquent, no default, breach,
violation or event (in any such case) permitting acceleration under the terms of
any Receivable has occurred; and except for any delinquency in payment on any
Receivable not more than 30 days delinquent, no continuing condition that with
notice or the lapse of time would constitute a default, breach, violation or
event (in any such case) permitting acceleration under the terms of any
Receivable shall have arisen as of the Cutoff Date; and the Seller has not
waived and shall not waive any of the foregoing. For purposes of this clause
(m), a Receivable is considered 30 days delinquent as of the end of the month
following the date on which a second consecutive Scheduled Payment has not been
made. As of the Closing Date, no Receivable has had an uncured First Payment
Default.
(n) No Bankruptcies. No Obligor on any Receivable was the subject of
a bankruptcy proceeding commenced following the execution of the related
Contract except an Obligor that has received a discharge or dismissal under the
United States Bankruptcy Code.
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(o) No Repossessions. As of the Cutoff Date, no Financed Vehicle
securing any Receivable is in repossession status.
(p) Adverse Selection. No selection procedures adverse to the
Noteholders or the Security Insurer were utilized in selecting the Receivables
from those owned by Franklin Capital which met the selection criteria contained
in this Agreement.
(q) Chattel Paper. Each Receivable constitutes "chattel paper" as
defined in the UCC.
(r) Insurance. Under the terms of each Receivable the Obligor is
required to maintain physical damage insurance or comprehensive and collision
insurance covering the Financed Vehicle.
(s) Lawful Assignment. No Receivable was originated in, as of the
Cutoff Date, or is subject to the laws of, any jurisdiction under which the
sale, transfer and assignment of such Receivable or this Agreement is unlawful,
void or voidable.
(t) Reserved.
(u) One Original. There is only one original executed copy of each
Receivable.
(v) Location of Receivable Files. The Receivable Files are kept at
one or more of the locations listed in Schedule B and each item required to be
in a Receivable File is in such Receivable File.
(w) Computer Records. As of the Closing Date, the accounting and
computer records relating to the Receivables of the Seller have been marked to
show the absolute ownership by the Owner Trustee on behalf of the Trust of the
Receivables.
(x) Taxes. To the knowledge of the Seller, there are no state or
local taxing jurisdictions which have asserted that nonresident holders of notes
issued by a trust which holds assets similar to the assets to be held by the
Trust are subject to the jurisdiction's income or other taxes solely by reason
of the location in the jurisdiction of the Owner Trustee, the Seller, the
Servicer, the Representative, the obligors on or the assets securing the
Receivables held by the Trust, or the issuer of a financial guaranty insurance
policy.
(y) Maturity of Receivables. Each Receivable has a final maturity
date not later than May 1, 2006; each Receivable has an original term to
maturity of not more than 84 months; the weighted average original term of the
Receivables is approximately 63.2 months; and the weighted average remaining
term of the Receivables is approximately 58.7 months as of the Cutoff Date. No
Receivable shall have a remaining term of less than [6] months as of the Cutoff
Date.
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(z) Financing. As of the Cutoff Date, approximately 34.47 % of the
aggregate Principal Balance of the Receivables, represent new vehicles; the
remainder of the Receivables represent used vehicles; approximately 7.39% of the
aggregate Principal Balance of the Receivables represent Precomputed Receivables
and the remainder of the Receivables represent Simple Interest Receivables; all
of the Receivables which are Precomputed Receivables are Rule of 78s
Receivables. Approximately 41.33% of the aggregate Principal Balance of the
Receivables, represent Prime Receivables, approximately 54.53% of the aggregate
Principal Balance of the Receivables, represent Non-Prime Receivables and
approximately 4.14% of the aggregate Principal Balance of the Receivables,
represent Sub-Prime Receivables. The aggregate Principal Balance of the
Receivables is $106,523,952.96.
(aa) APR. As of the Cutoff Date, the weighted average Annual
Percentage Rate of the Receivables is approximately 12.91%. Each Receivable has
an APR equal to or greater than 6.75%.
(bb) Number. As of the Cutoff Date, there are 7,335 Receivables.
(cc) Balance. Each Receivable has a remaining Principal Balance of
not less than $1,015.86 and not more than $58,339.68, and as of the Cutoff Date,
the average Principal Balance of the Receivables is $14,522.69.
SECTION 3.2 Repurchase upon Breach. (a) The Representative, the
Seller, the Servicer, the Security Insurer or the Issuer, as the case may be,
shall inform the other parties to this Agreement and the Trustee promptly, in
writing, upon the discovery of any breach of the Representative's or the
Seller's representations and warranties made pursuant to Section 3.1. As of the
last day of the second (or, if the Representative or the Seller so elects, the
first) month following the discovery by the Representative or the Seller or
receipt by the Representative or the Seller of notice from any of the
Representative, the Seller, the Servicer, the Security Insurer or the Issuer of
such breach, unless such breach is cured by such date, the Representative and
the Seller shall jointly and severally have an obligation to repurchase any
Receivable in which the interests of the Noteholders or the Security Insurer are
materially and adversely affected by any such breach as of such date. The
"second month" shall mean the month following the month in which discovery
occurs or notice is given, and the "first month" shall mean the month in which
discovery occurs or notice is given. In consideration of and simultaneously with
the repurchase of the Receivable, the Representative and/or the Seller shall
remit, or cause Franklin Capital to remit pursuant to the Purchase Agreement, to
the Collection Account the Purchase Amount in the manner specified in Section
5.5 and the Issuer shall execute such assignments and other documents reasonably
requested by such person in order to effect such repurchase. The sole remedy of
the Issuer, the Owner Trustee, the Trustee, the Noteholders or the
Certificateholders with respect to a breach of representations and warranties
pursuant to Section 3.1 and the agreement contained in this Section shall be the
repurchase of Receivables pursuant to this Section, subject to the conditions
contained herein or to enforce the obligations of Franklin Capital to the Seller
to repurchase such Receivables pursuant to the Purchase Agreement. Neither the
Owner Trustee nor the Trustee shall have a duty to conduct any affirmative
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investigation as to the occurrence of any conditions requiring the repurchase of
any Receivable pursuant to this Section.
(b) Pursuant to Section 2.1 of this Agreement, the Seller conveyed
to the Trust all of the Seller's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreement
including the Seller's rights under the Purchase Agreement and the delivery
requirements, the representations and warranties and the cure or repurchase
obligations of Franklin Capital thereunder. The Seller hereby represents and
warrants to the Trust that such assignment is valid, enforceable and effective
to permit the Trust to enforce such obligations of Franklin Capital under the
Purchase Agreement.
SECTION 3.3 Custody of Receivables Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer hereby
revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act as the agent of the Issuer and the Trustee as custodian of
the following documents or instruments which are hereby constructively delivered
to the Trustee, as of the Cutoff Date as pledgee of the Issuer with respect to
each Receivable:
(a) the original Receivable;
(b) a record of the information supplied by the Obligor in the
original credit application;
(c) the original certificate of title or such documents that the
Servicer shall keep on file, in accordance with its customary procedures,
evidencing the security interest of Franklin Capital in the Financed Vehicle (it
being understood that (i) the original certificates of title generally are not
delivered to Franklin Capital for 120 days but that promptly upon delivery they
shall be delivered to the Servicer as custodian hereunder and (ii) in
California, Franklin Capital participates in the California electronic lien and
title system and does not receive physical documentation); and
(d) any and all other documents that the Servicer shall keep on
file, in accordance with its customary procedures, relating to a Receivable, an
Obligor or a Financed Vehicle.
SECTION 3.4 Duties of Servicer as Custodian. (a) Safekeeping. The Servicer
shall hold the Receivables Files on behalf of the Issuer and the Trustee and
maintain such accurate and complete accounts, records and computer systems
pertaining to each Receivable File as shall enable the Issuer to comply with
this Agreement. In performing its duties as custodian the Servicer shall act
with reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to the receivable files relating to all comparable
automotive receivables that the Servicer services for itself or others, except
that the Servicer shall not be obligated, and does not currently intend, to (i)
pay any premium of force-placed insurance concerning any Financed Vehicle or
(ii) monitor any Obligor's maintenance of such insurance. The Servicer shall
conduct, or cause to be conducted, periodic audits of the Receivables Files held
by it under
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this Agreement and of the related accounts, records and computer systems, in
such a manner as shall enable the Issuer, the Security Insurer or the Trustee to
verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Issuer, the Security Insurer and the Trustee any failure
on its part to hold the Receivables Files and maintain its accounts, records and
computer systems as herein provided and promptly take appropriate action to
remedy any such failure.
(b) Maintenance of Records. The Servicer shall maintain each
Receivable File at the offices specified in Schedule B to this Agreement or at
such other office as shall be specified to the Issuer, the Trustee and the
Security Insurer by written notice not later than 10 days after any change in
location provided that the Controlling Party does not object to such change. The
Servicer shall at all times maintain the original of the fully executed
Receivable and store such original Receivable in a fireproof facility.
Additionally, the Servicer shall maintain the Receivable Files in an organized
and orderly manner.
(c) Access to Records. The Servicer will provide, on the Closing
Date, an Officer's Certificate stating that the Receivables Files contain all
materials which are required to be kept therein by Section 3.3(a), (b), (c) and
(d). At any time following the Closing Date, the Security Insurer may conduct a
review of the Receivables Files, or a sample thereof as it may specify, at its
own expense but with the cooperation of the Servicer. Should the Security
Insurer find a material number of documents missing or any other irregularities,
then the Trustee shall perform a review, for the benefit of the Security Insurer
and at the expense of the Servicer, of all the Receivables Files.
Upon reasonable prior notice, the Servicer shall make available to
the Issuer, the Trustee, the Security Insurer or any duly authorized
representatives, attorneys or auditors of any of the foregoing, a list of
locations of, and access to, the Receivables Files and records and computer
systems maintained by the Servicer at such times during normal business hours as
the Issuer, the Trustee or the Security Insurer shall instruct.
(d) Release of Documents. Upon written instruction from the Trustee
or the Security Insurer, at any time following a Servicer Default or termination
of the Servicer's appointment pursuant to Section 3.7 the Servicer shall release
any Receivable File to the Trustee, the Trustee's agent, or the Trustee's
designee, as the case may be, or the Security Insurer, as the case may be, at
such place or places as the Trustee or the Security Insurer, as the case may be,
may designate, as soon as practicable.
SECTION 3.5 Instructions; Authority To Act. The Servicer shall be deemed
to have received proper instructions with respect to the Receivables Files upon
its receipt of written instructions signed by a Trust Officer of the Trustee. A
copy of such instructions shall be furnished by the Trustee to the Security
Insurer. The Trustee shall not have any duty or obligation to provide the
Servicer with any such instructions with respect to the Receivables Files.
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SECTION 3.6 Custodian's Indemnification. The Servicer as custodian shall
indemnify and hold harmless the Trust, the Security Insurer, the Owner Trustee
and the Trustee and each of their officers, directors, employees and agents for
any and all liabilities, obligations, losses, compensatory damages, payments,
costs or expenses (including reasonable attorneys' fees and expenses) that may
be imposed on, incurred by or asserted against the Trust, the Security Insurer,
the Owner Trustee or the Trustee or any of their officers, directors, employees
and agents as the result of any improper act or omission in any way relating to
the maintenance and custody by the Servicer as custodian of the Receivables
Files; provided, however, that the Servicer shall not be liable to the Trust,
the Owner Trustee, the Trustee or the Security Insurer, as the case may be, for
any portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Owner Trustee, the Trustee or the Security Insurer, as the
case may be. This provision shall not be considered to limit the Servicer's or
any other party's rights, obligations, liabilities, claims or defenses which
arise as a matter of law or pursuant to any other provision of this Agreement.
SECTION 3.7 Effective Period and Termination. The Servicer's appointment
as custodian shall become effective as of the Cutoff Date and shall continue in
full force and effect until terminated pursuant to this Section 3.7. If Franklin
Capital shall resign as Servicer in accordance with the provisions of this
Agreement or if all of the rights and obligations of any Servicer shall have
been terminated under Section 8.1, the appointment of such Servicer as custodian
shall be terminated, in the same manner as the Servicer may be terminated under
Section 8.1. The Trustee or, with the consent of the Trustee, the Owner Trustee
may, in each case, with the consent of the Security Insurer, and the Security
Insurer may, terminate the Servicer's appointment as custodian (i) with cause or
(ii) upon the occurrence of an Insurance Agreement Trigger Event, upon written
notification to the Servicer and the Trustee or Security Insurer, as the case
may be. As soon as practicable after any termination of such appointment, the
Servicer shall deliver the Receivables Files to the Trustee or the Trustee's
agent at such place or places as the Trustee, with the consent of the Security
Insurer, or the Trustee shall, at the direction of the Security Insurer,
reasonably designate in writing. If the Servicer shall be terminated as
custodian hereunder for any reason but shall continue to serve as Servicer, the
Trustee shall, or shall cause its agent to, make the Receivables Files available
to the Servicer during normal business hours upon reasonable notice so as to
permit the Servicer to perform its obligations as Servicer hereunder.
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1 Duties of Servicer. The Servicer, as agent for the Issuer and
the Security Insurer (to the extent provided herein), shall manage, service,
administer and make collections on the Receivables (other than Purchased
Receivables) with reasonable care, using that degree of skill and attention that
the Servicer exercises with respect to all comparable automotive receivables
that it services for itself or others, except that the Servicer shall not be
obligated, and does not currently intend, to (i) pay any premium of force-placed
insurance
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concerning any Financed Vehicle or (ii) monitor any Obligor's maintenance of
such insurance. The Servicer's duties shall include collection and posting of
all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment statements or coupon books to
Obligors, accounting for collections and furnishing monthly and annual
statements to the Owner Trustee, the Trustee and the Security Insurer with
respect to distributions. Subject to the provisions of Section 4.2(b), the
Servicer shall follow its customary standards, policies and procedures in
performing its duties as Servicer. Without limiting the generality of the
foregoing, the Servicer is authorized and empowered to execute and deliver, on
behalf of itself, the Issuer, the Owner Trustee, the Trustee, the Security
Insurer, the Certificateholders and the Noteholders or any of them, any and all
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to such
Receivables or to the Financed Vehicles securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the Issuer
(in the case of a Receivable other than a Purchased Receivable) shall thereupon
be deemed to have automatically assigned, solely for the purpose of collection,
such Receivable to the Servicer. If in any enforcement suit or legal proceeding
it shall be held that the Servicer may not enforce a Receivable on the ground
that it shall not be a real party in interest or a holder entitled to enforce
such Receivable the Owner Trustee shall, at the Servicer's expense and
direction, take steps to enforce such Receivable, including bringing suit in its
name or the name of the Trust, the Trustee, the Certificateholders or the
Noteholders. The Owner Trustee and the Security Insurer shall upon the written
request of the Servicer furnish the Servicer with any powers of attorney and
other documents reasonably necessary or appropriate (as certified to the Owner
Trustee and/or the Security Insurer by the Servicer) to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 4.2 Collection and Allocation of Receivable Payments. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and shall follow such collection procedures as it follows with respect to
all comparable automotive receivables that it services for itself or others. The
Servicer shall allocate collections between principal and interest in accordance
with its customary servicing procedures.
(b) The Servicer may, in accordance with its customary servicing
policies grant extensions, rebates or adjustments on a Receivable; provided,
however, that if the Servicer extends the date for final payment by the Obligor
of any Receivable beyond the Final Scheduled Maturity Date, it shall promptly
repurchase such Receivable from the Trust in accordance with Section 4.7. The
Servicer may in its discretion waive any late payment charge or any other fees
that may be collected in the ordinary course of servicing a Receivable. The
Servicer shall not voluntarily agree to any alteration of the interest rate on
any Receivable.
SECTION 4.3 Realization upon Receivables. On behalf of the Issuer and the
Security Insurer, the Servicer shall use its best efforts, consistent with its
customary servicing procedures, to repossess or otherwise convert the ownership
of the Financed Vehicle securing any Receivable as to which the Servicer shall
have determined eventual payment in full is unlikely. From time to time, as
appropriate for servicing or foreclosing upon any Receivable,
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the Owner Trustee shall, upon written request of the Servicer, execute such
documents as shall be reasonably necessary to prosecute any such proceedings.
The Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of automotive receivables,
which may include reasonable efforts to realize proceeds from Receivables
repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach
of representation or warranty in the related Dealer Agreement or a default by an
Obligor resulting in the repossession of the Financed Vehicle under such Dealer
Agreement. The foregoing shall be subject to the provision that, in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with the repair or the repossession of such Financed
Vehicle unless it shall determine in its reasonable discretion that such repair
and/or repossession will increase the Net Liquidation Proceeds by an amount
greater than the amount of such expenses.
SECTION 4.4 Financed Vehicle Insurance. In the event of a loss or claim
under a physical damages insurance policy or comprehensive and collision
insurance policy, the Servicer shall, in accordance with its customary servicing
procedures take all necessary action to enforce all available rights and claims
under such insurance policy. Notwithstanding the foregoing, the Servicer shall
not be obligated to, and does not (a) monitor the placement or maintenance of
such insurance by Obligors or (b) pay any premium of force-placed insurance
concerning any Financed Vehicle.
SECTION 4.5 Maintenance of Security Interests in Financed Vehicles. (a)
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to maintain perfection of the security interest
created by each Receivable in the related Financed Vehicle in favor of the
Seller. The Servicer is hereby authorized to take such steps as are necessary to
re-perfect such security interest on behalf of the Issuer and the Indenture
Collateral Agent in the event of the relocation of a Financed Vehicle or for any
other reason.
(b) Upon the occurrence of an Insurance Agreement Trigger Event, and
subject to the other provisions of this Agreement, the Security Insurer may (so
long as an Insurer Default shall not have occurred and be continuing) instruct
the Owner Trustee and the Servicer to take or cause to be taken, or, if an
Insurer Default shall have occurred, upon the occurrence of a Servicer Default,
the Owner Trustee and the Servicer shall take or cause to be taken such action
as may, in the opinion of counsel to the Security Insurer (or, if an Insurer
Default shall have occurred and be continuing, counsel to the Owner Trustee), be
necessary to perfect or reperfect the security interests in the Financed
Vehicles securing the Receivables in the name of the Trust by such reasonable
means as may, in the opinion of counsel to the Security Insurer or the Owner
Trustee (as applicable), be necessary or prudent. The Servicer hereby agrees to
pay all expenses related to such perfection or reperfection and to take all
action necessary therefor.
SECTION 4.6 Covenants of Servicer. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or payment in full less a deficiency which the Servicer
would not attempt to collect in accordance with its customary procedures or in
connection with repossession or except as may be required by an insurer in
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order to receive proceeds from insurance covering such Financed Vehicle, nor
shall the Servicer impair the rights of the Issuer, the Trustee, the Indenture
Collateral Agent, the Security Insurer, the Certificateholders or the
Noteholders in such Receivables (it being understood that no action of the
Servicer taken in compliance with the terms of this Agreement shall be deemed to
impair such rights), nor shall the Servicer increase the number of scheduled
payments due under a Receivable.
SECTION 4.7 Purchase of Receivables upon Breach. The Representative, the
Seller, the Servicer, the Security Insurer or the Issuer shall inform the other
parties and the Trustee promptly, in writing, upon the discovery of any breach
of the Servicer's covenants pursuant to Sections 4.2(b), 4.4, 4.5 or 4.6, or of
any breach of the Servicer's representations and warranties made pursuant to
Section 7.1(b). As of the last day of the second (or, if the Servicer so elects,
the first) month following the discovery by the Servicer or receipt by the
Servicer of notice from any of the Representative, the Seller, the Servicer, the
Security Insurer, the Issuer or the Trustee of such breach, unless such breach
is cured by such date, the Servicer shall be obligated to purchase any
Receivable in which the interests of the Noteholders, the Certificateholders or
the Security Insurer are materially and adversely affected by such breach as of
such date. The "second month" shall mean the month following the month in which
discovery occurs or notice is given, and the "first month" shall mean the month
in which discovery occurs or notice is given. In consideration of the purchase
of any such Receivable pursuant to the preceding sentence, the Servicer shall
remit the Purchase Amount in the manner specified in Section 5.5. The sole
remedy of the Issuer, the Trustee, the Noteholders or the Certificateholders
with respect to a breach pursuant to Sections 4.2(b), 4.4, 4.5 or 4.6, or to a
breach of representations and warranties pursuant to Section 7.1(b), shall be
limited to the purchase of Receivables in accordance with this Section 4.7. The
Trustee and the Owner Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the purchase of
any Receivable pursuant to this Section 4.7. A successor Servicer shall not have
repurchase obligations for breaches by the predecessor servicer.
SECTION 4.8 Servicing Fee. The "Servicing Fee" for a Distribution Date
shall equal the sum of the Base Servicing Fee, the Supplemental Servicing Fee,
any Additional Servicing Fee, all Investment Earnings on the Collection Account
plus any reimbursement pursuant to Section 7.2. The Servicer shall be entitled
to retain from collections the Base Servicing Fee and the Investment Earnings as
provided herein. The Servicer shall also be entitled to retain the Supplemental
Servicing Fee to the extent that such amount is not required to be deposited to
the Spread Account pursuant to the Spread Account Agreement. The Servicer, in
its discretion at its election, may defer receipt of all or any portion of the
Servicing Fee for any Monthly Period to and until a later Monthly Period for any
reason, including in order to avoid a shortfall in any payments due on any
Notes. Any such deferred amount shall be payable to (or may be retained from
subsequent collections by) the Servicer on demand.
SECTION 4.9 Servicer's Certificate. (a) No later than 12:00 noon New York
City time on each Determination Date, the Servicer shall deliver to the Owner
Trustee, the Trustee, the Security Insurer or its fiscal agent, the Indenture
Collateral Agent and each Rating Agency a Servicer's Certificate containing,
among other things, (i) all information necessary to enable the
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Trustee to make any withdrawal and deposit required by Section 5.6(a), 5.6(b),
5.6(c) and 5.6(d), to give any notice required by Section 5.4 and to make the
distributions required by Section 5.6, (ii) all information necessary to enable
the Trustee to send the statements required by Section 5.8 to the Owner Trustee,
the Noteholders, the Certificateholders, each Rating Agency and the Security
Insurer, (iii) a listing of all Receivables purchased during the related Monthly
Period, identifying the Receivables so purchased, (iv) all information necessary
to enable the Trustee to reconcile all deposits to, and withdrawals from, the
Collection Account for the related Monthly Period and Distribution Date,
including the accounting required by Section 5.9, (v) the amount of "Covered
Amounts" to be deposited to the Collection Account for the related Distribution
Date pursuant to the Servicer Deposit Supporting Agreement, and (vi) all
information necessary to enable the Owner Trustee to make the distribution
required by the Trust Agreement. Receivables purchased by the Servicer, the
Seller or the Representative and each Receivable which became a Liquidated
Receivable or which was paid in full during the related Monthly Period shall be
identified by account number (as set forth in Schedule A hereto). A copy of such
certificate may be obtained by any Noteholder or Certificateholder by a request
in writing to the Trustee addressed to the Corporate Trust Office or from the
Servicer. Neither the Trustee nor the Owner Trustee shall be under any
obligation to confirm or reconcile the information provided pursuant to Section
4.9(a)(iv).
