<PAGE>
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) November 30, 1999
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Prudential Securities Secured Financing Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
333-52021 13-3526694
- -------------------------- ------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
One New York Plaza, New York, New York 10292
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(Address of Principal Executive Offices) (Zip Code)
(212) 778-1000
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(Registrant's Telephone Number, Including Area Code)
No Change
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 30, 1999, Registrant caused the issuance and sale by
PeopleFirst.com Auto Receivables Owner Trust 1999-1 of $116,000,000 aggregate
principal amount of Class A-1 asset-backed notes, Class A-2 asset-backed notes
and Class A-3 asset-backed notes and $2,367,346.94 aggregate principal amount of
asset-backed certificates.
The Registrant is filing final forms of the exhibits listed in Item
7(c) below relating to the Notes and the Certificates.
ITEM 5. OTHER EVENTS.
In connection with the offering of PeopleFirst.com Auto Receivables
Owner Trust 1999-1, Asset-Backed Notes, Series 1999-1 described in a Prospectus
Supplement dated November 17, 1999 (the "Prospectus Supplement"), attached
hereto as Exhibit 23.2 is a copy of the consent of Pricewaterhouse Coopers LLP
as to (i) the incorporation by reference in the Prospectus Supplement of its
report on its audits of the consolidated financial statements of Financial
Security Assurance Inc. and (ii) the use of the name of Pricewaterhouse Coopers
LLP in the Prospectus Supplement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT
NO. DOCUMENT DESCRIPTION
------- --------------------
(a) Not applicable
(b) Not applicable
(c) Exhibit 1.1 Underwriting Agreement, dated November 17, 1999, among
the Registrant, PeopleFirst Finance, LLC,
PeopleFirst.com Inc., PF Funding II, LLC and Prudential
Securities Incorporated
Exhibit 4.1 Indenture, dated as of November 1, 1999, among
PeopleFirst.com Auto Receivables Owner Trust 1999-1 and
Norwest Bank Minnesota, National Association
Exhibit 4.2 Trust Agreement, dated as of November 1, 1999, among
the Registrant and Wilmington Trust Company
Exhibit 4.3 Sale and Servicing Agreement, dated as of November 1,
1999, among PeopleFirst.com Auto Receivables Owner
Trust 1999-1, PF Funding II, LLC, PeopleFirst Finance,
LLC, the Registrant and Norwest Bank Minnesota,
National Association
Exhibit 4.4 Custodial Agreement, dated as of November 1, 1999,
among PF Funding II, LLC, PeopleFirst Finance, LLC,
PeopleFirst.com Auto Receivables Owner Trust 1999-1,
Wilmington Trust Company, and Norwest Bank Minnesota,
National Association
Exhibit 4.5 Financial Guaranty Insurance Policy No. 50886-N, dated
November 30, 1999, issued by Financial Security
Assurance Inc.
Exhibit 4.6 Indemnification Agreement, dated November 17, 1999,
among Financial Security Assurance Inc., PeopleFirst
Finance, LLC, Barclays Capital Inc. and Prudential
Securities Incorporated.
-2-
<PAGE>
Exhibit 4.7 Indemnification Agreement, dated November 30, 1999,
among the Registrant, PeopleFirst.com Inc.,
PeopleFirst Finance, LLC and PF Funding II, LLC.
Exhibit 23.2 Consent of PricewaterhouseCoopers L.L.P. regarding
financial statements of Finance Security Assurance
Inc., their report and the use of their name in the
Prospectus Supplement
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION
(Registrant)
Dated: December 15, 1999 By: Joseph M. Donovan
----------------------------------------
Name: Joseph M. Donovan
Title: Vice President
<PAGE>
Exhibit 1.1
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1
ASSET-BACKED NOTES
SERIES 1999-1
UNDERWRITING AGREEMENT
<PAGE>
UNDERWRITING AGREEMENT
PRUDENTIAL SECURITIES INCORPORATED
As Representative of the several Underwriters
One New York Plaza
New York, New York 10292
November 17, 1999
Ladies and Gentlemen:
Prudential Securities Secured Financing Corporation (the "Depositor")
proposes, subject to the terms and conditions stated herein and in the attached
Underwriting Agreement Standard Provisions, dated November 17, 1999 (the
"Standard Provisions"), among the Depositor, PeopleFirst Finance, LLC ("PF"),
PeopleFirst.com Inc. (the "Parent"), PF Funding II, LLC (the "Transferor") and
Prudential Securities Incorporated, to cause PeopleFirst.com Auto Receivables
Owner Trust 1999-1 (the "Issuer" or the "Trust") to issue and sell to the
Underwriters specified in Schedule I hereto (the "Underwriters") the Securities
described in Schedule II hereto (the "Offered Securities"). The Depositor, the
Parent, PF and the Transferor agree that each of the provisions of the Standard
Provisions is incorporated herein by reference in its entirety, and shall be
deemed to be a part of this Underwriting Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Underwriting Agreement. Each reference to the "Representative"
herein and in the provisions of the Standard Provisions so incorporated by
reference shall be deemed to refer to Prudential Securities Incorporated, as
Representative of the several Underwriters. Unless otherwise defined herein,
terms defined in the Standard Provisions are used herein as therein defined.
The Prospectus Supplement and the accompanying Base Prospectus relating to the
Offered Securities (together, the "Prospectus") are incorporated by reference
herein.
Subject to the terms and conditions set forth herein and in the
Standard Provisions incorporated herein by reference, the Depositor agrees to
cause the Issuer to issue and sell to the Underwriter, and each Underwriter
agrees to purchase, severally and not jointly, from the Issuer, the respective
aggregate principal amount of the Offered Securities set forth opposite such
Underwriter's name in Schedule I hereto, at the time and place and at the
purchase price to the Underwriters and in the manner set forth in Schedule II
hereto.