(b) If the Servicer's Certificate contains a manifest error, the
Security Insurer's written notice to the Servicer, the Owner Trustee and the
Trustee containing the corrected information shall be deemed to amend such
Servicer's Certificate.
SECTION 4.10 Annual Statement as to Compliance; Notice of Default. (a) The
Servicer shall deliver to the Owner Trustee, the Trustee and the Security
Insurer, on or before January 31 of each year beginning January 31, 2000 an
Officer's Certificate, dated as of the preceding September 30, stating that (i)
a review of the activities of the Servicer during the preceding 12-month period
and of its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officers and the
nature and status thereof. The Trustee shall send a copy of such certificate and
the report referred to in Section 4.11 to the Rating Agencies. A copy of such
certificate and the report referred to in Section 4.11 may be obtained by any
Certificateholder by a request in writing to the Owner Trustee addressed to the
Corporate Trust Office or by any Noteholder by a request in writing to the
Trustee addressed to the Corporate Trust Office. Upon the telephone request of
the Owner Trustee, the Trustee will promptly furnish the Owner Trustee a list of
Noteholders as of the date specified by the Owner Trustee. Each Noteholder, by
its acceptance of a Note, shall be deemed to agree that the Trustee shall be
under no liability for providing the list of Noteholders to the Owner Trustee as
described in the immediately preceding sentence.
(b) The Servicer shall deliver to the Owner Trustee, the Trustee,
the Security Insurer and the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice in an Officer's Certificate of any
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event which with the giving of notice or lapse of time, or both, would become a
Servicer Default under Section 8.1(a) or (b).
SECTION 4.11 Annual Independent Certified Public Accountants' Report. The
Servicer shall cause a firm of independent certified public accountants, which
may also render other services to the Servicer or the Seller, to deliver to the
Seller, the Owner Trustee, the Trustee and the Security Insurer on or before
January 31 of each year beginning January 31, 2000, an agreed-upon procedures
report addressed to the Servicer, the Seller, the Owner Trustee, the Trustee and
the Security Insurer and each Rating Agency, expressing a summary of findings,
(based on certain procedures performed on the documents, records and accounting
records that such accountants considered appropriate under the circumstances)
relating to the servicing of the Receivables, or the administration of the
Receivables and of the Trust, as the case may be, during the preceding year
ended September 30, and that, on the basis of the accounting and auditing
procedures considered appropriate under the circumstances, such firm is of the
opinion that such servicing or administration was conducted in compliance with
the terms of this Agreement, except for (i) such exceptions as such firm shall
believe to be immaterial and (ii) such other exceptions as shall be set forth in
such report.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, the
Owner Trustee and the Security Insurer reasonable access to the Receivable
Files. The Servicer shall provide to the Certificateholders and Noteholders
access to the Receivable Files in such cases where the Certificateholders or
Noteholders shall be required by applicable statutes or regulations to review
such documentation as demonstrated by evidence satisfactory to the Servicer in
its reasonable judgment. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section shall affect the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
SECTION 4.13 Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder and under
any of the Basic Documents, including fees and disbursements of independent
accountants, taxes imposed on the Servicer and expenses incurred in connection
with distributions and reports to Certificateholders and Noteholders.
SECTION 4.14 Appointment of Subservicer. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, however, that the Servicer shall remain obligated
and be liable to the Issuer, the Owner Trustee, the Trustee, the Security
Insurer, the Certificateholders and the Noteholders for the servicing and
administering of the Receivables in accordance with the provisions hereof
without diminution of
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such obligation and liability by virtue of the appointment of such subservicer
and to the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Receivables. The fees and
expenses of the subservicer shall be as agreed between the Servicer and its
subservicer from time to time and none of the Issuer, the Owner Trustee, the
Trustee, the Security Insurer, the Certificateholders or the Noteholders shall
have any responsibility therefor.
SECTION 4.15 Obligations under Basic Documents. The Servicer shall perform
all of its obligations under the Basic Documents.
ARTICLE V
Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1 Establishment of Trust Accounts.
(a)(i) The Servicer, for the benefit of the Trustee on behalf of the
Noteholders, the Owner Trustee on behalf of the Certificateholders, and
the Security Insurer, shall establish and maintain in the name of the
Indenture Collateral Agent an Eligible Deposit Account (the "Collection
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Noteholders, the Owner Trustee on behalf of the Certificateholders, and
the Security Insurer. Investment Earnings on funds in the Collection
Account shall be paid to the Servicer.
(ii) The Servicer, for the benefit of the Trustee on behalf of the
Noteholders and the Security Insurer, shall establish and maintain in the
name of the Indenture Collateral Agent an Eligible Deposit Account (the
"Note Distribution Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Trustee
on behalf of the Noteholders and the Security Insurer. The Note
Distribution Account shall initially be established with the Trustee.
(iii) The Servicer, for the benefit of the Trustee on behalf of the
Noteholders, the Owner Trustee on behalf of the Certificateholders, and
the Security Insurer, shall establish and maintain in the name of the
Indenture Collateral Agent an Eligible Deposit Account (the "Payahead
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Noteholders, the Owner Trustee on behalf of the Certificateholders, and
the Security Insurer. Investment Earnings on funds in the Payahead Account
shall be paid to the Servicer.
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(b) Funds on deposit in the Collection Account, the Note
Distribution Account, the Payahead Account (collectively the "Trust Accounts")
and the Certificate Distribution Account shall be invested by the Indenture
Collateral Agent with respect to Trust Accounts and by the Owner Trustee with
respect to the Certificate Distribution Account (or any custodian with respect
to funds on deposit in any such account) in Eligible Investments selected in
writing by the Servicer (pursuant to standing instructions or otherwise);
provided, however, it is understood and agreed that neither the Indenture
Collateral Agent nor the Owner Trustee shall be liable for any loss arising from
such investment in Eligible Investments. All such Eligible Investments shall be
held by or on behalf of the Indenture Collateral Agent or the Owner Trustee, as
applicable, for the benefit of the Noteholders and/or the Certificateholders, as
applicable, and the Security Insurer. Other than as permitted by the Rating
Agencies and the Security Insurer, funds on deposit in the Collection Account,
the Payahead Account, the Note Distribution Account and the Certificate
Distribution Account shall be invested in Eligible Investments that will mature
so that such funds will be available at the close of business on the Business
Day immediately preceding the Distribution Date next succeeding the date of such
investment. Funds deposited in a Trust Account or the Certificate Distribution
Account on the day immediately preceding a Distribution Date upon the maturity
of any Eligible Investments are not required to be invested overnight.
(c)(i) The Indenture Collateral Agent shall possess all right, title
and interest in all funds on deposit from time to time in the Trust Accounts and
in all proceeds thereof (excluding all Investment Earnings on the Collection
Account and the Payahead Account) and all such funds, investments, proceeds and
income shall be part of the Owner Trust Estate. Except as otherwise provided
herein, the Trust Accounts shall be under the sole dominion and control of the
Indenture Collateral Agent for the benefit of the Noteholders and the
Certificateholders, as the case may be, and the Security Insurer. If, at any
time, any of the Trust Accounts or the Certificate Distribution Account ceases
to be an Eligible Deposit Account, the Indenture Collateral Agent (or the
Servicer on its behalf) or the Owner Trustee, as applicable, shall within 10
Business Days (or such longer period as to which each Rating Agency and (unless
an Insurer Default shall have occurred and be continuing) the Security Insurer
may consent) establish a new Trust Account or a new Certificate Distribution
Account, as applicable, as an Eligible Deposit Account and shall transfer any
cash and/or any investments to such new Trust Account or a new Certificate
Distribution Account, as applicable. In connection with the foregoing, the
Servicer agrees that, in the event that any of the Trust Accounts are not
accounts with the Trustee, the Servicer shall notify a Trust Officer of the
Trustee in writing promptly upon any of such Trust Accounts ceasing to be an
Eligible Deposit Account.
(ii) With respect to the Trust Account Property, the Indenture
Collateral Agent, and with respect to the Certificate Distribution
Account, the Issuer agrees, by its respective acceptance hereof, that:
A. any Trust Account Property or any property in the
Certificate Distribution Account that is held in deposit accounts
shall be held solely in Eligible Deposit Accounts subject to the
penultimate sentence of Section 5.1(c)(i); and, except as otherwise
provided herein, each such Eligible Deposit
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Account shall be subject to the exclusive custody and control of the
Indenture Collateral Agent with respect to the Trust Accounts and
the Issuer with respect to the Certificate Distribution Account, and
the Indenture Collateral Agent or the Issuer, as applicable, shall
have sole signature authority with respect thereto;
B. any Trust Account Property shall be Delivered to the
Indenture Collateral Agent in accordance with the definition of
"Delivery" and shall be held, pending maturity or disposition,
solely by the Indenture Collateral Agent or such other Person acting
solely for the Indenture Collateral Agent as required for Delivery;
and
C. in the event that the Indenture Collateral Agent, in its
capacity as securities intermediary, has or subsequently obtains by
agreement, operation of law or otherwise a security interest in the
Trust Accounts or any security entitlement credited thereto, the
Indenture Collateral Agent, in its capacity as securities
intermediary, hereby agrees that such security interest shall be
subordinate to the security interest of the Indenture Collateral
Agent. The financial assets and other items deposited to the Trust
Accounts will not be subject to deduction, set-off, banker's lien,
or any other right in favor of any person (except that the Indenture
Collateral Agent, in its capacity as securities intermediary, may
set off the face amount of any checks which have been credited to
the Trust Accounts but are subsequently returned unpaid because of
uncollected or insufficient funds).
(d) The Servicer shall have the power, revocable by the Controlling
Party or by the Issuer with the consent of the Controlling Party, to instruct
the Indenture Collateral Agent to make withdrawals and payments from the Trust
Accounts for the purpose of permitting the Servicer or the Issuer to carry out
its respective duties hereunder or permitting the Trustee to carry out its
duties under the Indenture.
(e) The Servicer shall on or prior to each Distribution Date (and
prior to deposits to the Note Distribution Account) transfer from the Collection
Account to the Payahead Account all Payaheads as described in Section 5.3
received by the Servicer during the Monthly Period. Notwithstanding the
foregoing and the first sentence of Section 5.2, for so long as the Servicer is
permitted to make monthly remittances to the Collection Account pursuant to
Section 5.2, Payaheads need not be remitted to and deposited in the Payahead
Account but instead may be remitted to and held by the Servicer. So long as such
condition is met, the Servicer shall not be required to segregate or otherwise
hold separate any Payaheads remitted to the Servicer as aforesaid but shall be
required to remit Payaheads to the Collection Account in accordance with Section
5.6(a).
(f) The Servicer shall on or prior to each Distribution Date
transfer from the Collection Account to the Spread Account all amounts
constituting a part of the Supplemental Servicing Fee not retained by the
Servicer pursuant to Section 4.8.
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SECTION 5.2 Collections. (a) The Servicer shall remit within two Business
Days of receipt thereof to the Collection Account or Payahead Account, as
applicable, all payments by or on behalf of the Obligors with respect to the
Receivables (other than Purchased Receivables) and all Net Liquidation Proceeds,
both as collected during the Monthly Period less any payments owed thereon to
the Servicer. Notwithstanding the foregoing, for so long as (i) Franklin Capital
remains the Servicer, (ii) no Servicer Default shall have occurred and be
continuing, (iii) there exists no Insurer Default, (iv) the Servicer's (or if
the Servicer is Franklin Capital, and the Representative has entered into an
agreement, guaranty, surety or other arrangement backing Franklin Capital's
obligations acceptable to the Rating Agencies and the Security Insurer, then the
Representative's) short term obligations are rated at least A-1 by Standard &
Poor's and P-1 by Moody's and (v) the Rating Agency Condition shall have been
satisfied (and any conditions or limitations imposed by the Rating Agencies in
connection therewith are complied with), the Servicer may remit such collections
with respect to the preceding calendar month to the Collection Account or
Payahead Account, as applicable on the second Business Day immediately preceding
the related Distribution Date. Pending deposit thereof into the Collection
Account or the Payahead Account, the Servicer may use or invest collections at
its own risk and for its own benefit and need not segregate collections from its
own funds. For purposes of this Article V the phrase "payments by or on behalf
of Obligors" shall mean payments made with respect to the Receivables by Persons
other than the Servicer or the Seller.
(b) The Servicer will be entitled to be reimbursed from amounts on
deposit in the Collection Account with respect to a Monthly Period for amounts
previously deposited in the Collection Account but later determined by the
Servicer to have resulted from mistaken deposits or postings or checks returned
for insufficient funds. The amount to be reimbursed hereunder shall be paid to
the Servicer on the related Distribution Date pursuant to Section 5.6(b)(i) upon
certification by the Servicer of such amounts and the provision of such
information to the Trustee and the Security Insurer as may be necessary in the
opinion of the Security Insurer to verify the accuracy of such certification. In
the event that the Security Insurer has not received evidence satisfactory to it
of the Servicer's entitlement to reimbursement pursuant to Section 5.2(b), the
Security Insurer shall (unless an Insurer Default shall have occurred and be
continuing) give the Trustee notice to such effect, following receipt of which
the Trustee shall not make a distribution to the Servicer in respect of such
amount pursuant to Section 5.6(b)(i), or if the Servicer prior thereto has been
reimbursed pursuant to Section 5.6(b)(i) or Section 5.9, the Trustee shall
withhold such amounts from amounts otherwise distributable to the Servicer on
the next succeeding Distribution Date.
SECTION 5.3 Application of Collections. All collections for the Monthly
Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor, (other than Supplemental Servicing Fees
with respect to such Receivable, to the extent collected) shall be applied
first, in the case of Precomputed Receivables, to the Scheduled Payment and, in
the case of Simple Interest Receivables, to interest and principal in accordance
with the Simple Interest Method. With respect to Precomputed Receivables, any
remaining excess shall be added to the Payahead Balance, and
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shall be applied to prepay the Precomputed Receivable, but only if the sum of
such excess and the previous Payahead Balance shall be sufficient to prepay the
Precomputed Receivable in full. Otherwise, any such remaining excess payments
shall constitute a Payahead and shall increase the Payahead Balance.
All amounts collected that are payable to the Servicer as
Supplemental Servicing Fees hereunder shall, other than as provided in Section
5.9, be deposited in the Collection Account and paid to the Servicer in
accordance with Section 5.6(b).
SECTION 5.4 Deficiency Notice. (a) In the event that the Servicer's
Certificate with respect to (1) any Determination Date shall state that the
amount of the Available Funds with respect to such Determination Date is less
than the sum of the amounts payable on the related Distribution Date pursuant to
clauses (iii) and (iv) of Section 5.6(b) remaining after application of clauses,
(i) and (ii) of Section 5.6(b) (any such deficiency being a "Note Policy Claim
Amount"), then on the Deficiency Claim Date immediately preceding such
Distribution Date the Trustee, based solely on the information provided in the
Servicer's Certificate, shall deliver to the Indenture Collateral Agent, the
Security Insurer, the fiscal agent of the Security Insurer, the Owner Trustee,
the Insurer's Agent and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice (a "Deficiency Notice") in accordance with the
terms of the Note Policy specifying the Note Policy Claim Amount for such
Distribution Date.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York
City time, on the related Deficiency Claim Date. The amounts distributed to the
Trustee pursuant to a Deficiency Notice shall be deposited by the Trustee into
the Collection Account pursuant to Section 5.5.
SECTION 5.5 Additional Deposits. The Servicer, the Seller, and the
Representative, as applicable, shall deposit or cause to be deposited in the
Collection Account on the second Business Day immediately prior to the
Distribution Date following the date on which such obligations are due the
aggregate Purchase Amount with respect to Purchased Receivables. On or before
each Draw Date, the Trustee shall remit to the Collection Account any amounts
delivered to the Trustee pursuant to a Deficiency Notice.
SECTION 5.6 Distributions. (a) No later than 12:00 noon New York City time
on each Distribution Date, the Trustee shall (based solely on the information
contained in the Servicer's Certificate delivered on the related Determination
Date) cause to be made the following transfers and distributions in the amounts
set forth in the Servicer's Certificate for such Distribution Date from the
Payahead Account (i) to the Collection Account, in immediately available funds,
the aggregate previous Payaheads to be applied to Scheduled Payments on
Precomputed Receivables for the related Monthly Period or prepayments for the
related Monthly Period, pursuant to Section 5.3, in the amounts set forth in the
Servicer's Certificate for such Distribution Date and (ii) to the Seller, in
immediately available funds, the investment earnings, net of losses on the
Payaheads for the related Monthly Period.
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(b) On each Distribution Date other than the Distribution Date on
which Insolvency Proceeds are to be distributed, the Trustee shall (based solely
on the information contained in the Servicer's Certificate delivered with
respect to the related Determination Date) distribute the following amounts and
in the following order of priority:
(i) from the Distribution Amount, to the Servicer, the Base
Servicing Fee for the related Monthly Period, any amounts constituting the
Base Servicing Fee for previous Monthly Periods which have not been paid
and any amounts specified in Section 5.2(b), to the extent the Servicer
has not reimbursed itself in respect of such amounts pursuant to Section
5.9;
(ii) from the Distribution Amount, to the Security Insurer, any
accrued and unpaid fees of the Security Insurer payable pursuant to the
Insurance Agreement (to the extent such fees have not been previously paid
by the Servicer or Franklin Capital);
(iii) from the Distribution Amount, to the Note Distribution
Account, the Noteholders' Interest Distributable Amount;
(iv) from the Distribution Amount, to the Note Distribution Account,
the Principal Distributable Amount;
(v) from the Available Funds, to the Security Insurer, any interest
due on outstanding Surety Draws (as defined below);
(vi) from the Available Funds, to the Security Insurer, to the
extent of available funds, the amount, if any, to reimburse the Security Insurer
for amounts paid under the Note Policy (to the extent not reimbursed from other
amounts available to the Security Insurer) (such amounts paid, the "Surety
Draws") and any other Insurer Optional Deposits paid by the Insurer;
(vii) from the Available Funds, to the Spread Account, Spread
Account Deposit Amounts;
(viiii) from the Available Funds, to the Servicer, the Additional
Servicing Fee and for the related Monthly Period and any overdue
Additional Servicing Fees; and
(ix) from the Available Funds, to the Certificate Distribution
Account for distribution to the Certificateholders or their designees, any
remaining funds.
provided, however, that, (A) following an acceleration of the Notes or, (B) if
an Insurer Default shall have occurred and be continuing, following the
occurrence of an Event of Default pursuant to Section 5.1(i), 5.1(ii), 5.1(iii),
5.1(v) or 5.1(vi) of the Indenture, or (C) following the receipt of Insolvency
Proceeds pursuant to Section 9.1(b), amounts deposited in the Note Distribution
Account shall be applied to the Noteholders to the extent necessary to pay
accrued and unpaid interest on the Notes and then, to the extent funds are
available therefor, principal on the Notes
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until the principal balance of the Notes has been reduced to zero, in accordance
with the provisions of Section 5.6 of the Indenture. Notwithstanding item (ix)
above, for so long as the Servicer and/or its affiliates are the owners of the
Certificates, amounts to be remitted pursuant to such item (ix) to the
Certificate Distribution Account may instead be distributed directly to the
Certificateholders by the Servicer.
(c) Reserved.
(d) In the event that the Collection Account is maintained with an
institution other than the Indenture Collateral Agent, the Servicer shall
instruct and cause such institution to make all deposits and distributions
pursuant to Section 5.6(a) and Section 5.6(b) on the related Distribution Date.
SECTION 5.7 [RESERVED] .
SECTION 5.8 Statements to Certificateholders and Noteholders. On or prior
to each Determination Date, the Servicer shall provide to the Trustee (with a
copy to the Security Insurer and the Rating Agencies) for the Trustee to forward
to each Noteholder of record, to each Paying Agent, if any, and to the Owner
Trustee for the Owner Trustee to forward to each Certificateholder of record, a
statement substantially in the form of Exhibit C, setting forth at least the
following information with respect to distributions on the related Distribution
Date as to the Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of each
Class of Notes;
(ii) the amount of such distribution allocable to interest on or
with respect to each Class of Notes;
(iii) the amount of such distribution payable pursuant to a claim on
the Note Policy and any remaining outstanding balance available to be
drawn under the Note Policy;
(iv) the Month-End Pool Balance as of the close of business on the
last day of the preceding Monthly Period;
(v) the aggregate outstanding principal amount of each Class of the
Notes and the Note Pool Factor for each such Class, after giving effect to
payments allocated to principal reported under (i) above;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Monthly Period and/or due but unpaid with respect
to such Monthly Period or prior Monthly Periods, as the case may be;
(vii) the Noteholders' Interest Carryover Shortfall;
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(viii) the amount of the aggregate Realized Losses, if any, for the
related Monthly Period;
(ix) the aggregate Purchase Amounts for Receivables, if any, that
were repurchased in such period;
(x) the amounts which were collected by the Servicer;
(xi) the aggregate amount which was received by the Trust from the
Servicer;
(xii) any reimbursements to the Security Insurer;
(xiii) delinquency information relating to Receivables which are 30,
60 or 90 days delinquent;
(xiv) the aggregate Payahead Balance; and
(xv) the aggregate amount distributed to the Certificateholders.
Each amount set forth pursuant to paragraph (i), (ii), (iii), (vii), (x) and
(xi) above shall be expressed as a dollar amount per $1,000 of the initial
principal balance of the Notes (or Class thereof).
SECTION 5.9 Net Deposits. As an administrative convenience, unless the
Servicer is required to remit collections within two Business Days of receipt
thereof, the Servicer will be permitted to make the deposit of collections on
the Receivables and Purchase Amounts for or with respect to each Monthly Period
net of distributions to be made to the Servicer with respect to such Monthly
Period. Similarly, the Servicer may cause to be made a single, net transfer,
from the Collection Account to the Payahead Account, or vice versa. The
Servicer, however, will account to the Owner Trustee, the Trustee, the Indenture
Collateral Agent, the Noteholders and the Certificateholders as if all deposits,
distributions and transfers were made individually.
SECTION 5.10 Optional Deposits by the Security Insurer. The Security
Insurer shall at any time, and from time to time, with respect to a Distribution
Date, have the option (but shall not be required, except in accordance with the
terms of the Note Policy) to deliver or cause to be delivered amounts ("Insurer
Optional Deposits") to the Trustee for deposit into the Collection Account for
any of the following purposes: (i) to provide funds in respect of the payment of
fees or expenses of any provider of services to the Trust with respect to such
Distribution Date, (ii) [to provide funds in respect of the payment of the
Principal Distributable Amount for any such prior Distribution Date and not
distributed to the Noteholders or (iii)] to include such amount to the extent
that without such amount a draw would be required to be made on the Note Policy.
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ARTICLE VI
The Seller
SECTION 6.1 Representations of the Seller. The Seller makes the following
representations on which the Security Insurer shall be deemed to have relied in
executing and delivering the Note Policy and on which the Issuer is deemed to
have relied in acquiring the Receivables. The representations speak as of the
execution and delivery of this Agreement and as of the Closing Date (unless
another date or time period is otherwise specified or indicated in the
particular representation or warranty), and shall survive the sale to the Issuer
and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Seller is duly organized and
validly existing as a Delaware limited liability company with power and
authority to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted, and had at all
relevant times, and has, the power, authority and legal right to acquire and own
the Receivables.
(b) Due Qualification. The Seller is duly qualified to do business
as a limited liability company in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property, including the Receivables, or the conduct of its business shall
require such qualifications.
(c) Power and Authority of the Seller. The Seller has the power and
authority to execute and deliver this Agreement and to perform its obligations
under each of the Basic Documents to which the Seller is a party; the Seller has
full power and authority to sell and assign the property to be sold and assigned
to and deposited with the Issuer and the Seller has duly authorized such sale
and assignment to the Issuer by all necessary action; and the execution,
delivery and performance of each of the Basic Documents to which the Seller is a
party has been duly authorized by the Seller by all necessary action.
(d) Binding Obligation. This Agreement and each of the Basic
Documents to which the Seller is a party constitute legal, valid and binding
obligations of the Seller, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, fraudulent conveyance,
reorganization and similar laws now or hereafter in effect relating to
creditors' rights generally and subject to general principles of equity (whether
applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof and thereof do not
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under, the certificate of
formation or limited liability company agreement of the Seller, or any
indenture, agreement or other instrument to which the Seller is a party or by
which it is bound; nor result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than pursuant to the Basic
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Documents); nor violate any law or, to the best of its knowledge, any order,
rule or regulation applicable to the Seller of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending against the Seller or, to its best knowledge, threatened against the
Seller, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of this Agreement or any of the Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the issuance
of the Notes or the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Seller of its obligations under, or the
validity or enforceability of, the Basic Documents, the Notes or the
Certificates or (iv) that might adversely affect the federal income tax
attributes of the Issuer, the Notes or the Certificates.
(g) All Consents. All authorizations, consents, orders or approvals
of or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by the Seller in connection with the execution and
delivery by the Seller of this Agreement or any of the Basic Documents to which
it is a party and the performance by the Seller of the transactions contemplated
by this Agreement, or any of the Basic Documents to which it is a party, have
been duly obtained, effected or given and are in full force and effect, except
where failure to obtain the same would not have a material and adverse effect
upon the rights of the Issuer, the Noteholders or the Certificateholders.
(h) Chief Executive Office. The chief executive office of the Seller
is at 47 West 200 South, Salt Lake City, Utah 84101.
SECTION 6.2 Corporate Existence. (a) During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a limited liability company under the laws of the jurisdiction of
its formation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall observe the
applicable legal requirements for the recognition of the Seller as a legal
entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall maintain records and books of account separate
from those of its Affiliates;
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(ii) except as otherwise provided in this Agreement, the Seller
shall not commingle its assets and funds with those of its Affiliates;
(iii) the Seller shall hold such appropriate meetings of its members
as are necessary to authorize all the Seller's actions required by law to
be authorized by the members, shall keep minutes of such meetings and of
meetings of its stockholder(s) and observe all other customary formalities
(and any successor Seller not a corporation shall observe similar
procedures in accordance with its governing documents and applicable law);
(iv) the Seller shall at all times hold itself out to the public
under the Seller's own name as a legal entity separate and distinct from
its Affiliates; and
(v) all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
SECTION 6.3 Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust, the Security Insurer, the Trustee and the
Indenture Collateral Agent from and against any taxes that may at any time be
asserted against any such Person with respect to the transactions contemplated
in this Agreement and any of the Basic Documents (except any income taxes
arising out of fees paid to any of them and except any taxes to which the Owner
Trustee or the Trustee may otherwise be subject to), including any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but, in the case of the Issuer, not including any taxes asserted with
respect to, federal or other income taxes arising out of distributions on the
Certificates and the Notes) and costs and expenses in defending against the
same.
(b) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trustee, the Indenture Collateral Agent, the Security
Insurer, and the Noteholders from and against any loss, liability or expense
incurred by reason of (i) the Seller's willful misfeasance, bad faith or
negligence in the performance of its duties under this Agreement or the other
Basic Documents, or by reason of reckless disregard of its obligations and
duties under this Agreement and (ii) the Seller's or the Issuer's violation of
Federal or state securities laws in connection with the offering and sale of the
Notes.
(c) The Seller shall indemnify, defend and hold harmless the Owner
Trustee and its officers, directors, employees and agents from and against any
and all costs, expenses, losses, claims, damages and liabilities arising out of,
or incurred in connection with the acceptance or performance of the trusts and
duties set forth herein and in the Basic Documents except to the extent that
such cost, expense, loss, claim, damage or liability shall be due to the
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willful misfeasance, bad faith or negligence (except for errors in judgment) of
the Owner Trustee.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee, the Trustee or the Indenture Collateral Agent and
the termination of this Agreement, the Indenture or the Trust Agreement, as
applicable, and shall include reasonable fees and expenses of counsel and other
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Seller, without interest.
SECTION 6.4 Merger or Consolidation of, or Assumption of the Obligations
of, the Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, shall be the successor to the Seller hereunder without the
execution or filing of any document or any further act by any of the parties to
this Agreement; provided, however, that (i) unless an Insurer Default shall have
occurred and be continuing, the Seller shall have received the written consent
of the Security Insurer prior to entering into any such transaction, (ii)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.1 shall have been breached and no Servicer
Default, and no event which, after notice or lapse of time, or both, would
become a Servicer Default shall have happened and be continuing, (iii) the
Seller shall have delivered to the Owner Trustee, the Trustee and the Security
Insurer an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with, (iv) the
Rating Agency Condition shall have been satisfied with respect to such
transaction and (v) the Seller shall have delivered to the Owner Trustee, the
Trustee and the Security Insurer an Opinion of Counsel stating that, in the
opinion of such counsel, either (A) all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Owner Trustee and
the Trustee, respectively, in the Receivables and reciting the details of such
filings or (B) no such action shall be necessary to preserve and protect such
interest. Notwithstanding anything herein to the contrary, the execution of the
foregoing agreement of assumption and compliance with clauses (i), (ii), (iii),
(iv) and (v) above shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c) above.
SECTION 6.5 Limitation on Liability of Seller and Others. The Seller and
any member or officer or employee or agent of the Seller may rely in good faith
on the advice of counsel or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising under any
Basic Document. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
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SECTION 6.6 Seller May Own Certificates or Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any Basic Document. Notes or Certificates so owned by the Seller or such
Affiliate shall have an equal and proportionate benefit under the provisions of
the Basic Documents, without preference, priority, or distinction as among all
of the Notes or Certificates, provided, however, that any Notes or Certificates
owned by the Seller or any Affiliate thereof, during the time such Notes or
Certificates are owned by them, shall be without voting rights for any purpose
set forth in the Basic Documents and will not be entitled to the benefits of the
Note Policy. The Seller shall notify the Owner Trustee, the Trustee and the
Security Insurer promptly after it or any of its Affiliates become the owner of
a Certificate or a Note. The Seller hereby notifies the Owner Trustee that
immediately following the issuance of the Certificates it will own all the
Certificates.
ARTICLE VII
The Servicer
SECTION 7.1 Representations of Servicer. Franklin Capital, in its capacity
as Servicer, makes the following representations on which the Security Insurer
shall be deemed to have relied in executing and delivering the Note Policy and
on which the Issuer is deemed to have relied in acquiring the Receivables. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date, and shall survive the sale of the Receivables to the Issuer
and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Franklin Capital is duly
organized and validly existing as a corporation in good standing under the laws
of the state of its incorporation, with the corporate power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant times,
and has, the power, authority and legal right to acquire, own, sell and service
the Receivables and to hold the Receivable Files as custodian.
(b) Due Qualification. Franklin Capital is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business (including the servicing of the Receivables as required by this
Agreement) shall require such qualifications, and was duly qualified and had all
licenses in all relevant jurisdictions required for the origination of the
Receivables.
(c) Power and Authority of the Servicer. Franklin Capital has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement have been duly authorized by Franklin Capital by all necessary
corporate action. All authorizations, consents, orders or approvals of or
registrations or declarations with any court, regulatory body,
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administrative agency or other government instrumentality required to be
obtained, effected or given by Franklin Capital in connection with the execution
and delivery by the Servicer of this Agreement or any of the Basic Documents to
which it is a party and the performance by the Servicer of the transactions
contemplated by this Agreement or any of the Basic Documents to which it is a
party, have been duly obtained, effected or given and are in full force and
effect, except where failure to obtain the same would not have a material
adverse effect upon the rights of the Issuer or the Noteholders.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of Franklin Capital, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally, and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof do not result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under the articles of incorporation or
by-laws of Franklin Capital, or any indenture, agreement or other instrument to
which Franklin Capital is a party or by which it shall be bound; or result in
the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); or violate any law or, to the best of Franklin
Capital's knowledge, any order, rule or regulation applicable to Franklin
Capital of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over Franklin
Capital or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending against Franklin Capital, or, to its best knowledge, threatened against
Franklin Capital, before any court, regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over Franklin Capital or
its properties: (i) asserting the invalidity of this Agreement or any of the
Basic Documents or the Notes, (ii) seeking to prevent the issuance of the Notes
or the consummation of any of the transactions contemplated by this Agreement or
any of the Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by Franklin Capital of its
obligations under, or the validity or enforceability of this Agreement or any of
the Basic Documents or the Notes or (iv) relating to Franklin Capital and which
might adversely affect the federal income tax or ERISA attributes of the Issuer
or the Notes.
SECTION 7.2 Indemnities of Servicer. (a) The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement and the representations made by
the Servicer herein.
(b) The Servicer shall defend, indemnify and hold harmless the Owner
Trustee, the Trustee, the Trust, the Indenture Collateral Agent, the Security
Insurer, the Noteholders and the Seller from and against any and all costs,
expenses, losses, damages, claims,
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and liabilities, arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof of a Financed Vehicle.
(c) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee, the Trustee, the Seller, the Trust, the Indenture Collateral Agent, the
Security Insurer, their respective officers, directors, agents and employees and
the Noteholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such costs, expenses, losses,
claims, damages, or liabilities arose out of, or were imposed upon any such
Person through, the negligence, willful misfeasance or bad faith of the Servicer
in the performance of its duties under this Agreement or the other Basic
Documents or by reason of reckless disregard of its obligations and duties under
this Agreement.
(d) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee and its officers, directors, employees and agents from and against all
costs, expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties herein and in the Trust Agreement contained, except to the extent that
such costs, expenses, losses, claims, damages or liabilities shall be due to the
willful misfeasance, bad faith or negligence (except for errors in judgment) of
the Owner Trustee.
For purposes of this Section, in the event of the termination of the
rights and obligations of Franklin Capital (or any successor thereto pursuant to
Section 7.3) as Servicer pursuant to Section 8.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer (other than the Trustee)
pursuant to Section 8.2.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee or the termination of this
Agreement, the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and expenses of litigation. If
the Servicer shall have made any indemnity payments pursuant to this Section and
the recipient thereafter collects any of such amounts from others, such Person
shall promptly repay such amounts to the Servicer, without interest.
SECTION 7.3 Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party, (c) which may succeed to the properties and assets of
the Servicer, substantially as a whole or (d) with respect to the Servicer's
obligations hereunder, which is a corporation 50% or more of the voting stock of
which is owned, directly or indirectly, by Franklin Resources, which Person
executed an agreement of assumption to perform every obligation of the Servicer
hereunder shall be the successor to the Servicer under this Agreement without
further act on the part of any of the parties to this Agreement; provided,
however, that (i) unless an Insurer Default shall have occurred and be
continuing, the Servicer shall have received the written consent of the Security
Insurer prior to entering into any such transaction, (ii) immediately after
giving effect to such transaction, no Servicer Default and no event which, after
notice or lapse of time, or both, would
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become a Servicer Default shall have happened and be continuing, (iii) the
Servicer shall have delivered to the Owner Trustee, the Trustee and the Security
Insurer an Officer's Certificate and an Opinion of Counsel (which shall not be
addressed to the Security Insurer as long as an Insurer Default exists) each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent provided
for in this Agreement relating to such transaction have been complied with, (iv)
the Rating Agency Condition shall have been satisfied with respect to such
transaction and (v) the Servicer shall have delivered to the Owner Trustee, the
Trustee and the Security Insurer an Opinion of Counsel (which shall not be
addressed to the Security Insurer as long as an Insurer Default exists) stating
that, in the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Owner Trustee
and the Trustee, respectively, in the Receivables and reciting the details of
such filings or (B) no such action shall be necessary to preserve and protect
such interest. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii), (iv) and (v) above shall be conditions to the consummation of the
transactions referred to in clauses (a), (b), (c) or (d) above.
SECTION 7.4 Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of its directors, officers, employees or agents shall be
under any liability to the Issuer, the Noteholders or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the Servicer
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence (except for errors in
judgment) in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer or any subservicer and
any of their respective directors, officers, employees or agents may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer, may (but shall not be required
to) undertake any reasonable action that it may deem necessary or desirable to
protect the interests of the Certificateholders under the Trust Agreement and
the Noteholders under the Indenture.
SECTION 7.5 Servicer Not To Resign. Subject to the provisions of Section
7.3, the Servicer may not resign from the obligations and duties hereby imposed
on it as Servicer under this Agreement or the other Basic Documents except upon
determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer and the Security Insurer does not elect to
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waive the obligations of the Servicer to perform the duties which render it
legally unable to act or does not elect to delegate those duties to another
Person. Notice of any such determination permitting the resignation of the
Servicer shall be communicated to the Owner Trustee, the Trustee and the
Security Insurer at the earliest practicable time (and, if such communication is
not in writing, shall be confirmed in writing at the earliest practicable time)
and any such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to and satisfactory to the Owner Trustee, the Trustee and the
Security Insurer concurrently with or promptly after such notice. No such
resignation of the Servicer shall become effective until a successor servicer
shall have assumed the responsibilities and obligations of Franklin Capital in
accordance with Section 8.2 of this Agreement.
ARTICLE VIIA
The Representative
SECTION 7.1A Representations of Franklin Resources. Franklin Resources
makes the following representations on which the Security Insurer shall be
deemed to have relied in executing and delivering the Note Policy and on which
the Issuer is deemed to have relied in acquiring the Receivables. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date, and shall survive the sale of the Receivables to the Issuer
and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Franklin Resources is duly
organized and validly existing as a corporation in good standing under the laws
of the state of its incorporation, with the corporate power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted.
(b) Due Qualification. Franklin Resources is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business shall require such qualifications.
(c) Power and Authority. Franklin Resources has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and the execution, delivery and performance of this
Agreement have been duly authorized by Franklin Resources by all necessary
corporate action. All authorizations, consents, orders or approvals of or
registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by Franklin Resources in connection with the execution and delivery by
Franklin Resources of this Agreement or any of the Basic Documents to which it
is a party and the performance by Franklin Resources of the transactions
contemplated by this Agreement or any of the Basic Documents to which it is a
party, have been duly obtained, effected or given and are in full force and
effect, except where failure to obtain the same would not have a material
adverse effect upon the rights of the Issuer or the Noteholders.
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(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of Franklin Resources, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally, and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof do not result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under the articles of incorporation or
by-laws of Franklin Resources, or any indenture, agreement or other instrument
to which Franklin Resources is a party or by which it shall be bound; or result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); or violate any law or, to the best of Franklin
Resources' knowledge, any order, rule or regulation applicable to Franklin
Resources of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over Franklin Resources or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending against Franklin Resources or, to its best knowledge, threatened against
Franklin Resources, before any court, regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over Franklin Resources
or its properties: (i) asserting the invalidity of this Agreement or any of the
Basic Documents or the Notes, (ii) seeking to prevent the issuance of the Notes
or the consummation of any of the transactions contemplated by this Agreement or
any of the Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by Franklin Resources of its
obligations under, or the validity or enforceability of, this Agreement or any
of the Basic Documents or the Notes or (iv) relating to Franklin Resources and
which might adversely affect the federal income tax or ERISA attributes of the
Issuer or the Notes.
SECTION 7.2A Limitation on Liability of Franklin Resources and Others.
Neither Franklin Resources nor any of its directors, officers, employees or
agents shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or for errors in judgment; provided, however, that this provision shall not
protect Franklin Resources or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties under this Agreement. Franklin Resources or and any of its directors,
officers, employees or agents may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any matters
arising under this Agreement.
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ARTICLE VIII
Default
SECTION 8.1 Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) Any failure by the Servicer to deliver to the Owner Trustee or
the Trustee for deposit in any of the Trust Accounts or the Certificate
Distribution Account any payment required to be so delivered under the terms of
the Notes, the Certificates or this Agreement that shall continue unremedied for
a period of 30 Business Days after written notice of such failure is received by
the Servicer from the Security Insurer, the Owner Trustee or the Trustee or
after discovery of such failure by an Officer of the Servicer; or
(b) Failure by the Servicer duly to observe or to perform in any
material respect any other covenants or agreements of the Servicer or the Seller
(as the case may be) set forth in the Notes, the Certificates, this Agreement or
any other Basic Document, which failure shall (i) materially and adversely
affect the rights of the Certificateholders, the Security Insurer or the
Noteholders and (ii) continue 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 (A) to the Servicer by the Security Insurer, the Owner
Trustee or the Trustee or (B) to the Servicer, the Owner Trustee and the Trustee
by the Holders of Notes evidencing not less than 25% of the outstanding
principal amount of the Notes as applicable (or for such longer period, not in
excess of 120 days, as may be reasonably necessary to remedy such default;
provided that such default is capable of remedy within 120 days and the Servicer
delivers an Officers' Certificate to the Security Insurer, the Owner Trustee and
the Trustee to such effect and to the effect that the Servicer has commenced or
will promptly commence, and will diligently pursue, all reasonable efforts to
remedy such default); or
(c) An Insolvency Event occurs with respect to the Servicer or any
successor; or
(d) So long as an Insurer Default shall not have occurred and be
continuing, an Insurance Agreement Trigger Event described in Section 6.01 of
the Insurance Agreement shall have occurred;
then, and in each and every case, (i) so long as no Insurer Default shall have
occurred and be continuing, the Trustee may, with the consent of the Security
Insurer and at the direction of the Security Insurer, the Trustee shall, subject
to subsection (b) of this Section 8.1 or (ii) if an Insurer Default shall have
occurred and be continuing, any of the Trustee or the Holders of Notes
evidencing not less than a majority of the principal amount of the Notes then
outstanding or Holders of Certificates of Percentage Interests greater than 50%
in the case of any default that does not adversely affect the Trustee or the
Noteholders, in any case by notice given in writing to the Servicer (and to the
Trustee if given by the Security Insurer or, as applicable, the Noteholders or
the Certificateholders) may terminate all of the rights and obligations of the
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Servicer under this Agreement. For purposes of Section 8.1(b), any determination
of an adverse effect on the interest of the Certificateholders or the
Noteholders pursuant to Section 8.1(b) shall be made without consideration of
the availability of funds under the Note Policy. On or after the receipt by the
Servicer of such written notice, all authority, power, obligations and
responsibilities of the Servicer under this Agreement, whether with respect to
the Notes, the Certificates or the Receivables or otherwise, automatically shall
pass to, be vested in and become obligations and responsibilities of the Trustee
provided that the Trustee is not unwilling or unable to act; provided, however,
that the Trustee shall have no liability with respect to any obligation which
was required to be performed by the prior Servicer prior to the date that the
Trustee becomes the Servicer or any claim of a third party based on any alleged
action or inaction of the prior Servicer. The Trustee is authorized and
empowered by this Agreement, as successor Servicer to execute and deliver, on
behalf of the prior Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Receivables and the
other Trust Property and related documents, to show the Trustee as lienholder or
secured party on the related Lien Certificates, or otherwise. The prior Servicer
agrees to cooperate with the successor Servicer in effecting the termination of
the responsibilities and rights of the prior Servicer under this Agreement,
including, without limitation, the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
prior Servicer for deposit, or have been deposited by the prior Servicer, in the
Collection Account or thereafter received with respect to the Receivables and
the delivery to the successor Servicer of all Receivables Files, records and a
computer tape in readable form containing all information necessary to enable
the successor Servicer to service the Receivables and the other Trust Property.
The terminated Servicer shall grant the Trustee, (in its capacity as Trustee
and/or successor Servicer), the Owner Trustee and the Security Insurer
reasonable access to the terminated Servicer's premises at the Servicer's
reasonable expense.
SECTION 8.2 Appointment of Successor. (a) Upon the Servicer's receipt of
notice of termination, pursuant to Section 8.1 or the Servicer's resignation in
accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the later of (x) the date 45 days
from the delivery to the Owner Trustee and the Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of the Servicer's
termination hereunder, the Trustee shall, provided it is not unwilling or unable
to act, assume the obligations of the Servicer hereunder and, unless an Insurer
Default shall have occurred and be continuing, shall accept its appointment by a
written assumption in form acceptable to the Security Insurer. Notwithstanding
the above, the Trustee, with the prior written consent of the Security Insurer,
or the Security Insurer shall, if the Trustee shall be unwilling or legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, any established institution having a net worth of not less than
$50,000,000 and whose regular business shall include the servicing of
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automotive receivables as the successor to the Servicer under this Agreement.
Any successor Servicer shall be acceptable to the Security Insurer.
(b) Upon appointment, the successor Servicer (including the Trustee
acting as successor Servicer) shall be the successor in all respects to the
predecessor Servicer and shall be subject to all the responsibilities, duties
and liabilities arising thereafter relating thereto placed on the predecessor
Servicer, subject to the exceptions set forth in Section 8.2(a) hereof, and
shall be entitled to the Servicing Fee and all the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement.
SECTION 8.3 [RESERVED]
SECTION 8.4 Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VIII, the Owner Trustee shall give prompt written notice thereof to
Certificateholders and the Security Insurer, and the Trustee shall give prompt
written notice thereof to Noteholders and to the Rating Agencies.
SECTION 8.5 Waiver of Past Defaults. So long as no Insurer Default shall
have occurred and be continuing, the Security Insurer (or, if an Insurer Default
shall have occurred and be continuing, the Holders of Notes evidencing not less
than a majority of the outstanding principal amount of the Notes, or Holders of
Certificates of Percentage Interests greater than 50% in the case of any default
which does not adversely affect the Trustee or the Noteholders (in each case, in
any default which does not adversely affect the Security Insurer) may, on behalf
of all Noteholders and Certificateholders, waive any default by the Servicer in
the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from any of the Trust
Accounts in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer 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 thereto.
ARTICLE IX
Termination
SECTION 9.1 Optional Purchase of All Receivables. (a) On the last day of
any Monthly Period as of which the Pool Balance shall be less than or equal to
10% of the Original Pool Balance, the Servicer shall have the option to purchase
the Owner Trust Estate, other than the Trust Accounts and the Certificate
Distribution Account (with the consent of the Security Insurer if such purchase
would result in a claim on the Note Policy or would result in any amount owing
to the Security Insurer under the Insurance Agreement remaining unpaid);
provided, however, that the amount to be paid for such purchase (as set forth in
the following sentence) shall be sufficient to pay the full amount of principal,
premium and other amounts owing to the Security Insurer if any, and interest
then due and payable on the Notes. To exercise
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such option, the Servicer shall deposit pursuant to Section 5.5 in the
Collection Account an amount equal to the aggregate Purchase Amount for the
Receivables, plus any amounts then due and owing to the Security Insurer plus
the appraised value of any other property held by the Trust, such value to be
determined by an appraiser mutually agreed upon by the Servicer, the Security
Insurer (unless an Insurer Default shall have occurred and be continuing), the
Owner Trustee and the Trustee, and shall succeed to all interests in and to the
Trust.
(b) Upon any sale of the assets of the Trust pursuant to the Trust
Agreement, the Servicer shall instruct the Trustee to deposit the proceeds from
such sale after all payments and reserves therefrom (including the expenses of
such sale) have been made (the "Insolvency Proceeds") in the Collection Account.
On the Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Servicer
shall instruct the Trustee to make, and the Trustee shall make, the following
deposits and distributions (after the application on such Distribution Date of
the Distribution Amount pursuant to Section 5.6(b)) from the Insolvency Proceeds
and the Distribution Amount for such Distribution Date:
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited into
the Note Distribution Account on such Distribution Date; and
(ii) to the Note Distribution Account, the outstanding principal
amount of the Notes (after giving effect to the reduction in the
outstanding principal amount of the Notes to result from the deposits made
in the Note Distribution Account on such Distribution Date).
Any Insolvency Proceeds remaining after the deposits described above shall be
paid first to the Security Insurer to the extent of any amounts owing to the
Security Insurer under the Insurance Agreement and not paid, and second, to the
extent of any remaining funds, to the Certificateholders.
(c) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Trustee, the Indenture Collateral Agent, the
Security Insurer and the Rating Agencies as soon as practicable after the
Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and
the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of the Trustee pursuant to this
Agreement.
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ARTICLE X
Administrative Duties of the Servicer
SECTION 10.1 Administrative Duties. (a) Duties with Respect to the
Indenture and Depository Agreements. The Servicer shall perform all its duties
and the duties of the Issuer under the Indenture and the other Basic Documents.
In addition, the Servicer shall consult with the Owner Trustee as the Servicer
deems appropriate regarding the duties of the Issuer under the Indenture and the
other Basic Documents. The Servicer shall monitor the performance of the Issuer
and shall advise the Owner Trustee when action is necessary to comply with the
Issuer's duties under the Indenture and the other Basic Documents. The Servicer
shall prepare for execution by the Issuer or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture and the other Basic Documents. In
furtherance of the foregoing, the Servicer shall take all necessary action that
is the duty of the Issuer to take pursuant to the Indenture and the other Basic
Documents, including, without limitation, pursuant to Sections 2.7, 3.5, 3.6,
3.7, 3.9, 7.2, 7.3, 11.1 and 11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set forth in this
Agreement or any of the Basic Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner
Trustee or shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and opinions
as it shall be the duty of the Issuer or the Owner Trustee to prepare,
file or deliver pursuant to this Agreement or any of the Basic Documents
or state or Federal securities laws, and at the request of the Owner
Trustee shall take all appropriate action that it is the duty of the
Issuer to take pursuant to this Agreement or any of the Basic Documents,
including, without limitation, pursuant to Sections 2.6 and 2.13 of the
Trust Agreement. In accordance with the directions of the Issuer or the
Owner Trustee, the Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Basic Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Issuer or the Owner
Trustee and are reasonably within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the Basic
Documents to the contrary, the Servicer shall be responsible for promptly
notifying the Owner Trustee in the event that any withholding tax is
imposed on the Issuer's payments (or allocations of income) to an Owner
(as defined in the Trust Agreement) as contemplated in Section 5.2(c) of
the Trust Agreement. Any such notice shall be in writing and specify the
amount of any withholding tax required to be withheld by the Owner Trustee
pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for
performance of the duties of the Issuer or
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the Owner Trustee set forth in Section 5.6(a), (b), (c) and (d) of the
Trust Agreement with respect to, among other things, accounting and
reports to Holders (as defined in the Trust Agreement); provided, however,
that once prepared by the Servicer and filed with the appropriate tax
authorities, the Owner Trustee shall retain responsibility for the
distribution of the Schedule K-1s necessary to enable each
Certificateholder to prepare its federal and state income tax returns.
(iv) The Servicer shall perform the duties of the Servicer specified
in Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any
other duties expressly required to be performed by the Servicer under this
Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into transactions
with or otherwise deal with any of its Affiliates; provided, however, that
the terms of any such transactions or dealings shall be in accordance with
any directions received from the Issuer and shall be, in the Servicer's
opinion, no less favorable to the Issuer in any material respect.
(c) Tax Matters. The Servicer shall prepare and file, on behalf of
the Seller, so long as it is a Certificateholder, all tax returns, tax
elections, financial statements and such annual or other reports of the Issuer
as are necessary for preparation of tax reports as provided in Article V of the
Trust Agreement, including without limitation Forms 1099. All tax returns will
be signed by Seller, so long as it is a Certificateholder.
(d) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article X unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (A), (B), (C) and (D) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Receivables);
(C) the amendment, change or modification of this Agreement or
any of the Basic Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or
the appointment of Successor Servicers or the consent to the
assignment by the Note Registrar, Paying Agent or Trustee of its
obligations under the Indenture; and
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(E) the removal of the Trustee.
(e) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders or Certificateholders under the
Basic Documents, (2) sell the Owner Trust Estate pursuant to Section 5.5 of the
Indenture, (3) take any other action that the Issuer directs the Servicer not to
take on its behalf or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
SECTION 10.2 Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
SECTION 10.3 Additional Information to be Furnished to the Issuer. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
SECTION 10.4 Replacement Note Policy. In the event of an Insurer Default
or the rating of the Security Insurer is downgraded by any Rating Agency such
that the rating of any Class of Notes is reduced, suspended or withdrawn, the
Servicer shall be permitted, provided that all amounts payable to the Security
Insurer pursuant to the Insurance Agreement have been paid in full, (i) replace
the Note Policy with a financial guaranty insurance policy issued by another
insurer provided that the ratings on the claims paying ability of such
replacement insurer are higher than those of the insurer sought to be replaced
(after giving effect to such reduction) or (ii) eliminate or provide another
form of credit enhancement; provided that in the case of clause (ii), the Rating
Agencies consent thereto and confirmation that the ratings of the Notes will be
increased from their then-current levels (after giving effect to such reduction)
as a result of such action shall have been obtained. It shall be a condition to
substitution of any such new financial guaranty insurance policy or other form
of credit enhancement that there be delivered to the Trustee (i) an Officer's
Certificate by the Servicer stating that the conditions to such substitution set
forth in this Section 10.4 (other than in clause (ii)) have been satisfied and
(ii) a legal opinion, acceptable in form to the Trustee, from counsel to the
provider of such financial guaranty insurance policy or other form of credit
enhancement with respect to the enforceability thereof and such other matters as
the Trustee may require. Upon receipt of written notice of any such substitution
from the Servicer and the taking of physical possession of the replacement
financial guaranty insurance policy or other form of credit enhancement, the
Trustee shall, within five Business Days following receipt of such notice and
such taking of physical possession, deliver the Note Policy marked "Cancelled"
to the Security Insurer, and the Security Insurer will have no further liability
under the Note Policy.
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ARTICLE XI
Miscellaneous Provisions
SECTION 11.1 Amendment. This Agreement may be amended from time to time by
the Representative, the Seller, the Servicer and the Owner Trustee, with the
consent of the Trustee (which consent may not be unreasonably withheld), with
the prior written consent of the Security Insurer (so long as no Insurer Default
has occurred and is continuing) but without the consent of any of the
Noteholders or the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement, to comply with any changes in the
Code, or to make any other provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the provisions
of this Agreement or the Insurance Agreement; provided, however, that such
action shall not, adversely affect in any material respect the interests of any
Noteholder or Certificateholder; provided further that if an Insurer Default has
occurred and is continuing and the Security Insurer has not consented to such
action, such action shall not materially adversely affect the interests of the
Security Insurer. An amendment shall be deemed not to adversely affect the
interests of any such holder if both Rating Agencies confirm in writing that
such amendment will not result in a reduction or withdrawal of the then current
rating of the Notes.
This Agreement may also be amended from time to time by the
Representative, the Seller, the Servicer and the Owner Trustee, with the consent
of the Security Insurer (so long as no Insurer Default has occurred and is
continuing), the consent of the Trustee, the consent of the Holders of Notes
evidencing not less than a majority of the outstanding principal amount of the
Notes and the consent of the Holders of Certificates evidencing not less than a
Percentage Interest greater than 50% for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made for the benefit of the Noteholders or the Certificateholders or (b)
reduce the aforesaid percentage of the outstanding principal amount of the Notes
and the Percentage Interests, the Holders of which are required to consent to
any such amendment, without the consent of the Holders of all the outstanding
Notes and the Certificates, of each Class affected thereby; provided further,
that if an Insurer Default has occurred and is continuing and the Security
Insurer has not consented to such action, such action shall not materially
adversely affect the interest of the Security Insurer.
Promptly after the execution of any such amendment or consent
pursuant to either of the preceding paragraphs, the Owner Trustee shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Noteholders or Certificateholders provided
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for in this Agreement) and of evidencing the authorization of any action by
Noteholders or Certificateholders shall be subject to such reasonable
requirements as the Trustee or the Owner Trustee, as applicable, may prescribe.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee, the Trustee and the Security Insurer shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred to
in Section 11.2(i)(1) has been delivered. The Owner Trustee and the Trustee may,
but shall not be obligated to, enter into any such amendment which affects the
Issuer's, the Owner Trustee's or the Trustee's, as applicable, own rights,
duties or immunities under this Agreement or otherwise.
SECTION 11.2 Protection of Title to Trust. (a) The Seller shall execute
and file such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Issuer and the interests of the Indenture Collateral Agent on behalf of the
Noteholders, the Certificateholders and the Security Insurer in the Receivables
and in the proceeds thereof. The Seller shall deliver (or cause to be delivered)
to the Security Insurer, the Owner Trustee and the Indenture Collateral Agent
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Security Insurer, the Owner Trustee
and the Trustee at least five days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements. Promptly upon such filing, the Seller or
the Servicer, as the case may be, shall unless an Insurer Default shall have
occurred and be continuing, deliver to the Security Insurer, the Owner Trustee
and the Trustee an Opinion of Counsel in form and substance reasonably
satisfactory to the Security Insurer, or if an Insurer Default shall have
occurred and be continuing an Opinion of Counsel satisfactory to the Trustee
stating either (A) all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trust and the Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) no such action shall be necessary to preserve and
protect such interest.
(c) Each of the Seller and the Servicer shall have an obligation to
give the Security Insurer, the Owner Trustee and the Trustee at least 60 days'
prior written notice of any relocation of its principal executive office if, 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 promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
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(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any backup archives)
that refer to a Receivable shall indicate clearly the interest of the Issuer and
the Trustee on behalf of the Certificateholders, the Noteholders and the
Security Insurer in such Receivable and that such Receivable is owned by the
Issuer and has been pledged to the Trustee. Indication of the Issuer's and the
Trustee's interest in a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the related Receivable shall
have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Issuer and has been pledged to the Trustee on behalf of the Certificateholders,
the Noteholders and the Security Insurer.
(g) The Servicer shall permit the Trustee and the Security Insurer
and their respective agents at any time during normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records regarding any
Receivable or any other portion of the Trust Property. The preceding sentence
shall not create any duty or obligation on the part of the Trustee to perform
any such acts.
(h) Upon request, the Servicer shall furnish to the Security
Insurer, the Owner Trustee or the Trustee, within five Business Days, a list of
all Receivables (by contract number and name of Obligor) then held as part of
the Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Security Insurer, the Owner
Trustee and the Trustee:
(1) Upon the execution and delivery of this Agreement and, if
required pursuant to Section 11.1, of each amendment, an Opinion of
Counsel stating that, in the opinion of such Counsel, in form and
substance reasonably satisfactory to the Controlling Party, either (A) all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Trust and the
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Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given or
(B) no such action shall be necessary to preserve and protect such
interest; and
(2) On or before October 30 of each calendar year, a certificate
signed by the Secretary or Assistant Secretary of the Servicer and an
authorized officer of the managing member of the Seller stating that, to
such officer's knowledge, following consultation with counsel, the
Servicer or the Seller, as applicable, has determined that it was not
necessary or desirable to file any continuation UCC financing statement or
other UCC financing statement during such fiscal year in order to maintain
the perfection of the Trustee's security interest, for the benefit of the
Noteholders and the Security Insurer, in the Trust Property or if the
Servicer or the Seller has determined that any such filing was necessary
or desirable, describing the reason for any such filing and attaching a
copy thereof to such certificate.
Each Opinion of Counsel referred to in clause (l) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law,
cause the Certificates and the Notes to be registered with the Commission
pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the time
periods specified in such sections.
(k) On or before December 31 of each year, the Servicer shall
forward to the Owner Trustee a list of the scheduled holidays in California for
the following calendar year.
SECTION 11.3 Notices. All demands, notices and communications upon or to
the Seller, the Servicer, the Owner Trustee, the Trustee or the Rating Agencies
under this Agreement shall be in writing, personally delivered, or mailed by
certified mail, return receipt requested, and shall be deemed to have been duly
given upon receipt (a) in the case of the Seller to 47 West 200 South, Suite
500, Salt Lake City, UT 84101, Attention: Jennifer J. Bolt, with a copy to
Franklin Resources, 777 Mariners Island Blvd., San Mateo, CA 94404, Attention:
General Counsel; (b) in the case of the Servicer to 47 West 200 South, Suite
500, Salt Lake City, UT 84101, Attention: Jennifer J. Bolt, with a copy to
Franklin Resources, 777 Mariners Island Blvd., San Mateo, CA 94404, Attention:
General Counsel; (c) in the case of the Representative, to 777 Mariners Island
Blvd., San Mateo, CA 94404, Attention: General Counsel; (d) in the case of the
Issuer or the Owner Trustee, at the Corporate Trust Office of the Owner Trustee,
with a copy to Bankers Trust Company, 4 Albany Street, 10th Floor, New York, New
York 10006, Attention: Corporate Trust and Agency Group, Structured Finance; (e)
in the case of the Trustee or the Indenture Collateral Agent, at the Corporate
Trust Office; (f) in the case of the Security Insurer, to MBIA Insurance
Corporation, 113 King Street, Armonk, New York 10504, Attention: Insured
Portfolio Management-SF; (g) in the case of Moody's, to Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007; and (g) in the case of Standard & Poor's, to Standard & Poor's Ratings
Group, 25 Broadway - 15th Floor, New York, New York 10004, Attention: Asset
Backed Surveillance Department. Any
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notice required or permitted to be mailed to a Noteholder or Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register or Note Register, as applicable. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder or Noteholder shall receive such notice.
SECTION 11.4 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.4 and 7.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Owner Trustee, the Trustee and the Security Insurer
(or if an Insurer Default shall have occurred and be continuing the Holders of
Notes evidencing not less than 66% of the principal amount of the outstanding
Notes.)
SECTION 11.5 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Issuer,
the Owner Trustee and for the benefit of the Certificateholders, the Trustee,
the Security Insurer and the Noteholders, as third-party beneficiaries. Nothing
in this Agreement, whether express or implied, shall be construed to give to any
other Person, other than express third-party beneficiaries, any legal or
equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
SECTION 11.6 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7 Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.8 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.9 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 11.10 Assignment to Trustee. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Trustee pursuant to the Indenture for the benefit of the
Issuer Secured Parties (as defined in the
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Indenture) of all right, title and interest of the Issuer in, to and under the
Receivables and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Trustee.
SECTION 11.11 Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, the parties hereto shall not, prior to the date
which is one year and one day after the termination of this Agreement with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
parties hereto shall not, prior to the date that is one year and one day after
the termination of this Agreement with respect to the Seller, acquiesce to,
petition or otherwise invoke or cause the Seller to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Seller under any federal or state bankruptcy, insolvency or similar
law, appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator, or other similar official of the Seller or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Seller.
SECTION 11.12 Limitation of Liability of Owner Trustee, Trustee and
Indenture Collateral Agent. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been countersigned by Bankers Trust (Delaware) not
in its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall Bankers Trust (Delaware) in its individual capacity
or, except as expressly provided in the Trust Agreement, as Owner Trustee have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Agreement, in
the performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by The Chase Manhattan Bank, not in its individual
capacity but solely as Trustee and as Indenture Collateral Agent, and in no
event shall The Chase Manhattan Bank have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
SECTION 11.13 Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the
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<PAGE> 70
Servicer shall have no authority to act for or represent the Issuer or the Owner
Trustee in any way and shall not otherwise be deemed an agent of the Issuer or
the Owner Trustee.
SECTION 11.14 No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Servicer and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 11.15 Third-Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. The Security Insurer and its successors and
assigns shall be a third-party beneficiary to the provisions of this Agreement,
and shall be entitled to rely upon and directly to enforce such provisions of
this Agreement, except as expressly limited by the terms hereof, so long as no
Insurer Default consisting of a failure to pay under the Note Policy shall have
occurred and be continuing. Except as expressly stated otherwise herein or in
the Basic Documents, any right of the Security Insurer to direct, appoint,
consent to, approve of, or take any action under this Agreement, shall be a
right exercised by the Security Insurer in its sole and absolute discretion.
SECTION 11.16 Disclaimer by Security Insurer. The Security Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Note Policy) upon delivery of a written notice to the
Owner Trustee and the Trustee.
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<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the day and year first above written.
FRANKLIN AUTO TRUST 1999-1
By BANKERS TRUST (DELAWARE),
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust,
By /s/ Christopher Lew
_____________________________________
Name: Christopher Lew
Title: Attorney in fact
FRANKLIN RECEIVABLES LLC,
Seller
By FRANKLIN CAPITAL CORPORATION,
as managing member
By /s/ Jennifer J. Bolt
_____________________________________
Name: Jennifer J. Bolt
Title: President
FRANKLIN CAPITAL CORPORATION,
Servicer,
By /s/ Jennifer J. Bolt
_____________________________________
Name: Jennifer J. Bolt
Title: President
FRANKLIN RESOURCES, INC.,
Representative,
By /s/ Jennifer J. Bolt
_____________________________________
Name: Jennifer J. Bolt
Title: Vice President
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<PAGE> 72
Acknowledged and Accepted:
THE CHASE MANHATTAN BANK, not
in its individual capacity
but solely as Trustee,
By /s/ Vada Haight
___________________________
Name: Vada Haight
Title: Vice President
Acknowledged and Accepted:
BANKERS TRUST (DELAWARE),
not in its individual capacity
but solely as Owner Trustee,
By /s/ Christopher Lew
___________________________
Name: Christopher Lew
Title: Attorney in Fact
Acknowledged and Accepted:
THE CHASE MANHATTAN BANK, not
in its individual capacity
but solely as Indenture Collateral
Agent
By /s/ Vada Haight
___________________________
Name: Vada Haight
Title: Vice President
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<PAGE> 73
SCHEDULE A
Schedule of Receivables
<PAGE> 74
SCHEDULE B
Location of Receivables
Franklin Capital Corporation
47 West 200 South, Suite 500
Salt Lake City, Utah 84101
Downtown Self Storage
255 West 200 South
Salt Lake City, Utah 84101
<PAGE> 75
Exhibit A
[Reserved]
<PAGE> 76
Exhibit B
[Reserved]
<PAGE> 77
Exhibit C
FORM OF MONTHLY NOTEHOLDER STATEMENT
FRANKLIN AUTO TRUST 1999-1
Class A-1 5.52% Asset Backed Notes
Class A-2 6.05% Asset Backed Notes
Distribution Date:
Monthly Period:
Under the Sale and Servicing Agreement, dated as of May 1, 1999 (the "Sale
and Servicing Agreement"), among Franklin Capital Corporation, as servicer,
Franklin Receivables LLC, as seller, Franklin Resources, Inc., as representative
and Franklin Auto Trust 1999-1, as issuer, the Servicer is required to prepare
certain information each month regarding current distributions to Noteholders
and the performance of the Trust during the previous month. The information that
is required to be prepared with respect to the Distribution Date and Monthly
Period listed above is set forth below. Certain of the information is presented
on the basis of an original principal amount of $1,000 per Note, and certain
other information is presented based upon the aggregate amounts for the Trust as
a whole. Capitalized terms used herein and not otherwise defined herein have the
meanings assigned to those terms in the Sale and Servicing Agreement.
A. Information Regarding the Current Monthly Distribution.
1. Notes.
(a) The aggregate amount of the distribution with respect to:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
(b) The amount of the distribution set
<PAGE> 78
forth in paragraph A.1.(a) above in respect of interest on:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
(c) The amount of the distribution set forth in paragraph
A.1.(a) above in respect of principal of:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
(d) The amount of the distribution in A.1.(a) payable
pursuant to a claim on the Note Policy with respect to:
the Class A-1 Notes................................$_______
the Class A-2 Notes................................$_______
(e) The remaining outstanding balance available to be
drawn under the Note Policy..............................$_______
(f) The amount of the distribution set forth in paragraph
A.1.(a) above per $1,000 interest in:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
(g) The amount of the distribution set forth in paragraph
A.1.(b) above per $1,000 interest in:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
(h) The amount of the distribution set forth in paragraph
A.1.(c) above per $1,000 interest in:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
(i) The amount of the distribution set forth in paragraph
A.1.(d) above per $1,000 interest in:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
B. Information Regarding the Performance of the Trust.
1. Pool Balance and Note Principal Balance.
(a) The Pool Balance at the close of business on
the last day of the Monthly Period..........................$_____
<PAGE> 79
(b) The aggregate outstanding principal amount of each
Class of Notes after giving effect to payments allocated
to principal as set forth in Paragraph A.1(c) above
with respect to:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
(c) The Note Pool Factor for each Class of Notes after giving
affect to the payments set forth in paragraph A.1(c)
with respect to:
the Class A-1 Notes.................................________
the Class A-2 Notes.................................________
(d) The amount of aggregate Realized Losses for the second
preceding Monthly Period.................................$________
(e) The aggregate Purchase Amount for all Receivables that were
repurchased in the Monthly Period........................$________
(f) The aggregate Payahead Balance on
such Distribution Date...................................$________
(g) The change in the Payahead Balance
from the preceding Distribution Date.....................$________
2. Servicing Fee.
The aggregate amount of the Servicing
Fee paid to the Servicer with respect
to the preceding Monthly Period...........................$_______
3. Payment Shortfalls.
(a) The amount of the Noteholders' Interest Carryover
Shortfall after giving effect to the payments set forth
in paragraph A.1(b) above with respect to:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
<PAGE> 80
(b) The amount of the Noteholders' Interest Carryover
Shortfall set forth in paragraph B.3.(a) above per
$1,000 interest with respect to:
the Class A-1 Notes................................$________
the Class A-2 Notes................................$________
4. (a) The aggregate amount of collections by the Servicer
during the preceding Monthly
Period....................................................$______
(b) The aggregate amount which was received by
the Trust from the Servicer during the
preceding Monthly Period...................................$______
(c) The aggregate amount of reimbursements to the Security
Insurer during the preceding Monthly Period................$______
(d) The number of Receivables that are delinquent for over:
30 days..............................................______
60 days..............................................______
90 days..............................................______
<PAGE> 81
Exhibit D
Form of Servicer's Certificate
<PAGE> 82
Exhibit E
Form of Note Policy
<PAGE> 1
Exhibit 10.1
Execution Copy
PURCHASE AGREEMENT dated as of May 1, 1999, between FRANKLIN CAPITAL
CORPORATION, a Utah corporation (the "Seller"), and FRANKLIN RECEIVABLES LLC, a
Delaware limited liability company (the "Purchaser").
WHEREAS in the regular course of its business, the Seller has
purchased certain prime, non-prime and sub-prime motor vehicle retail
installment sale contracts secured by new and used automobiles and light trucks
from motor vehicle dealers;
WHEREAS the Seller and the Purchaser wish to set forth the terms
pursuant to which the Receivables (as hereinafter defined) are to be sold by the
Seller to the Purchaser, which Receivables will be transferred by the Purchaser,
pursuant to the Sale and Servicing Agreement (as hereinafter defined), to
Franklin Auto Trust 1999-1 (the "Trust"), which Trust will issue two classes of
Asset Backed Notes (the "Notes"), which will be debt of the Trust and
Certificates representing the ownership interest in the Trust (the
"Certificates").
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
Certain Definitions
Terms not defined in this Agreement shall have the meaning set forth
in the Sale and Servicing Agreement. As used in this Agreement, the following
terms shall, unless the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms of the
terms defined):
"Agreement" shall mean this Purchase Agreement, as the same may be
amended and supplemented from time to time.
"Assignment" shall mean the document of assignment attached to this
Agreement as Exhibit A.
"Certificateholder" means a holder of a Certificate.
"Closing Date" shall mean May 27, 1999.
"Collections" shall mean all amounts collected by the Servicer (from
whatever source) on or with respect to the Receivables.
<PAGE> 2
"Computer Tape" means the computer tapes or other electronic media
furnished by the Seller to the Purchaser describing certain characteristics of
the Receivables.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor.
"Noteholder" means a holder of a Note.
"Obligor" on a Receivable means the purchaser or co-purchasers of
the Financed Vehicle and any other Person who owes payments under the
Receivable.
"Prospectus" shall mean the Prospectus (as defined in the
Underwriting Agreement).
"Purchase Amount" means, with respect to any Receivable required to be
repurchased by the Seller pursuant to Section 6.02 of this Agreement, an amount
equal to the sum of (i) 100% of the Principal Balance thereof and (ii) all
accrued and unpaid interest thereon (including one month's interest thereon, in
the month of payment, at the APR less, so long as Franklin Capital is the
Servicer, the Base Servicing Fee).
"Purchaser" shall mean Franklin Receivables LLC, a Delaware limited
liability company, its successors and assigns.
"Receivable" shall mean any Contract listed on Schedule A (which
Schedule may be in the form of microfiche).
"Repurchase Event" shall have the meaning specified in Section 6.02.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of May 1, 1999, among the Trust, as issuer, Franklin
Receivables LLC, as seller, Franklin Capital Corporation, as servicer and
Franklin Resources, Inc., as representative, as the same may be amended and
supplemented from time to time.
"Schedule of Receivables" shall mean the list of Receivables annexed
hereto as Schedule A.
"Security Insurer" shall mean MBIA Insurance Corporation.
"Seller" shall mean Franklin Capital Corporation, a Utah
corporation, its successors and assigns.
"Underwriting Agreement" shall mean the Underwriting Agreement dated
May 20, 1999 between Goldman, Sachs & Co. and the Purchaser.
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<PAGE> 3
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables. In consideration of the
Purchaser's delivery to or upon the order of the Seller of $105,948,257.83 the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Purchaser, without recourse (subject to the obligations herein), all right,
title and interest of the Seller in and to:
(i) the Receivables, and all monies representing interest payments
and principal payments received thereunder on and after the Cutoff Date, and,
with respect to Precomputed Receivables, monies representing interest and
principal payments received thereunder prior to the Cutoff Date that are due on
or after the Cutoff Date;
(ii) an assignment of the security interests in the Financed
Vehicles granted by Obligors pursuant to the Receivables and any other interest
of the Seller in such Financed Vehicles;
(iii) any proceeds with respect to the Receivables from claims on
any physical damage, credit life or disability insurance policies covering
Financed Vehicles or Obligors and any proceeds from the liquidation of the
Receivables;
(iv) any proceeds from any Receivables repurchased by a Dealer,
pursuant to a Dealer Agreement, as a result of a breach of representation or
warranty in the related Dealer Agreement;
(v) the related Receivables Files; and
(vi) the proceeds of any and all of the foregoing.
SECTION 2.02. RESERVED.
SECTION 2.03. The Closing. The sale and purchase of the Receivables
shall take place at a closing (the "Closing") at the offices of Morrison &
Foerster LLP, 1290 Avenue of the Americas, 40th Floor, New York, New York 10104
on the Closing Date, simultaneously with the closings under the Sale and
Servicing Agreement.
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<PAGE> 4
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Seller as of the date hereof and
as of the Closing Date:
(a) Organization and Good Standing. The Purchaser has been duly
organized and is validly existing as a limited liability company in good
standing under the laws of the State of Utah, with the power and authority to
own its properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant times,
and has, the power, authority and legal right to acquire and own the
Receivables.
(b) Due Qualification. The Purchaser is duly qualified to do
business and is in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property or
the conduct of its business shall require such qualifications.
(c) Power and Authority. The Purchaser has the power and authority
to execute and deliver this Agreement and to carry out its terms and the
execution, delivery and performance of this Agreement has been duly authorized
by the Purchaser by all necessary action.
(d) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under, the certificate of
formation or limited liability company agreement of the Purchaser, or any
indenture, agreement or other instrument to which the Purchaser is a party or by
which it is bound; nor result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than the Sale and Servicing Agreement) nor violate any
law or, to the best of the Purchaser's knowledge, any order, rule or regulation
applicable to the Purchaser of any court or of any Federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Purchaser or its properties.
(e) No Proceedings. There are no proceedings or investigations
pending or, to the Purchaser's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Purchaser or its properties: (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Purchaser of its obligations under, or the validity or
enforceability of, this Agreement.
SECTION 3.02. Representations and Warranties of the Seller. (a) The
Seller hereby represents and warrants to the Purchaser as of the date hereof and
as of the Closing Date:
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<PAGE> 5
(i) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Utah, with the power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant
times, and has, the power, authority and legal right to acquire and own
the Receivables.
(ii) Due Qualification. The Seller is duly qualified to do business
as a foreign corporation and is in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(iii) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the property sold and
assigned to the Purchaser hereby and has duly authorized such sale and
assignment to the Purchaser by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Seller by all necessary corporate action.
(iv) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof shall not
conflict with, result in any breach of any of the terms and provisions of,
nor constitute (with or without notice or lapse of time) or both a default
under, the articles of incorporation or by-laws of the Seller, or any
indenture, agreement or other instrument to which the Seller is a party or
by which it is bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than this Agreement); nor violate any
law or, to the best of the Seller's knowledge, any order, rule or
regulation applicable to the Seller of any court or of any Federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(v) No Proceedings. To the Seller's best knowledge, there are no
proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties: (A)
asserting the invalidity of this Agreement, (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, or
(C) seeking any determination or ruling that might materially and
adversely affect the performance by the Seller of its obligations under,
or the validity or enforceability of, this Agreement.
(b) The Seller represents to the Purchaser that, as of the date set
forth in Section 3.1 of the Sale and Servicing Agreement, each of the
representations set forth in said section is hereby made to the Purchaser and
the Security Insurer as if the same were fully set forth herein.
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<PAGE> 6
ARTICLE IV
Conditions
SECTION 4.01. Conditions to Obligation of the Purchaser. The
obligation of the Purchaser to purchase the Receivables is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Seller hereunder shall be true and correct on the Closing Date
with the same effect as if then made, and the Seller shall have performed all
obligations to be performed by it hereunder on or prior to the Closing Date.
(b) Computer Files Marked. The Seller shall, at its own expense, on
or prior to the Closing Date, indicate in its computer files that receivables
created in connection with the Receivables have been sold to the Purchaser
pursuant to this Agreement, and deliver to the Purchaser the Schedule of
Receivables certified by the Chairman, the President, a Vice President or the
Treasurer to be true, correct and complete.
(c) Documents To Be Delivered by the Seller at the Closing.
(i) The Assignment. At the Closing, the Seller will execute and
deliver an Assignment. The Assignment shall be substantially in the form
of Exhibit A hereto.
(ii) Evidence of UCC Filing. On or prior to the Closing Date, the
Seller shall record and file, at its own expense, a UCC-l financing
statement in each jurisdiction required by applicable law, executed by the
Seller, as seller or debtor, and naming the Purchaser, as purchaser or
secured party, describing the Receivables and the other property included
in the Trust Property as collateral, meeting the requirements of the laws
of each such jurisdiction and in such manner as is necessary to perfect
the sale, transfer, assignment and conveyance of such Receivables to the
Purchaser. The Seller shall deliver a file-stamped copy, or other evidence
satisfactory to the Purchaser of such filing, to the Purchaser on or prior
to the Closing Date.
(iii) Other Documents. Such other documents as the Purchaser may
reasonably request.
(d) Other Transactions. The transactions contemplated by the Sale
and Servicing Agreement to be consummated on the Closing Date, shall be
consummated on such date.
SECTION 4.02. Conditions to Obligation of the Seller. The obligation
of the Seller to sell the Receivables to the Purchaser is subject to the
satisfaction of the following conditions:
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<PAGE> 7
(a) Representations and Warranties True. The representations and
warranties of the Purchaser hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Seller shall have performed
all obligations to be performed by it hereunder on or prior to the Closing Date.
(b) Receivables Purchase Price. On the Closing Date, the Purchaser
shall have delivered to the Seller the purchase price specified in Section 2.01
of this Agreement.
ARTICLE V
Covenants of the Seller
The Seller agrees with the Purchaser as follows; provided, however,
that to the extent that any provision of this Article conflicts with any
provision of the Sale and Servicing Agreement, the Sale and Servicing Agreement
shall govern:
SECTION 5.01. Protection of Right, Title and Interest. (a) Filings.
The Seller shall cause all financing statements and continuation statements and
any other necessary documents covering the right, title and interest of the
Purchaser in and to the Receivables and the other property included in the Trust
Property to be promptly 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 Purchaser hereunder
to the Receivables and the other property included in the Trust Property. The
Seller shall deliver to the Purchaser file stamped copies of, or filing receipts
for, any document recorded, registered or filed as provided above, as soon as
available following such recordation, registration or filing. The Purchaser
shall cooperate fully with the Seller in connection with the obligations set
forth above and will execute any and all documents reasonably required to
fulfill the intent of this paragraph.
(b) Name Change. Within 15 days after the Seller makes any change in
its name, identity or corporate structure which would make any financing
statement or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the applicable provisions of the UCC or any title
statute, the Seller shall give the Purchaser notice of any such change, and no
later than 5 days after the effective date thereof, shall file such financing
statements or amendments as may be necessary to continue the perfection of the
Purchaser's interest in the property included in the Owner Trust Estate.
SECTION 5.02. Other Liens or Interests. Except for the conveyances
hereunder and pursuant to the Sale and Servicing Agreement, the Seller will not
sell, pledge, assign or transfer to any Person, or grant, create, incur, assume
or suffer to exist any Lien on, any interest in, to and under the Receivables,
and the Seller shall defend the right, title and interest of the Purchaser in,
to and under the Receivables against all claims of third parties claiming
through or under the Seller; provided, however, that the Seller's obligations
under this Section shall terminate upon the termination of the Trust pursuant to
the Sale and Servicing Agreement.
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<PAGE> 8
SECTION 5.03. Chief Executive Office. During the term of the
Receivables, the Seller will maintain its chief executive office in Utah.
SECTION 5.04. Costs and Expenses. The Seller agrees to pay all
reasonable costs and disbursements in connection with the perfection, as against
all third parties, of the Purchaser's right, title and interest in and to the
Receivables.
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01. Obligations of Seller. The obligations of the Seller
under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable.
SECTION 6.02. Repurchase Events. The Seller hereby covenants and
agrees with the Purchaser for the benefit of the Purchaser, the Trust, the
Trustee, the Noteholders, the Certificateholders and the Security Insurer that
the occurrence of a breach of any of the Seller's representations and warranties
contained in Section 3.02(b) shall constitute events obligating the Seller to
repurchase Receivables hereunder ("Repurchase Events"), at the Purchase Amount
from the Purchaser or from the Trustee. The repurchase obligation of the Seller
shall constitute the sole remedy to the Purchaser, the Trust, the Trustee, the
Noteholders or the Certificateholders against the Seller with respect to any
Repurchase Event.
SECTION 6.03. Purchaser Assignment of Repurchased Receivables. With
respect to all Receivables repurchased by the Seller pursuant to this Agreement,
the Purchaser shall assign, without recourse, representation or warranty, to the
Seller all the Purchaser's right, title and interest in and to such Receivables,
and all security and documents relating thereto.
SECTION 6.04. [Reserved]
SECTION 6.05. Trust. The Seller acknowledges and agrees that (a) the
Purchaser will, pursuant to the Sale and Servicing Agreement, sell the
Receivables to the Trust and assign its rights under this Agreement to the
Trust, and (b) the representations and warranties contained in this Agreement
and the rights of the Purchaser under this Agreement, including those under
Section 6.02, are intended to benefit the Trust, the Noteholders, the
Certificateholders and the Security Insurer. The Seller hereby consents to all
such sales and assignments.
SECTION 6.06. Amendment. This Agreement may be amended from time to
time, with prior written notice to the Rating Agencies, by a written amendment
duly executed and delivered by the Seller and the Purchaser, without the consent
of the Noteholders, but with the consent of the Security Insurer, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any
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<PAGE> 9
manner the rights of the Noteholders; provided that such amendment will not, in
the Opinion of Counsel satisfactory to the Trustee, materially and adversely
affect the interest of any Noteholder. This Agreement may also be amended by the
Seller and the Purchaser, with prior written notice to the Rating Agencies, with
the consent of the holders of Notes evidencing at least a majority of the
outstanding principal amount of the Notes for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders and
with the consent of the Security Insurer; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on Receivables or distributions
that are required to be made for the benefit of the Noteholders or (ii) reduce
the aforesaid percentage of the Notes which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes.
SECTION 6.07. Accountants' Letters. (a) PricewaterhouseCoopers LLP
will review the characteristics of the Receivables described in the Schedule of
Receivables set forth as Schedule A hereto and will compare those
characteristics to the information with respect to the Receivables contained in
the Prospectus Supplement dated May 20, 1999; (b) the Seller will cooperate with
the Purchaser and PricewaterhouseCoopers LLP in making available all information
and taking all steps reasonably necessary to permit such accountants to complete
the review set forth in clause (a) above and to deliver the letters required of
them under the Underwriting Agreement; (c) PricewaterhouseCoopers LLP will
deliver to the Purchaser a letter, dated the date of the Prospectus, in the form
previously agreed to by the Seller and the Purchaser, with respect to the
financial and statistical information contained in the Prospectus Supplement
dated May 20, 1999 and with respect to such other information as may be agreed
in the form of the letter.
SECTION 6.08. Waivers. No failure or delay on the part of the
Purchaser in exercising any power, right or remedy under this Agreement or any
Assignment shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or remedy.
SECTION 6.09. Notices. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Seller, to 47 West 200 South, Suite 500, Salt
lake City, UT 84101, Attention: Jennifer J. Bolt, with a copy to Franklin
Resources, Inc., 777 Mariners Island Blvd., San Mateo, CA 94404, (b) in the case
of the Purchaser, to 47 West 200 South, Suite 500, Salt lake City, UT 84101,
Attention: Jennifer J. Bolt, with a copy to Franklin Resources, Inc., 777
Mariners Island Blvd., San Mateo, CA 94404, (c) in the case of Moody's, to
Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street,
New York, New York 10007; (d) in the case of Standard & Poor's, to Standard &
Poor's Corporation, 26 Broadway (20th Floor), New York, New York 10004,
Attention of Asset Backed Surveillance Department; (e) in the case of the
Security Insurer, to MBIA Insurance Corporation, 113 King Street, Armonk, New
York 10504, Attn:
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<PAGE> 10
Insured Portfolio Management (IPM-SF), or as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 6.10. Costs and Expenses. The Seller will pay all expenses
incident to the performance of its obligations under this Agreement and the
Seller agrees to pay all reasonable out-of-pocket costs and expenses of the
Purchaser, excluding fees and expenses of counsel, in connection with the
perfection as against third parties of the Purchaser's right, title and interest
in and to the Receivables and the enforcement of any obligation of the Seller
hereunder.
SECTION 6.11. Representations of the Seller and the Purchaser. The
respective agreements, representations, warranties and other statements by the
Seller and the Purchaser set forth in or made pursuant to this Agreement shall
remain in full force and effect and will survive the closing under Section 2.03.
SECTION 6.12. Confidential Information. The Purchaser agrees that it
will neither use nor disclose to any Person the names and addresses of the
Obligors under the Receivables, except in connection with the enforcement of the
Purchaser's rights hereunder, under the Sale and Servicing Agreement or as
required by any of the foregoing or by law.
SECTION 6.13. Headings and Cross-References. The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References in this
Agreement to Section names or numbers are to such Sections of this Agreement.
SECTION 6.14. GOVERNING LAW. THIS AGREEMENT AND THE ASSIGNMENTS
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 OR THEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 6.15. 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 6.16. Third Party Beneficiary. The Security Insurer is an
express third party beneficiary of this Agreement.
SECTION 6.17. No Proceedings. So long as this Agreement is in
effect, and for one year and one day following its termination, the Seller
agrees that it will not file any involuntary petition or otherwise institute any
bankruptcy, reorganization arrangement, insolvency or liquidation proceeding or
other proceedings under any federal or state bankruptcy law or similar law
against the Purchaser.
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers duly authorized as of the date and year
first above written.
FRANKLIN RECEIVABLES LLC,
as Purchaser, by Franklin Capital
Corporation,
its managing member
By: /s/ Jennifer J. Bolt
__________________________
Name: Jennifer J. Bolt
Title: President
FRANKLIN CAPITAL CORPORATION
as Seller
By: /s/ Jennifer J. Bolt
__________________________
Name: Jennifer J. Bolt
Title: President
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<PAGE> 12
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement (the
"Purchase Agreement") dated as of May 1, 1999, between the undersigned and
Franklin Receivables LLC (the "Purchaser"), the undersigned does hereby sell,
assign, transfer and otherwise convey unto the Purchaser, without recourse, all
right, title and interest of the undersigned in and to (i) the Receivables, and
all moneys received thereon on and after the Cutoff Date, and, with respect to
Precomputed Receivables, certain monies representing interest and principal
received thereunder on or prior to the Cutoff Date that are due after the Cutoff
Date; (ii) the security interest of the Seller in the Financed Vehicles granted
by the Obligors pursuant thereto and any other interest of the Seller in such
Financed Vehicles; (iii) the interest of the Seller in any proceeds from claims
on any physical damage, credit life or disability insurance policies relating to
the Financed Vehicles or Obligors; (iv) the interest of the Seller in any
proceeds with respect to the Receivables from recourse to Dealers thereon with
respect to which the Servicer has determined in accordance with its customary
procedures that eventual payment in full is unlikely; (v) all rights under any
Service Contract on the related Financed Vehicles; (vi) the related Receivables
Files; and (vii) the proceeds of any and all of the foregoing. The foregoing
sale does not constitute and is not intended to result in any assumption by the
Purchaser of any obligation of the undersigned to the Obligors, insurers or any
other person in connection with the Receivables, Receivable Files, any insurance
policies or any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be
A-1
<PAGE> 13
governed by the Purchase Agreement. The undersigned acknowledges and agrees that
the Purchaser may further assign the items enumerated in clauses (i) through
(vii) above to Franklin Auto Trust 1999-1 which may in turn assign its interests
in the items in (i) through (vii) to The Chase Manhattan Bank, as trustee (the
"Trustee") for the benefit of the Noteholders and the Security Insurer and that
the Trustee will have the right to enforce any of the rights of the Purchaser
under the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
A-2
<PAGE> 14
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of May 1, 1999.
FRANKLIN CAPITAL CORPORATION
By: _____________________________
Name:
Title:
A-3
<PAGE> 15
SCHEDULE A
Schedule of Receivables
[Delivered to the Trustee at Closing]
<PAGE> 16
SCHEDULE 1
Location of Receivable Files
-----------------
-----------------
<PAGE> 1
Exhibit 10.2
ASSIGNMENT
For value received, in accordance with the Purchase Agreement (the
"Purchase Agreement") dated as of May 1, 1999, between the undersigned and
Franklin Receivables LLC (the "Purchaser"), the undersigned does hereby sell,
assign, transfer and otherwise convey unto the Purchaser, without recourse, all
right, title and interest of the undersigned in and to (i) the Receivables, and
all moneys received thereon on and after the Cutoff Date, and, with respect to
Precomputed Receivables, certain monies representing interest and principal
received thereunder on or prior to the Cutoff Date that are due after the Cutoff
Date; (ii) the security interest of the Seller in the Financed Vehicles granted
by the Obligors pursuant thereto and any other interest of the Seller in such
Financed Vehicles; (iii) the interest of the Seller in any proceeds from claims
on any physical damage, credit life or disability insurance policies relating to
the Financed Vehicles or Obligors; (iv) the interest of the Seller in any
proceeds with respect to the Receivables from recourse to Dealers thereon with
respect to which the Servicer has determined in accordance with its customary
procedures that eventual payment in full is unlikely; (v) all rights under any
Service Contract on the related Financed Vehicles; (vi) the related Receivables
Files; and (vii) the proceeds of any and all of the foregoing. The foregoing
sale does not constitute and is not intended to result in any assumption by the
Purchaser of any obligation of the undersigned to the Obligors, insurers or any
other person in connection with the Receivables, Receivable Files, any insurance
policies or any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement. The
undersigned acknowledges and agrees that the Purchaser may further assign the
items enumerated in clauses (i) through (vii) above to Franklin
<PAGE> 2
Auto Trust 1999-1 which may in turn assign its interests in the items in (i)
through (vii) to The Chase Manhattan Bank, as trustee (the "Trustee") for the
benefit of the Noteholders and the Security Insurer and that the Trustee will
have the right to enforce any of the rights of the Purchaser under the Purchase
Agreement.
Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Purchase Agreement.
<PAGE> 3
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of May 1, 1999.
FRANKLIN CAPITAL CORPORATION
By: /s/ Jennifer J. Bolt
_____________________________
Name: Jennifer J. Bolt
Title: President
<PAGE> 1
Exhibit 10.3
Execution Copy
FRANKLIN AUTO TRUST 1999-1
$66,500,000 5.52% CLASS A-1 ASSET BACKED NOTES
$40,023,000 6.05% CLASS A-2 ASSET BACKED NOTES
Franklin Receivables LLC
(SELLER)
UNDERWRITING AGREEMENT
May 20, 1999
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Ladies and Gentlemen:
1. Introductory. FCC Receivables Corp. and Franklin Receivables LLC
(together, the "Registrants") have previously filed a registration statement
with the Securities and Exchange Commission relating to the issuance and sale
from time to time of up to $500,000,000 of asset backed notes and/or asset
backed certificates. Franklin Receivables LLC (the "Seller") proposes to cause
FRANKLIN AUTO TRUST 1999-1 (the "Trust") to issue and sell to Goldman, Sachs &
Co. (the "Underwriter") $66,500,000 principal amount of its 5.52% Class A-1
Asset Backed Notes (the "Class A-1 Notes") and $40,023,000 principal amount of
its 6.05% Class A-2 Asset Backed Notes (the "Class A-2 Notes" and together with
the Class A-1 Notes, the "Notes"). The Trust will also issue Certificates (the
"Certificates" and together with the Notes, the "Securities") which will be
retained by the Seller. The assets of the Trust will include, among other
things, a pool of prime, non-prime and sub-prime motor vehicle retail
installment sale contracts (the "Receivables") secured by new and used
automobiles and light trucks financed thereby (the "Financed Vehicles"), and
certain monies received thereunder on or after May 1, 1999 (the "Cutoff Date"),
and the other property and the proceeds thereof to be conveyed to the Trust
pursuant to the Sale and Servicing Agreement to be dated as of May 1, 1999 (the
"Sale and Servicing Agreement") among Franklin Auto Trust 1999-1 (the "Trust"),
the Seller, Franklin Capital Corporation ("Franklin Capital"), as servicer (the
"Servicer") and Franklin Resources, Inc. ("Franklin Resources"). Pursuant to the
Sale and Servicing Agreement, the Seller will sell the Receivables to the Trust
and the Servicer will service the Receivables on behalf of the Trust. In
addition, pursuant to the Sale and Servicing Agreement, the Servicer will agree
to perform certain administrative tasks on behalf of the Trust imposed on the
Trust under the Indenture. The Notes will be issued pursuant to the Indenture to
be dated as of May 1, 1999 (as amended and supplemented from time to time, the
"Indenture"), between the Trust and The
<PAGE> 2
Chase Manhattan Bank (the "Trustee"). The Seller will form the Trust pursuant to
a Trust Agreement (the "Trust Agreement") to be dated as of May 1, 1999 between
the Seller and Bankers Trust (Delaware), as owner trustee (the "Owner Trustee").
The Certificates, each representing a fractional undivided interest in the
Trust, will be issued pursuant to the Trust Agreement.
The Receivables were originated or acquired by Franklin Capital.
Franklin Capital will sell the Receivables owned by it to the Seller pursuant to
the terms of the Purchase Agreement (the "Loan Purchase Agreement") dated as of
May 1, 1999 between the Seller and Franklin Capital.
Capitalized terms used and not otherwise defined herein shall have
the meanings given them in the preliminary prospectus or, if not defined
therein, as defined in the Sale and Servicing Agreement. As used herein, the
term "Basic Documents" refers to the Sale and Servicing Agreement, Indenture,
Trust Agreement, Spread Account Agreement, Loan Purchase Agreement, the letter
agreement in the form of Exhibit A hereto (the "Letter Agreement"), Insurance
and Indemnity Agreement, Indemnification Agreement and Note Depository
Agreement.
2. Representations and Warranties of the Registrants and Franklin
Capital. Each of the Seller and Franklin Capital jointly and severally and
Franklin Receivables LLC with respect to the representations and warranties
appearing in clauses (a), (b), (d), (e) and (f) represents and warrants to and
agrees with the Underwriter that:
(a) A registration statement on Form S-3 (No. 333-56869), including
a prospectus, relating to the Notes has been filed with the Securities and
Exchange Commission (the "Commission") and has become effective. Such
registration statement, as amended as of the date of the Agreement is
hereinafter referred to as the "Registration Statement," and the prospectus
included in such Registration Statement, as supplemented to reflect the terms of
the Notes as first filed with the Commission after the date of this Agreement
pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under the
Securities Act of 1933, as amended (the "Act"), including all material
incorporated by reference therein, is hereinafter referred to as the
"Prospectus;" a "preliminary prospectus" means any form of prospectus, including
any prospectus supplement, relating to the Notes used prior to date of this
Agreement that is subject to completion; the "Base Prospectus" means the base
prospectus dated May 14, 1999 included in the Prospectus; the "Prospectus
Supplement" means the prospectus supplement dated the date hereof included in
the Prospectus .
(b) On the effective date of the registration statement relating to
the Notes, such registration statement conformed in all respects to the
requirements of the Act and the rules and regulations of the Commission
promulgated under the Act (the "Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and on the date of this Agreement the Registration Statement and the preliminary
prospectus conform, and at the time of the filing of the Prospectus in
accordance with Rule 424(b), the Registration Statement
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<PAGE> 3
and the Prospectus will conform in all respects to the requirements of the Act
and the Rules and Regulations, and neither of such documents includes or will
include any untrue statement of a material fact or omits or will omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The preceding sentence does not apply to
statements in or omissions from such documents based upon (i) written
information furnished to the Seller by the Underwriter specifically for use
therein, it being understood that the only such information consists of the
Underwriter's Information (as defined in Section 7(f)) or (ii) the information
set forth in the Prospectus under the caption "The Insurer."
(c) The Notes are "asset backed securities" within the meaning of,
and satisfy the requirements for use of, Form S-3 under the Act.
(d) The documents incorporated by reference in the Registration
Statement and Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder.
(e) Each of the Registrants, Franklin Capital and Franklin Resources
is a corporation or limited liability company, as applicable, duly organized,
validly existing and in good standing under the laws of its respective state of
incorporation or formation, as applicable, is duly qualified to transact
business as a foreign corporation or limited liability company, as applicable,
in each jurisdiction in which it is required to be so qualified and has all
necessary licenses, permits and consents to conduct its business as presently
conducted and as described in the Prospectus and to perform its obligations
under the Basic Documents.
(f) This Agreement and each of the Basic Documents to which it is a
party has been duly authorized, executed and delivered by the Registrants,
Franklin Capital and Franklin Resources, constitutes a valid and binding
agreement of each of the Registrants, Franklin Capital and Franklin Resources,
enforceable against the Registrants, Franklin Capital and Franklin Resources in
accordance with its terms, subject as to the enforcement of remedies (x) to
applicable bankruptcy, insolvency, reorganization, moratorium, and other similar
laws affecting creditors' rights generally, (y) to general principles of equity
(regardless of and whether the enforcement of such remedies is considered in a
proceeding in equity or at law) and (z) with respect to rights of indemnity
under this Agreement, the Letter Agreement and the Indemnification Agreement, to
limitations of public policy under applicable securities laws.
(g) None of the Seller, Franklin Capital or Franklin Resources is in
breach or violation of any credit or security agreement or other agreement or
instrument to which it is a party or by which it or its properties may be bound,
or in violation of any applicable law, statute, regulation or ordinance or any
governmental body having jurisdiction over it, which breach or violation would
have a material and adverse effect on its ability to perform its obligations
under this Agreement or any of the Basic Documents, in each case, to which it is
a party.
(h) Other than as contemplated by this Agreement or as disclosed in
the
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<PAGE> 4
Prospectus, there is no broker, finder or other party that is entitled to
receive from the Seller, Franklin Capital or any affiliate thereof or the
Underwriter, any brokerage or finder's fee or other fee or commission as a
result of any of the transactions contemplated by this Agreement.
(i) Neither Franklin Capital nor the Seller has entered into, nor
will it enter into, any contractual arrangement with respect to the distribution
of the Notes, except for this Agreement.
(j) The Trust is not an "investment company" and is not required to
be registered as an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(k) As of the Closing Date (as defined below), the representations
and warranties of the Seller, Franklin Capital and Franklin Resources, in each
of its capacities under each of the Basic Documents, to which it is a party will
be true and correct in all material respects and each such representation and
warranty is so incorporated herein by this reference.
(l) The Seller has filed the preliminary prospectus supplement
relating to the Notes pursuant to and in accordance with Rule 424(b).
(m) On or before the Closing Date, the Basic Documents will have
been duly authorized, executed and delivered by each of the parties thereto.
(n) The Certificates, when duly and validly executed by the Owner
Trustee, authenticated and delivered in accordance with the Trust Agreement, and
delivered to and paid for pursuant hereto will be validly issued and outstanding
and entitled to the benefits of the Trust Agreement.
(o) The Trust's assignment of the Collateral to the Trustee pursuant
to the Indenture will vest in the Trustee, for the benefit of the Noteholders, a
first priority perfected security interest therein, subject to no other
outstanding Lien.
(p) The Notes, when duly and validly executed by the Trustee,
authenticated and delivered in accordance with the Indenture, and delivered and
paid for pursuant hereto will be enforceable in accordance with their terms,
subject as to enforceability to the effects of applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and similar laws
now or hereafter in effect relating to creditors' rights generally and subject
to general principles of equity (whether in a proceeding at law or in equity).
(q) Neither the execution, delivery or performance of any of the
Basic Documents by the Seller, or Franklin Capital, nor the issuance, sale and
delivery of the Notes or Certificates, nor the fulfillment of the terms of the
Notes or Certificates, will conflict with, or result in a breach, violation or
acceleration of, or constitute a default under, any term or provision of the
organizational documents of the Seller, or Franklin Capital, any material
indenture or other material agreement or instrument to which the Seller, or
Franklin Capital is a
-4-
<PAGE> 5
party or by which either of them or their properties is bound or result in a
violation of or contravene the terms of any statute, order or regulation
applicable to the Seller, or Franklin Capital of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction over
the Seller, or Franklin Capital, or will result in the creation of any lien upon
any material property or assets of the Seller, or Franklin Capital (other than
pursuant to the Basic Documents).
(r) There are no legal or governmental proceedings pending to which
the Seller, Franklin Capital or Franklin Resources is a party or of which any of
its properties is the subject, which if determined adversely to the Seller,
Franklin Capital or Franklin Resources would individually or in the aggregate
have a material adverse effect on the financial position, shareholders' equity
or results of operations of any of them; and to the best of the Seller's,
Franklin Capital's or Franklin Resources' knowledge, no such proceedings are
threatened or contemplated by governmental authorities or others.
(s) No consent, license, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
issuance of the Notes and Certificates or sale of the Notes or the consummation
of the other transactions contemplated by this Agreement or the Basic Documents,
except such as have been duly made or obtained.
(t) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any material
adverse change, or any development which could reasonably be expected to result
in a material adverse change, in or affecting the financial position,
shareholders' equity or results of operations of the Seller, Franklin Capital or
Franklin Resources, or the Seller's, Franklin Capital's or Franklin Resources'
ability to perform its obligations under this Agreement or any of the Basic
Documents to which it is a party.
(u) Any taxes, fees and other governmental charges due on or prior
to the Closing Date (including, without limitation, sales taxes) in connection
with the execution, delivery and issuance of this Agreement, the Basic Documents
and the Securities have been or will have been paid at or prior to the Closing
Date.
(v) The Receivables transferred by Franklin Capital to the Seller
are chattel paper as defined in the Uniform Commercial Code as in effect in the
State of Utah. The Receivables transferred by the Seller to the Trust are
chattel paper as defined in the Uniform Commercial Code as in effect in the
State of Utah.
(w) Under generally accepted accounting principles, (i) Franklin
Capital will report its transfer of the Receivables transferred by it to the
Seller pursuant to the Loan Purchase Agreement and (ii) the Seller will report
its transfer of the Receivables to the Trustee pursuant to the Sale and
Servicing Agreement as a sale of the Receivables for financial accounting
purposes.
(x) Immediately prior to the transfer thereof to the Seller pursuant
to the Loan Purchase Agreement, Franklin Capital is the sole owner of all right,
title and interest in, and has
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<PAGE> 6
good and marketable title to the Receivables and the other property to be
transferred to the Seller. Franklin Capital, pursuant to the Loan Purchase
Agreement, is transferring to the Seller ownership of the Receivables, the
security interest in the Financed Vehicles securing the Receivables and the
proceeds of each of the foregoing, and, immediately prior to the transfer
thereof to the Trust, the Seller will be the sole owner of all right, title and
interest in, and will have good and marketable title to, the Receivables and the
other property to be transferred by it to the Trust. The assignment of the
Receivables, all documents and instruments relating thereto and all proceeds
thereof to the Trust, pursuant to the Loan Purchase Agreement and the Sale and
Servicing Agreement, vests in the Trust all interests which are purported to be
conveyed thereby, free and clear of any liens, security interests or
encumbrances.
(y) Immediately prior to the transfer of the Receivables to the
Seller, Franklin Capital's interest in the Receivables and the proceeds thereof
shall be perfected upon the filing of UCC-1 financing statements (the "Financing
Statements") in the offices specified in Schedule I and there shall be no
unreleased statements affecting the Receivables filed in such offices other than
the Financing Statements. If a court concludes that the transfer of the
Receivables from Franklin Capital to the Seller is a sale, the interest of the
Seller in the Receivables and the proceeds thereof will be perfected upon the
filing of the Financing Statements in the office of the Secretary of State of
the State of Utah. If a court concludes that such transfer is not a sale, the
Loan Purchase Agreement and the transactions contemplated thereby constitute a
grant by Franklin Capital to the Seller of a valid security interest in the
Receivables and the proceeds thereof, which security interest will be perfected
upon the filing of the Financing Statements in the office of the Secretary of
State of the State of Utah. No filing or other action, other than the filing of
the Financing Statements in the office of the Secretary of State of the State of
Utah referred to above, is necessary to perfect and maintain the interest or the
security interest of the Seller in the Receivables and the proceeds thereof
against third parties.
(z) Immediately prior to the transfer of the Receivables to the
Trust, the Seller's interest in the Receivables and the proceeds thereof shall
be perfected upon the filing of the Financing Statements and there shall be no
unreleased statements affecting the Receivables filed in such offices other than
the Financing Statements. If a court concludes that the transfer of the
Receivables from the Seller to the Trust is a sale, the interest of the Trust in
the Receivables and the proceeds thereof will be perfected upon the filing of
the Financing Statements in the office of the Secretary of State of the State of
Utah. If a court concludes that such transfer is not a sale, the Sale and
Servicing Agreement and the transactions contemplated thereby constitute a grant
by the Seller to the Trust of a valid security interest in the Receivables and
the proceeds thereof, which security interest will be perfected upon the filing
of the Financing Statements in the office of the Secretary of State of the State
of Utah. No filing or other action, other than the filing of the Financing
Statements in the office of the Secretary of State of the State of Utah referred
to above and any related continuation statements, is necessary to perfect and
maintain the interest or the security interest of the Trust in the Receivables
and the proceeds thereof against third parties.
(aa) The Trust Agreement need not be qualified under the Trust
Indenture Act of 1939, as amended and the Trust is not required to register
under the Investment Company Act
-6-
<PAGE> 7
of 1940, as amended.
(bb) The Indenture has been qualified under the Trust Indenture Act
of 1939, as amended.
(cc) As of the Closing Date, each of the respective representations
and warranties of the Seller and Franklin Capital set forth in the Basic
Documents will be true and correct, and the Underwriter may rely on such
representations and warranties as if they were set forth herein in full.
3. Purchase, Sale and Delivery of the Notes. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Seller agrees to cause the Trust to
sell to the Underwriter, and the Underwriter agrees, to purchase from the Trust,
the principal amount of each class of Notes set forth on Schedule II hereto at a
purchase price equal to "Price $" as specified on Schedule II hereto, plus
accrued interest from May 15, 1999.
The Seller will deliver the Notes to the Underwriter, against
payment of the purchase price to or upon the order of the Seller by wire
transfer or check in Federal (same day) Funds, at the office of Morrison &
Foerster LLP, 1290 Avenue of the Americas, New York, NY 10104, at 10:00 a.m.,
New York time on May 27, 1999, or at such other time not later than seven full
business days thereafter as the Underwriter and the Seller determine, such time
being herein referred to as the "Closing Date." The Notes to be so delivered
will be initially represented by one or more Notes registered in the name of
Cede & Co., the nominee of The Depository Trust Company ("DTC"). The interests
of beneficial owners of the Notes will be represented by book entries on the
records of DTC and participating members thereof. Definitive Notes will be
available only under the limited circumstances specified in the Basic Documents.
4. Offering by Underwriter. It is understood that, after the
Registration Statement becomes effective, the Underwriter proposes to offer the
Notes for sale to the public (which may include selected dealers), on the terms
set forth in the Prospectus.
5. Covenants of the Seller and Franklin Capital. Each of the Seller
and Franklin Capital, jointly and severally, covenants and agrees with the
Underwriter that:
(a) The Seller will file the Prospectus, properly completed, with
the Commission pursuant to and in accordance with subparagraph (2) (or, if
applicable and if consented to by the Underwriter, subparagraph (5)) of Rule
424(b) no later than the second business day following the earlier of the date
of determination of the offering price or the date it is first used. The Seller
and Franklin Capital will advise the Underwriter promptly of any such filing
pursuant to Rule 424(b).
(b) The Seller and Franklin Capital will advise the Underwriter
promptly of any proposal to amend or supplement the Registration Statement or
the Prospectus and will not
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<PAGE> 8
effect such amendment or supplementation without the consent of the Underwriter,
which consent shall not be unreasonably withheld or delayed; and the Seller and
Franklin Capital will advise the Underwriter promptly of any amendment or
supplementation of the Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of the
Registration Statement and will use its best efforts to prevent the issuance of
any such stop order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Notes is
required to be delivered by an Underwriter or dealer either (i) any event occurs
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made not misleading, or (ii) for any other
reason it shall be necessary to amend or supplement the Prospectus to comply
with the Act, the Seller and Franklin Capital promptly will notify the
Underwriter of such event and promptly will prepare, at their own expense, an
amendment or supplement which will correct such statement or omission. Neither
the Underwriter's consent to, nor the Underwriter's distribution of any
amendment or supplement to the Prospectus shall constitute a waiver of any of
the conditions set forth in Section 6 hereof.
(d) The Seller and Franklin Capital will furnish to the Underwriter
copies of any preliminary prospectus, the Prospectus, the Registration Statement
and all amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Underwriter reasonably requests.
(e) The Seller and Franklin Capital will take all actions which are
reasonably necessary to arrange for the qualification of the Notes for offering
and sale under the laws of such jurisdictions as the Underwriter designates and
will continue such qualifications in effect so long as required under such laws
for the distribution of the Notes; provided, however, that in no event shall the
Seller be obligated to qualify as a foreign corporation or to execute a general
or unlimited consent to service of process in any such jurisdiction.
(f) The Seller and Franklin Capital shall furnish or make available
to the Underwriter or its counsel such additional documents and information
regarding the Seller and Franklin Capital and their respective affairs as the
Underwriter may from time to time reasonably request, including any and all
documentation reasonably requested in connection with its due diligence efforts
regarding information in the Registration Statement and the Prospectus and in
order to evidence the accuracy or completeness of any of the conditions
contained in this Underwriting Agreement; and all actions taken by the Seller to
authorize the sale of the Notes shall be reasonably satisfactory in form and
substance to the Underwriter.
(g) The Seller and Franklin Capital shall, at all times upon request
of the Underwriter or its advisors, or both, from the date hereof through the
Closing Date, (i) make available to the Underwriter or its advisors, or both,
prior to acceptance of its purchase, such information (in addition to that
contained in the Registration Statement and the Prospectus) concerning the
offering, the Seller and any other relevant matters as they possess or can
acquire
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<PAGE> 9
without unreasonable effort or expense and (ii) provide the Underwriter or its
advisors, or both, prior to acceptance of its subscription, the opportunity to
ask questions of, and receive answers from, the Seller and Franklin Capital with
respect to such matters.
(h) The Seller and Franklin Capital will cause the Trust to make
generally available to Noteholders, as soon as practicable, but no later than
sixteen months after the date hereof, an earnings statement of the Trust
covering a period of at least twelve consecutive months beginning after the
later of (i) the effective date of the registration statement relating to the
Notes and (ii) the effective date of the most recent post-effective amendment to
the Registration Statement to become effective prior to the date of this
Agreement and, in each case, satisfying the provisions of Section 11(a) of the
Act (including Rule 158 promulgated thereunder).
(i) Until the retirement of the Notes, the Seller will deliver to
the Underwriter the annual statements of compliance and the annual independent
certified public accountants' reports furnished to the Trustee pursuant to the
Basic Documents, as soon as such statements and reports are furnished to the
Trustee.
(j) So long as any of the Notes are outstanding, the Seller will
furnish to the Underwriter (i) as soon as practicable after the end of the
fiscal year all documents required to be distributed to Noteholders or filed
with the Commission on behalf of the Trust pursuant to the Exchange Act, or any
order of the Commission thereunder and (ii) from time to time, any other
information concerning the Seller or Franklin Capital as the Underwriter may
reasonably request only insofar as such information reasonably relates to the
Registration Statement or the Prospectus or the transactions contemplated by the
Basic Documents.
(k) On or before the Closing Date, the Seller and Franklin Capital
shall cause the computer records of the Seller and Franklin Capital relating to
the Receivables to show the absolute ownership by the Owner Trustee on behalf of
the Trust of the Receivables, and from and after the Closing Date neither the
Seller nor Franklin Capital shall take any action inconsistent with the
ownership by the Owner Trustee on behalf of the Trust of such Receivables, other
than as permitted by the Sale and Servicing Agreement.
(l) To the extent, if any, that any of the ratings provided with
respect to the Notes by the rating agency or agencies that initially rate any of
the Notes are conditional upon the furnishing of documents or the taking of any
other actions by the Seller or Franklin Capital on or prior to the Closing Date,
one of the Seller or Franklin Capital shall furnish such documents and take any
such other actions. A copy of any such document shall be provided to the
Underwriter at the time it is delivered to the rating agencies.
(m) Franklin Capital will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the printing
and filing of the documents (including the Registration Statement and the
Prospectus), (ii) the preparation, issuance and delivery of the Notes to the
Underwriter, (iii) the fees and disbursements of Franklin Capital's, the
Seller's and Franklin Resources' counsel (including without limitation, local
counsel in the
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<PAGE> 10
State of Utah) and accountants, (iv) the qualification of the Notes under state
securities laws, including filing fees and the fees and disbursements of counsel
for the Underwriter in connection therewith and in connection with the
preparation of any blue sky or legal investment survey, if any is requested, (v)
the printing and delivery to the Underwriter of copies of the Registration
Statement and the Prospectus and each amendment thereto, (vi) the fees and
reasonable expenses of the Underwriter and its counsel, (vii) any fees charged
by rating agencies for the rating of the Notes, (viii) the fees and expenses of
the Trustee and its counsel, (ix) the fees and expenses of the Owner Trustee,
the Trust and each of their counsel and (x) the fees and expenses of the
Security Insurer and its counsel.
6. Conditions of the Obligations of the Underwriter. The obligations
of the Underwriter to purchase and pay for the Notes will be subject to the
accuracy, as of the date hereof and as of the Closing Date, of the
representations and warranties on the part of the Seller and Franklin Capital
herein, to the accuracy of the written statements of officers of the Seller and
Franklin Capital made pursuant to the provisions of this Section, to the
performance by the Seller and Franklin Capital of its obligations hereunder and
to the following additional conditions precedent:
(a) The Underwriter shall have received a letter, dated the date
hereof, of PricewaterhouseCoopers LLP, confirming that such accountants are
independent public accountants within the meaning of the Act and the Rules and
Regulations, and substantially in the form of the drafts to which the
Underwriter has previously agreed and otherwise in form and substance reasonably
satisfactory to the Underwriter and counsel for the Underwriter (i) regarding
certain numerical information contained in the Prospectus and (ii) relating to
certain agreed-upon procedures.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) hereof. On or prior
to the Closing Date, 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, to the knowledge of the Seller or
Franklin Capital, shall be contemplated by the Commission.
(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 the Receivables or particularly the business
or properties of (x) the Trust, the Seller, Franklin Capital or Franklin
Resources or (y) the Security Insurer which, in the reasonable judgment of the
Underwriter, materially impairs the investment quality of the Notes; (ii) any
downgrading in the rating of (x) any securities of Franklin Resources by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the 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) or (y)
the claims-paying ability of the Security Insurer by any "nationally recognized
statistical rating organization" or if the claims-paying ability of the Security
Insurer has been put on the "watch list" of any such rating organization with
negative implications; (iii) any suspension or limitation
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<PAGE> 11
of trading in securities generally on the New York or American Stock Exchanges,
or any setting of minimum prices for trading on such exchange; (iv) any
suspension of trading of any securities of Franklin Resources on any exchange,
the NASDAQ National Market or in the over-the-counter market; (v) any banking
moratorium declared by Federal or New York authorities; or (vi) 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 a the Underwriter,
the effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the sale of
and payment for the Notes.
(d) On the Closing Date, each of the Basic Documents and the
Securities shall have been duly authorized, executed and delivered by the
parties thereto, shall be in full force and effect and no default shall exist
thereunder, and the Owner Trustee shall have received a fully executed copy
thereof or, with respect to the Notes, a conformed copy thereof. The Basic
Documents and the Securities shall be substantially in the forms heretofore
provided to the Underwriter.
(e) The Underwriter shall have received an opinion of Morrison &
Foerster LLP, special counsel to Franklin Capital, the Seller and Franklin
Resources, dated the Closing Date, satisfactory in form and substance to the
Underwriter, to the effect that:
(i) The Seller has been duly formed and is validly existing as
a limited liability company in good standing under the laws of the
state of its incorporation, with full corporate power and authority
to own its properties and conduct its business, and is duly
qualified to transact business and is in good standing in each
jurisdiction in which its failure to qualify would have a material
adverse effect upon the business or the ownership of its property.
(ii) This Agreement has been duly authorized, executed and
delivered by the Seller. The Basic Documents to which it is a party
have been duly authorized, executed and delivered by the Seller.
(iii) The Seller has full power and authority to sell and
assign the property to be sold and assigned to the Trust by it
pursuant to the Sale and Servicing Agreement and has duly authorized
such sale and assignment to the Trust by all necessary corporate
action.
(iv) Assuming that this Agreement and the Basic Documents have
been duly authorized, executed and delivered by Franklin Capital,
Franklin Resources and FCC Receivables Corp., this Agreement and the
Basic Documents to which each of Franklin Capital, Franklin
Resources and the Registrants is a party are the legal, valid and
binding obligation of Franklin Capital, Franklin Resources and the
Registrants, enforceable against Franklin Capital, Franklin
Resources and the Registrants in accordance with their terms,
subject as to enforceability to the effects of applicable
bankruptcy, insolvency, reorganization, fraudulent
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<PAGE> 12
conveyance, moratorium and similar laws now or hereafter in effect
relating to creditors' rights generally and subject to general
principles of equity (whether in a proceeding at law or in equity).
(v) The Seller has duly authorized, executed and delivered the
written order to the Owner Trustee to execute and deliver the Issuer
Order to the Trustee.
(vi) The Seller has duly authorized, executed and delivered
the written order to the Owner Trustee to execute and deliver the
Certificates.
(vii) When the Notes have been executed, authenticated and
delivered in accordance with the Indenture and paid for pursuant to
this Agreement, the Notes will be validly issued and outstanding and
enforceable in accordance with their terms, subject as to
enforceability to the effects of applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws
now or hereafter in effect relating to creditors' rights generally
and subject to general principles of equity (whether in a proceeding
at law or in equity).
(viii) Neither the transfer of certain of the Receivables by
the Seller to the Trustee on behalf of the Trust, nor the assignment
by the Seller of the Trust Estate to the Trust, nor the grant by the
Trust of the security interest in the Collateral to the Owner
Trustee pursuant to the Indenture, nor the execution, delivery and
performance by the Seller of the Basic Documents to which it is a
party, nor the consummation by the Seller of the transactions
contemplated thereby will conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of the Seller,
pursuant to the terms of the formation documents of the Seller or
any statute, rule, regulation or order of any governmental agency or
body, or any court having jurisdiction over the Seller or its
properties, or any agreement or instrument known to me after due
investigation to which the Seller is a party or by which the Seller
or any of its properties is bound.
(ix) No authorization, license, approval, consent or order of,
or filing with, any court or governmental agency or authority is
necessary in connection with the execution, delivery and performance
of this Agreement and each of the Basic Documents to which it is a
party by Franklin Capital, the Seller or Franklin Resources.
(x) To the best of such counsel's knowledge, there are no
contracts or documents of the Registrants which are required to be
filed as exhibits to the Registration Statement pursuant to the Act
or the Rules or Regulations which have not been so filed.
(xi) The Registration Statement became effective under the Act
as of
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<PAGE> 13
September 18, 1998 and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereto has been
issued under the Act and no proceeding for that purpose has been
instituted or threatened by the Commission.
(xii) The Seller is not, and will not as a result of the offer
and sale of the Notes as contemplated in the Prospectus and this Agreement
become, an "investment company" as defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act"), or a company
"controlled by" an "investment company" within the meaning of the
Investment Company Act.
(xiii) The Trust Agreement need not be qualified under the
Trust Indenture Act and the Trust is not required to register under the
Investment Company Act.
(xiv) The Indenture has been duly qualified under the Trust
Indenture Act.
(xv) The statements in the Prospectus Supplement under the
headings "Summary of Terms of the Notes -- Tax Status," "Federal Income
Tax Consequences," "Summary of Terms of the Notes -- ERISA
Considerations," and "ERISA Considerations," and in the Base Prospectus
under the headings "Prospectus Summary -- Tax Status," "Federal Income Tax
Consequences," " Prospectus Summary -- ERISA Considerations," and "ERISA
Considerations," to the extent that they constitute statements of matters
of law or legal conclusions with respect thereto, have been reviewed by
such counsel and accurately describe the material consequences to holders
of the Notes under the Code and ERISA.
(xvi) The Registration Statement relating to the Notes as of
its effective date and the Prospectus as of the date of this Agreement,
and any amendment or supplement thereto, as of its date, complied as to
form in all material respects with the requirements of the Act and the
applicable Rules and Regulations. Such counsel need express no opinion
with respect to the financial statements, the exhibits, annexes and other
financial, statistical, numerical or portfolio data, economic conditions
or financial condition of the portfolio information included in or
incorporated by reference into the Registration Statement relating to the
Notes, the Prospectus or any amendment or supplement thereto.
(xvii) Such counsel shall state that they have participated in
the preparation of the Registration Statement and the Prospectus, and that
no facts have come to their attention which cause them to believe that the
Registration Statement relating to the Notes as of its effective date, and
the Prospectus (other than information regarding the Security Insurer
under the caption "The Insurer"), as of the date of this Agreement, and
any amendment or supplement thereto, as of its date when it became
effective, contained any 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 not misleading or that the Prospectus (other than
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<PAGE> 14
information regarding the Security Insurer under the caption "The
Insurer") on its date contained or on the Closing Date contains, any
untrue statement of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided that such counsel need not express any
view with respect to the financial, statistical or computational material
included in or incorporated by reference into the Registration Statement
relating to the Notes, the Prospectus or any amendment or supplement
thereto.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of New York.
(f) The Underwriter shall have received an opinion of in-house
counsel to Franklin Capital, the Registrants and Franklin Resources, dated the
Closing Date, satisfactory in form and substance to the Underwriter, to the
effect that:
(i) Each of FCC Receivables Corp. and Franklin Resources has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of the state of its incorporation, with
full corporate power and authority to own its properties and conduct
its business, and is duly qualified to transact business and is in
good standing in each jurisdiction in which its failure to qualify
would have a material adverse effect upon the business or the
ownership of its property.
(ii)This Agreement has been duly authorized, executed and
delivered by FCC Receivables Corp. The Basic Documents to which it
is a party have been duly authorized, executed and delivered by each
of the Seller and Franklin Resources.
(iii) Franklin Resources has full power and authority to enter
into the Basic Documents to which it is a party and has duly
authorized entering into such documents by all necessary corporate
action.
(iv) Neither the execution, delivery and performance by
Franklin Resources of the Basic Documents to which it is a party,
nor the consummation by Franklin Resources of the transactions
contemplated thereby will conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of Franklin
Resources, pursuant to the terms of the certificate of incorporation
or the by-laws of Franklin Resources or any statute, rule,
regulation or order of any governmental agency or body, or any court
having jurisdiction over Franklin Resources or its properties, or
any agreement or instrument known to me after due investigation to
which Franklin Resources is a
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<PAGE> 15
party or by which Franklin Resources or any of its properties is
bound.
(v) To the best of the knowledge of such counsel, there are no
legal or governmental proceedings pending to which Franklin Capital,
the Seller or Franklin Resources is a party or of which any property
of Franklin Capital, the Seller or Franklin Resources is the
subject, and no such proceedings are known to such counsel to be
threatened or contemplated by governmental authorities or threatened
by others (i) asserting the invalidity of all or any part of this
Agreement or any of the Basic Documents or (ii) that could
materially adversely affect the ability of Franklin Capital, the
Seller or Franklin Resources to perform their obligations under any
of the Basic Documents to which either is a party.
(vi) Such counsel is familiar with Franklin Capital's standard
operating procedures relating to the acquisition of a perfected
first priority security interest in the vehicles financed by
Franklin Capital pursuant to retail installment sale contracts in
the ordinary course of their business. Assuming that these standard
procedures are followed with respect to the perfection of security
interests in the Financed Vehicles, Franklin Capital has acquired or
will acquire a perfected first priority security interests in the
Financed Vehicles with respect to which it has originated
Receivables sold by it to the Seller.
(vii) Immediately prior to the transfer of certain of the
Receivables by Franklin Capital pursuant to the Loan Purchase
Agreement, Franklin Capital was the sole owner of all right, title
and interest in the Receivables and the other property transferred
by it to the Seller. Immediately prior to the transfer of certain of
the Receivables by the Seller pursuant to the Sale and Servicing
Agreement, the Seller was the sole owner of all right, title and
interest in the Receivables and the other property transferred by it
to the Trust.
(viii) Franklin Capital has all necessary licenses required by
law in connection with its performance as Servicer pursuant to the
Sale and Servicing Agreement.
(ix) To such counsel's knowledge, there are no material legal
or governmental proceedings pending or threatened against Franklin
Capital, the Registrants or Franklin Resources other than those
disclosed in the Registration Statement and the Prospectus.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of Delaware and Utah.
(g) The Underwriter shall have received the opinion of Morrison &
Foerster
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<PAGE> 16
LLP, special counsel to the Trust, dated the Closing Date, satisfactory in form
and substance to the Underwriter and counsel for the Underwriter, regarding the
creation and attachment of a security interest in the Receivables with respect
to the transfer of the Receivables from Franklin Capital to the Seller and the
Seller to the Trust and the pledge of the Receivables from the Trust to the
Trustee. Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of New York.
(h) The Underwriter shall have received the opinion of Callister,
Nebeker & McCullough, counsel to Franklin Capital or such other counsel
acceptable to the Underwriter and counsel for the Underwriter, dated the Closing
Date, satisfactory in form and substance to the Underwriter and counsel for the
Underwriter to the effect that:
(i) Franklin Capital has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
state of its incorporation, with full corporate power and authority
to own its properties and conduct its business, and is duly
qualified to transact business and is in good standing in each
jurisdiction in which its failure to qualify would have a material
adverse effect upon the business or the ownership of its property.
(ii) Franklin Capital has full power and authority to sell and
assign the property to be sold and assigned to the Seller by it
pursuant to the Loan Purchase Agreement and has duly authorized such
sale and assignment to the Trust by all necessary corporate action.
(iii) This Agreement and each of the Basic Documents to which
it is a party have been duly authorized, executed and delivered by
Franklin Capital.
(iv) Neither the transfer of the Receivables by Franklin
Capital to the Seller or the Seller to the Trustee on behalf of the
Trust, nor the assignment by the Seller of the Trust Estate to the
Trust, nor the grant by the Trust of the security interest in the
Collateral to the Trustee pursuant to the Indenture, nor the
execution, delivery and performance by the Registrants or Franklin
Capital of this Agreement and the Basic Documents to which it is a
party, nor the consummation of the transactions contemplated thereby
will conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
of the property or assets of Franklin Capital, pursuant to the terms
of the certificate of incorporation or the by-laws of Franklin
Capital or any statute, rule, regulation or order of any
governmental agency or body, or any court having jurisdiction over
Franklin Capital or the Seller or their properties, or any agreement
or instrument known to me after due investigation to which Franklin
Capital is a party or by which Franklin Capital or any of its
properties is bound.
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<PAGE> 17
(v) Such counsel shall deliver an opinion regarding Utah state
tax consequences in form and substance reasonably acceptable to the
Underwriter and counsel to the Underwriter.
(vi) The Receivables conveyed by Franklin Capital to the
Seller are chattel paper as defined in the Uniform Commercial Code
as in effect in the State of Utah.
(vii) If the transfer of Receivables from Franklin Capital to
the Seller is considered a sale, such sale will be perfected upon
the filing of financing statements with the Secretary of State of
the State of Utah and Salt Lake County, Utah. If the transfer of
Receivables from Franklin Capital to the Seller is considered a
financing, such financing will create a first priority perfected
interest upon the filing of financing statements with the Secretary
of State of the State of Utah and Salt Lake County, Utah.
(viii) The Receivables conveyed by the Seller to the Trust are
chattel paper as defined in the Uniform Commercial Code as in effect
in the State of Utah.
(ix) If the transfer of Receivables from the Seller to the
Trust is considered a sale, such sale will be perfected upon the
filing of financing statements with the Secretary of State of the
State of Utah and Salt Lake County, Utah. If the transfer of
Receivables from the Seller to the Trust is considered a financing,
such financing will create a first priority perfected interest upon
the filing of financing statements with the Secretary of State of
the State of Utah and Salt Lake County, Utah.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of New York and Utah.
(i) The Underwriter shall have received an opinion addressed to it
of Morrison & Foerster LLP, in its capacity as counsel to the Seller, dated the
Closing Date, with respect to (i) the consolidation of the assets and
liabilities of the Seller with those of each of (x) Franklin Capital and (y)
Franklin Resources, under the doctrine of substantive consolidation and (ii) the
creation of (x) a "true sale" with respect to the transfers of the Receivables
from Franklin Capital to the Seller and (y) with respect to the transfer of the
Receivables to the Trust, a valid and binding security interest in the
Receivables and the Seller shall have furnished or caused to be furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters. Such opinions shall be limited to the
laws of the State of New York and United States federal law.
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<PAGE> 18
(j) The Underwriter shall have received an opinion of Thacher,
Proffitt & Wood, counsel to the Trustee, dated the Closing Date and satisfactory
in form and substance to the Underwriter and counsel for the Underwriter, to the
effect that:
(i) The Trustee has been duly organized as a banking
corporation and is validly existing and in good standing under the
laws of the State of New York.
(ii) The Trustee has the requisite power and authority to
execute, deliver and perform its obligations under the Indenture and
has taken all necessary action to authorize the execution, delivery
and performance by it of the Indenture.
(iii) The Indenture has been duly executed and delivered by
the Trustee and constitutes a legal, valid and binding obligation of
the Trustee, enforceable against the Trustee in accordance with its
respective terms, except that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the 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).
(iv) The Notes have been duly authenticated by the Trustee in
accordance with the terms of the Indenture.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of New York.
(k) The Underwriter shall have received an opinion of Richards,
Layton & Finger, counsel to the Owner Trustee, dated the Closing Date and
satisfactory in form and substance to the Underwriter and counsel for the
Underwriter, to the effect that:
(i) The Owner Trustee is a banking corporation duly
incorporated and organized and validly existing under the laws of
the Delaware.
(ii) The Owner Trustee has the full corporate trust power to
accept the office of owner trustee under the Trust Agreement and to
enter into and perform its obligations under the Trust Agreement,
the Indenture and the Sale and Servicing Agreement.
(iii) The execution and delivery of the Trust Agreement, the
Indenture and the Sale and Servicing Agreement, and the performance
by the Owner Trustee of its obligations under the Trust Agreement,
the Sale and Servicing Agreement and the Indenture have been duly
authorized by all necessary action of the Owner Trustee and each has
been duly executed and delivered by the Owner Trustee.
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<PAGE> 19
(iv) The Trust Agreement constitutes the valid and binding
obligations of the Owner Trustee enforceable against the Owner
Trustee in accordance with its terms.
(v) The execution and delivery by the Owner Trustee of the
Trust Agreement, the Indenture and the Sale and Servicing Agreement
do not require any consent, approval or authorization of, or any
registration or filing with, any applicable governmental authority.
(vi) Each of the Notes and Certificates has been duly executed
and delivered by the Owner Trustee, on behalf of the Trust.
(vii) Neither the consummation by the Owner Trustee of the
transactions contemplated in the Sale and Servicing Agreement, the
Indenture or the Trust Agreement nor the fulfillment of the terms
thereof by the Owner Trustee will conflict with, result in a breach
or violation of, or constitute a default under any law of the United
States of America or the State of New York governing its banking or
trust powers or the charter, by-laws or other organizational
documents of the Owner Trustee.
(viii) No approval, authorization or other action by, or
filing with, any governmental authority of the United States of
America or the State of New York having jurisdiction over the
banking or trust powers of the Owner Trustee is required in
connection with the execution and delivery by the Owner Trustee of
the Trust Agreement, the Indenture or the Sale and Servicing
Agreement.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of New York and Delaware.
(l) The Underwriter shall have received an opinion of Richards,
Layton & Finger, special Delaware counsel for the Trust, dated the Closing Date,
satisfactory in form and substance to the Underwriter and counsel for the
Underwriter, to the effect that:
(i) The Trust Agreement constitutes the valid and binding
obligation of the Owner Trustee and the Seller enforceable against
the Owner Trustee and the Seller in accordance with its terms
subject to (i) applicable bankruptcy, insolvency, moratorium,
receivership, reorganization, fraudulent conveyance and similar laws
relating to and affecting the rights and remedies of creditors
generally, and (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law).
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<PAGE> 20
(ii) The Certificate of Trust has been duly filed with the
Secretary of State. The Trust has been duly formed and is validly
existing as a business trust under the Delaware Business Trust Act
(the "Business Trust Act"). The Trust has the power and authority
under the Trust Agreement and the Act to execute and deliver the
Indenture and the Sale and Servicing Agreement, to issue the Notes
and the Certificates and to pledge the Trust Estate to the Trustee
as security for the Notes.
(iii) Assuming that the Certificates have been duly executed
and issued by the Trust and duly authenticated by the Owner Trustee
in accordance with the Trust Agreement and delivered to and paid for
pursuant to the Underwriter Agreement, the Certificates have been
validly issued and are entitled to the benefits of the Trust
Agreement.
(iv) To the extent that Article 9 of the Uniform Commercial
Code as in effect in the State of Delaware (the "Delaware UCC") is
applicable (without regard to conflicts of laws principles), and
assuming that the security interest created by each of the Sale and
Servicing Agreement and the Indenture in the Receivables has been
duly created and has attached, upon the filing of UCC-1 financing
statements with the Secretary of State of the State of Delaware the
Trust will have a perfected security interest in the transfer of
Receivables pursuant to the Sale and Servicing Agreement and the
proceeds thereof, and such security interest will be prior to any
other security interest that is perfected solely by the filing of
financing statements under the Delaware UCC, excluding purchase
money security interests under ss. 9-312(4) of the UCC and
temporarily perfected security interests in proceeds under ss.
9-306(3) of the Delaware UCC and the Trustee will have a perfected
security interest in such Receivables and the proceeds thereof, and
such security interest will be prior to any other security interest
that is perfected solely by the filing of financing statements under
the Delaware UCC, excluding purchase money security interests under
ss. 9-312(4) of the UCC and temporarily perfected security interests
in proceeds under ss. 9-306(3) of the Delaware UCC.
(v) No re-filing or other action is necessary under the
Delaware UCC in order to maintain the perfection of such security
interests except for the filing of continuation statements at five
year intervals.
(vi) Under ss. 3805(b) of the Business Trust Act, no creditor
of any Certificateholder shall have any right to obtain possession
of, or otherwise exercise legal or equitable remedies with respect
to, the property of the Trust except in accordance with the terms of
the Trust Agreement.
(vii) Under ss. 3805(c) of the Business Trust Act, and
assuming that the Sale and Servicing Agreement conveys good title to
the Receivables to the Trust as a true sale and not as a security
arrangement, the Trust rather than the
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<PAGE> 21
Certificateholders is the owner of the Receivables.
(viii) The execution and delivery by the Owner Trustee of the
Trust Agreement and, on behalf of the Trust, the Indenture and the
Sale and Servicing Agreement do not require any consent, approval or
authorization of, or any registration or filing with, any
governmental authority of the State of Delaware, except for the
filing of the Certificate of Trust with the Secretary of State.
(ix) Neither the consummation by the Owner Trustee of the
transactions contemplated in the Trust Agreement or, on behalf of
the Trust, the transactions contemplated in the Indenture and the
Sale and Servicing Agreement nor the fulfillment of the terms
thereof by the Owner Trustee will conflict with or result in a
breach or violation of any law of the State of Delaware.
Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter. In rendering such opinion, such
counsel may state that they express no opinion as to the laws of any
jurisdiction other than the federal law of the United States of America and the
laws of the State of Delaware.
(m) The Note Policy shall have been duly executed and issued at or
prior to the Closing Date and shall conform in all material respects to the
description thereof in the Prospectus.
(n) The Underwriter shall have received an opinion of Shaw, Pittman,
Potts & Trowbridge, counsel for the Security Insurer, dated the Closing Date,
satisfactory in form and substance to the Underwriter and counsel for the
Underwriter, to the effect that:
(i) The Security Insurer is validly existing under the laws of the
jurisdiction of its incorporation, is duly qualified and/or licensed to do
business in all jurisdictions where the nature of its operations as
contemplated in the Note Policy, the Indemnification Agreement and the
Insurance and Indemnity Agreement requires such qualification, and has the
power and authority (corporate and other) to issue the Note Policy and to
enter into the Note Policy, the Indemnification Agreement and the
Insurance and Indemnity Agreement and to perform its obligations under the
Note Policy, the Indemnification Agreement and the Insurance and Indemnity
Agreement.
(ii) The execution, delivery and performance by the Security Insurer
of the Note Policy, the Indemnification Agreement and the Insurance and
Indemnity Agreement have been duly authorized by all necessary corporate
action on the part of the Security Insurer.
(iii) The execution, delivery and performance by the Security
Insurer of the Note Policy, the Indemnification Agreement and the
Insurance and Indemnity Agreement do not require the consent or approval
of, the giving of notice to, the registration with, or
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<PAGE> 22
the taking of any other action in respect of any state or other
governmental agency or authority which has not previously been effected.
(iv) The Note Policy, the Indemnification Agreement and the
Insurance and Indemnity Agreement have been duly authorized, executed and
delivered by the Security Insurer, and constitute legal, valid and binding
obligations of the Security Insurer, enforceable against the Security
Insurer in accordance with their respective terms, except to the extent
that the enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, conservatorship, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights as such laws would apply
in the event of the insolvency, liquidation or reorganization or other
similar occurrence with respect to the Security Insurer or the event of
any moratorium or similar occurrence affecting the Security Insurer.
(v) The obligations of the Security Insurer under the Note Policy
will rank equally with the general obligations and all other unsecured
indebtedness of the Security Insurer outstanding on the Closing Date or
thereafter that are not contractually subordinated to the payment of such
obligations under the Note Policy.
(vi) The Note Policy is not required to be registered under the Act
in connection with the offer and sale of the Certificates in the manner
contemplated in the Prospectus.
Such opinions may be subject to such counsel's customary practices
and limitations relating to the scope of such counsel's participation in the
preparation of the Registration Statement and the Prospectus and its
investigation or verification of information contained therein, such counsel
also shall state that it has no reason to believe that as of the Closing Date
any of the information contained in the Prospectus Supplement in (x) the
paragraph titled "The Note Policy" under the heading "Summary of Terms of the
Notes" or (y) under the captions "The Insurer" and "The Note Policy" includes
any 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 financial,
numerical and statistical information contained therein as to which such counsel
need express no opinion).
(o) On or prior to the Closing Date there shall not have occurred
any downgrading, nor shall any notice have been given of (A) any intended or
potential downgrading or (B) any review or possible change in rating the
direction of which has not been indicated, in the rating accorded the Security
Insurer's claims paying ability by any "nationally recognized statistical rating
organization."
(p) Franklin Capital shall have received from the Security Insurer a
certificate, signed by the President, a senior vice president or a vice
president of the Security Insurer, dated the Closing Date, to the effect that
the signer of such certificate has carefully examined the Policy and the related
documents and that, to the best of his or her knowledge
-22-
<PAGE> 23
based on reasonable investigation:
(i) The information in the Prospectus Supplement as of the
date hereof under the captions "The Insurer" and "The Note Policy"
(the "Security Insurer Information") is true and correct in all
material respects and does not contain any untrue statement of a
fact that is material to the Security Insurer's ability to perform
its obligations under the Note Policy. There has been no material
adverse change in the financial condition of the Security Insurer
since March 31, 1999.
(ii) There are no actions, suits, proceedings or
investigations pending or, to the best of the Security Insurer's
knowledge, threatened against it at law or in equity or before or by
any court, governmental agency, board or commission or any
arbitrator which, if decided adversely, would materially and
adversely affect its condition (financial or otherwise) or
operations of it or would materially and adversely affect its
ability to perform its obligations under the Note Policy or the
Insurance Agreement.
(iii) The execution and delivery of the Insurance Agreement,
the Indemnification Agreement and the Note Policy and the compliance
with the terms and provisions thereof will not conflict with, result
in a breach of, or constitute a default under any of the terms,
provisions or conditions of, the Restated Charter or By-Laws of the
Security Insurer, or any agreement, indenture or other instrument to
which the Security Insurer is a party.
(iv) The issuance of the Note Policy and the execution,
delivery and performance of the Indemnification Agreement and the
Insurance Agreement have been duly authorized by all necessary
corporate proceedings. No further approvals or filings of any kind,
including, without limitation, any further approvals of or further
filing with any governmental agency or other governmental authority,
or any approval of the Security Insurer's board of directors or
stockholders, are necessary for the Note Policy, the Indemnification
Agreement and the Insurance Agreement to constitute the legal, valid
and binding obligations of the Security Insurer.
(q) The Underwriter shall have received copies of each opinion of
counsel delivered to either rating agency or the Security Insurer, together with
a letter addressed to the Underwriter, dated the Closing Date, to the effect
that the Underwriter may rely on each such opinion to the same extent as though
such opinion was addressed to each as of its date.
(r) The Underwriter shall have received a certificate dated the
Closing Date of the Seller, executed by any two of the Chairman of the Board,
the President, any Executive Vice President, Senior Vice President or Vice
President, the Treasurer, any Assistant Treasurer, the Secretary, the principal
financial officer or the principal accounting officer of the Seller, in which
such officer shall state that, to the best of its knowledge after reasonable
investigation, (i)
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<PAGE> 24
the representations and warranties of the Seller, contained in this Agreement
and the Basic Documents to which it is a party are true and correct in all
material respects, (ii) that the Seller, has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied under such
agreements at or prior to the Closing Date, and (iii) since the date of its
incorporation, except as may be disclosed in the Prospectus or in such
certificate, no material adverse change, or any development involving a
prospective material adverse change, in or affecting particularly the business
or properties of the Trust, Franklin Capital or the Seller, has occurred.
(s) The Underwriter shall have received a certificate dated the
Closing Date of Franklin Capital, executed by any two of the Chairman of the
Board, the President, any Executive Vice President, Senior Vice President or
Vice President, the Treasurer, any Assistant Treasurer, the Secretary, the
principal financial officer or the principal accounting officer of Franklin
Capital in which such officer shall state that, to the best of its knowledge
after reasonable investigation, (i) the representations and warranties of
Franklin Capital contained in this Agreement, the Loan Purchase Agreement and
the Sale and Servicing Agreement are true and correct in all material respects,
(ii) that Franklin Capital has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under such agreements at or
prior to Closing Date the and (iii) since December 31, 1998, except as may be
disclosed in the Prospectus or in such certificate, no material adverse change,
or any development involving a prospective material adverse change, in or
affecting particularly the business or properties of the Trust, Franklin Capital
or the Seller, has occurred.
(t) The Underwriter shall have received evidence satisfactory to it
and counsel for the Underwriter that, on or before the Closing Date, UCC-1
financing statements shall have been submitted to the Owner Trustee or Trustee,
as the case may be, for filing in the appropriate filing offices reflecting (1)
the transfer of the interest in the Receivables, certain other property and the
proceeds thereof (A) from Franklin Capital to the Seller and (B) from the Seller
to the Trust, and (2) the grant of the security interest by the Trust in the
Receivables, certain other property and the proceeds thereof to the Trustee.
(u) The Class A-1 Notes and the Class A-2 Notes shall be rated "AAA"
or its equivalent, in each case by Moody's and S&P and neither corporation shall
have placed the Notes under surveillance or review with possible negative
implications.
The Seller will provide or cause to be provided to the Underwriter
such conformed copies of such of the foregoing opinions, certificates, letters
and documents as the Underwriter shall reasonably request.
7. Indemnification and Contribution.
(a) The Seller and Franklin Capital, jointly and severally, agree to
indemnify and hold harmless the Underwriter against any and all losses, claims,
damages or liabilities, joint or several, or any action in respect thereof
(including but not limited to, any loss, claim, damage or liability (or action
relating to purchases and sales of the Notes)), to which the Underwriter
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<PAGE> 25
may become subject, under the Act, the Exchange 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 or incorporated 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, in the light of the circumstances
in which they were made, not misleading, and will reimburse the Underwriter for
any 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 neither the Seller
nor Franklin Capital shall 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 the Underwriter's
Information.
(b) The Underwriter severally agrees to indemnify and hold harmless
the Seller and Franklin Capital against any losses, claims, damages or
liabilities to which the Seller or Franklin Capital may become subject, under
the Act, the Exchange 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
or incorporated 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 the 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 the Underwriter's Information, and
will reimburse any legal or other expenses reasonably incurred by Franklin
Capital or the Seller 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, 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 to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
under subsection (a) or (b) above, except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify any
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section. 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 to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (which
counsel may be counsel to the indemnifying party, if such counsel is otherwise
satisfactory to such indemnified party), and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, except to the extent provided in the next following paragraph, the
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<PAGE> 26
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.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party and in the reasonable judgment of such counsel it is
advisable for such indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to local counsel) at any
time for all such indemnified parties, which firm shall be designated in writing
by the Underwriter, if the indemnified parties under this Section 7 consist of
the Underwriter, or by the Seller and Franklin Capital, if the indemnified
parties under this Section 7 consist of the Seller and Franklin Capital.
Each indemnified party, as a condition of the indemnity agreements
contained in Section 7 (a) and (b) hereof, shall use its best efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless the 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
the Seller and Franklin Capital on the one hand and the Underwriter on the other
from the offering of the Notes or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or if the indemnified party failed to
give the notice required under subsection (c) above, 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 the Seller or Franklin Capital on the one
hand and the Underwriter 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 the Seller and Franklin Capital on the one hand and the Underwriter on the
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<PAGE> 27
other shall be deemed to be in such proportion that the Underwriter shall be
responsible for that portion represented by the underwriting discounts and
commissions received by the Underwriter (the "Spread"); and the Seller and
Franklin Capital shall be responsible for the balance. 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 the Seller or Franklin
Capital or the Underwriter and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The Seller, Franklin Capital and the Underwriter agree that it would
not be just and equitable if contributions pursuant to this subsection (f) were
to be determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to
herein.
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), in no case shall the Underwriter be
responsible for any amount (not including the fees and expenses of its counsel)
in excess of the Spread received by the Underwriter, as set forth on the cover
page of the Prospectus. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Seller and Franklin Capital under this
Section shall be in addition to any liability which the Seller and Franklin
Capital may otherwise have and shall extend, upon the same terms and conditions,
to each person, if any, who controls the Underwriter within the meaning of the
Act or the Exchange Act. The obligations of the Underwriter shall be in addition
to any liability which the Underwriter may otherwise have and shall extend, upon
the same terms and conditions, to each director of the Seller, and each of its
officers that signed the Registration Statement.
(f) The Underwriter confirms that the information set forth under
the caption "Underwriting" in the Prospectus Supplement (the "Underwriter's
Information") is correct and constitutes the only information furnished in
writing to the Seller by or on behalf of the Underwriter specifically for
inclusion in the Registration Statement and the Prospectus.
8. Survival of Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Seller or its officers and of the Underwriter set forth in or made pursuant to
this Agreement or contained in certificates of officers of the Seller submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation or statement as to the results thereof, made by or on
behalf of the Underwriter, the Seller or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Notes. If for any reason the purchase of
the Notes by the Underwriter is not consummated, Franklin Capital shall remain
responsible for the expenses to be paid or reimbursed by Franklin Capital
pursuant to Section
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<PAGE> 28
5(m) (other than clause (vi) thereof in the case of a failure by the Underwriter
to comply with its obligations hereunder) and the respective obligations of the
Seller, Franklin Capital and the Underwriter pursuant to Section 7 shall remain
in effect. If for any reason the purchase of the Notes by the Underwriter is not
consummated (other than because of (a) a failure by the Underwriter to comply
with its obligations hereunder or (b) a failure to satisfy the conditions set
forth in items (i)(y), (iii), (v) and (vi) of Section 6(c)), Franklin Capital
will reimburse the Underwriter for all out-of-pocket expenses reasonably
incurred by it in connection with the offering of the Notes.
9. Notices. Any written request, demand, authorization, direction,
notice, consent or waiver shall be personally delivered or mailed certified
mail, return receipt requested (or in the form of telex or facsimile notice,
followed by written notice as aforesaid) and shall be deemed to have been duly
given upon receipt, if sent to the Underwriter, when delivered to the
Underwriter at 85 Broad Street, New York, New York 10004, Attention: Tom
Lasersohn (fax # (212) 902-4024), if sent to Franklin Capital when delivered to
47 West 200 South, Suite 500, Salt Lake City, UT 84101, Attention: Jennifer J.
Bolt (Fax # (801) 881-8892), with a copy to Franklin Resources, Inc., 777
Mariners Island Blvd., San Mateo, CA 94404, Attention: General Counsel and if
sent to the Seller when delivered to 47 West 200 South, Suite 500, Salt Lake
City, UT 84101, Attention: Jennifer J. Bolt (Fax # (801) 881-8892), with a copy
to Franklin Resources, Inc., 777 Mariners Island Blvd., San Mateo, CA 94404,
Attention: General Counsel.
10. Successors. This Agreement shall 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, and no other
person will have any right or obligations hereunder.
11. 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.
12. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to the choice of law provisions thereof.
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<PAGE> 29
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Registrants, Franklin
Capital and the Underwriter in accordance with its terms.
Very truly yours,
FRANKLIN RECEIVABLES LLC
By: FRANKLIN CAPITAL CORPORATION,
its managing member
By: /s/ Jennifer J. Bolt
__________________________
Name: Jennifer J. Bolt
Title: President
FCC RECEIVABLES CORP.
By: /s/ Jennifer J. Bolt
__________________________
Name: Jennifer J. Bolt
Title: Executive Vice President
FRANKLIN CAPITAL CORPORATION
By: /s/ Jennifer J. Bolt
__________________________
Name: Jennifer J. Bolt
Title: President
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first written above.
GOLDMAN, SACHS AND CO.
By: /s/ Goldman, Sachs & Co.
____________________________
Name: Jonathan Coblentz
Title: Attorney-in-Fact
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<PAGE> 30
SCHEDULE I
OFFICES
<PAGE> 31
SCHEDULE II
<TABLE>
<CAPTION>
Original
Principal Investor Investor
Security Balance $ Price % Price $ Price % Price $ Rate %
- -------- --------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 Notes $66,500,000 99.866175% $66,411,006.38 99.566175% $66,211,506.38 5.52%
Class A-2 Notes $40,023,000 99.343399% $39,760,208.58 98.777399% $39,533,678.40 6.05%
</TABLE>
Total Price to Public: $106,171,214.96
Total Price to Seller: $105,745,184.78
Underwriting Discounts
and Commissions: $426,030.18
-2-
<PAGE> 32
EXHIBIT A
May 20, 1999
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Re: Underwriting Agreement for Franklin Auto Trust 1999-1, dated May 20, 1999
the "Underwriting Agreement") among FCC Receivables Corp., Franklin Receivables
LLC, Franklin Capital Corporation ("Franklin Capital") and Goldman, Sachs & Co.
(the "Underwriter").
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement, Franklin Capital has undertaken
certain financial obligations with respect to the indemnification of the
Underwriter with respect to the Registration Statement, and the Prospectus
described in the Underwriting Agreement. Any financial obligations of Franklin
Capital under the Underwriting Agreement, whether or not specifically enumerated
in this paragraph, are hereinafter referred to as the "Joint and Several
Obligations;" provided, however, that "Joint and Several Obligations" shall mean
only the financial obligations of Franklin Capital under the Underwriting
Agreement (including the payment of money damages for a breach of any of
Franklin Capital's obligations under the Underwriting Agreement, whether
financial or otherwise) but shall not include any obligations not relating to
the payment of money.
As a condition of its execution of the Underwriting Agreement, the
Underwriter has required the undersigned, Franklin Resources, Inc. ("Franklin
Resources"), the parent corporation of Franklin Capital, to acknowledge its
joint and several liability with Franklin Capital for the payment of the Joint
and Several Obligations under the Underwriting Agreement.
Now, therefore, the Underwriter and Franklin Resources do hereby agree
that:
1. Franklin Resources hereby agrees to be absolutely and unconditionally
jointly and severally liable with Franklin Capital to the Underwriter for the
payment of the Joint and Several Obligations under the Underwriting Agreement.
2. Franklin Resources may honor its obligations hereunder either by direct
payment of any Joint and Several Obligations or by causing any Joint and Several
Obligations to be paid to the Underwriter by Franklin Capital or another
affiliate of Franklin Resources.
<PAGE> 33
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Underwriting Agreement.
Very truly yours,
FRANKLIN RESOURCES, INC.
By:__________________________
Name:
Title:
GOLDMAN, SACHS & CO.
By:______________________
Name:
Title:
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<PAGE> 1
Exhibit 10.4
May 20, 1999
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Re: Underwriting Agreement for Franklin Auto Trust 1999-1, dated May 20, 1999
the "Underwriting Agreement") among FCC Receivables Corp., Franklin Receivables
LLC, Franklin Capital Corporation ("Franklin Capital") and Goldman, Sachs & Co.
(the "Underwriter").
Ladies and Gentlemen:
Pursuant to the Underwriting Agreement, Franklin Capital has undertaken
certain financial obligations with respect to the indemnification of the
Underwriter with respect to the Registration Statement, and the Prospectus
described in the Underwriting Agreement. Any financial obligations of Franklin
Capital under the Underwriting Agreement, whether or not specifically enumerated
in this paragraph, are hereinafter referred to as the "Joint and Several
Obligations;" provided, however, that "Joint and Several Obligations" shall mean
only the financial obligations of Franklin Capital under the Underwriting
Agreement (including the payment of money damages for a breach of any of
Franklin Capital's obligations under the Underwriting Agreement, whether
financial or otherwise) but shall not include any obligations not relating to
the payment of money.
As a condition of its execution of the Underwriting Agreement, the
Underwriter has required the undersigned, Franklin Resources, Inc. ("Franklin
Resources"), the parent corporation of Franklin Capital, to acknowledge its
joint and several liability with Franklin Capital for the payment of the Joint
and Several Obligations under the Underwriting Agreement.
Now, therefore, the Underwriter and Franklin Resources do hereby agree
that:
1. Franklin Resources hereby agrees to be absolutely and unconditionally
jointly and severally liable with Franklin Capital to the Underwriter for the
payment of the Joint and Several Obligations under the Underwriting Agreement.
2. Franklin Resources may honor its obligations hereunder either by direct
payment of any Joint and Several Obligations or by causing any Joint and Several
Obligations to be paid to the Underwriter by Franklin Capital or another
affiliate of Franklin Resources.
<PAGE> 2
Capitalized terms used herein and not defined herein shall have their
respective meanings as set forth in the Underwriting Agreement.
Very truly yours,
FRANKLIN RESOURCES, INC.
By: /s/ Jennifer J. Bolt
__________________________
Name: Jennifer J. Bolt
Title: Vice President
GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
_________________________
Name: Jonathan Coblentz
Title: Attorney-in-Fact
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