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, and upon acceptance hereof by you,
this letter and such acceptance hereof, including the provisions of the Standard
Provisions incorporated herein by reference, shall constitute a binding
agreement between the Underwriters, PF, the Parent, the Transferor and the
Depositor.
Yours truly,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:
--------------------------------------
Name:
Title:
PEOPLEFIRST FINANCE, LLC
By:
--------------------------------------
Name:
Title:
PEOPLEFIRST.COM INC.
By:
--------------------------------------
Name:
Title:
PF FUNDING II, LLC
By:
--------------------------------------
Name:
Title:
<PAGE>
Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED,
As Representative of the Several Underwriters
By:
---------------------------------------------
Name:
Title:
[Signature Page to Underwriting Agreement]
<PAGE>
SCHEDULE I
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<TABLE>
<CAPTION>
Class A-1 Class A-2 Class A-3
Underwriters Notes Notes Notes
------------ ------------ ------------ ------------
<S> <C> <C> <C>
Prudential Securities Incorporated $37,334,000 $28,000,000 $12,000,000
Barclays Capital Inc. 18,666,000 14,000,000 6,000,000
----------- ----------- -----------
Total $56,000,000 $42,000,000 $18,000,000
</TABLE>
<PAGE>
SCHEDULE II
-----------
<TABLE>
<CAPTION>
<S> <C>
Title of Offered Securities: PeopleFirst.com Auto Receivables Owner Trust 1999-1, Asset
Backed Notes, Series 1999-1, Class A-1, Class A-2 and Class
A-3.
Terms of Offered Securities: The Offered Securities shall have the terms set forth in the
Prospectus and shall conform in all material respects to the
descriptions thereof contained therein, and shall be issued pursuant
to an Indenture, to be dated as of November 1, 1999, between
PeopleFirst.com Auto Receivables Owner Trust 1999-1, as issuer,
and Norwest Bank Minnesota, National Association, as indenture
trustee.
Purchase Price: The purchase price for the Offered Securities shall be 100%, 100%
and 100% of the aggregate note principal balance of the Class A-1
Notes, Class A-2 Notes and Class A-3 Notes, respectively, as of the
Closing Date, plus accrued interest at the rate of 6.415% per
annum, 6.685% per annum and 6.835% per annum, on the
aggregate note principal balance of the Class A-1 Notes, Class A-2
Notes and Class A-3 Notes, respectively, from and including,
November 15, 1999 to, but not including, the Closing Date.
Specified funds for payment Federal Funds (immediately available funds).
of Purchase Price:
Required Ratings: Aaa by Moody's Investors Service, Inc.
AAA by Standard & Poor's, a division of the McGraw-Hill
Companies.
Closing Date: On or about November 30, 1999 at 10:00 A.M. eastern standard
time or at such other time as the Depositor and the Representative
shall agree.
Closing Location: Rogers & Wells, LLP, 200 Park Avenue, New York, NY 10166-
0153.
Name and address of Designated Representative: Prudential Securities Incorporated.
Representative:
Address for Notices, etc.: One New York Plaza, 14th Floor
New York, New York 10292
Attn: Asset-Backed Group
</TABLE>
<PAGE>
STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
November 17, 1999
From time to time, Prudential Securities Secured Financing
Corporation, a Delaware corporation (the "Depositor"), PeopleFirst Finance,
LLC, a California limited liability company ("PF"), PeopleFirst.com Inc. (the
"Parent"), and PF Funding II, LLC, a Delaware limited liability company (the
"Transferor"), may enter into one or more underwriting agreements (each, an
"Underwriting Agreement") that provide for the sale of designated securities to
the several underwriters named therein (such underwriters constituting the
"Underwriters" with respect to such Underwriting Agreement and the securities
specified therein). The several underwriters named in an Underwriting Agreement
will be represented by one or more representatives as named in such Underwriting
Agreement (collectively, the "Representative"). The term "Representative" also
refers to a single firm acting as sole representative of the Underwriters and to
Underwriters who act without any firm being designated as their representative.
The standard provisions set forth herein (the "Standard Provisions") may be
incorporated by reference in any Underwriting Agreement. These Standard
Provisions shall not be construed as an obligation of the Depositor to sell any
securities or as an obligation of any of the Underwriters to purchase such
securities. The obligation of the Depositor to sell any securities and the
obligation of any of the Underwriters to purchase any of the securities shall be
evidenced by the Underwriting Agreement with respect to the securities specified
therein. An Underwriting Agreement shall be in the form of an executed writing
(which may be in counterparts), and may be evidenced by an exchange of
telegraphic communications or any other rapid transmission device designed to
produce a written record of the communications transmitted. The obligations of
the underwriters under these Standard Provisions and each Underwriting Agreement
shall be several and not joint. Unless otherwise defined herein, the terms
defined in the Underwriting Agreement are used herein as defined in the
Prospectus referred to below.
1. THE OFFERED SECURITIES. The Depositor proposes to sell pursuant
to the applicable Underwriting Agreement to the several Underwriters named
therein auto loan backed notes (the "Notes") representing indebtedness secured
primarily by the property of a trust which consists of a pool of auto loans
secured by new or used automobiles, light duty trucks and vans (the
"Receivables") and certain related property. The Securities will be issued
pursuant to an Indenture (the "Indenture") by and between PeopleFirst.com Auto
Receivables Owner Trust 1999-1, as issuer (the "Issuer") and Norwest Bank
Minnesota, National Association, as indenture trustee (the "Indenture Trustee").
The Issuer will be formed at the direction of the Depositor, pursuant to the
terms of a Trust Agreement (the "Trust Agreement") among the Depositor and
Wilmington Trust Company, as owner trustee (the "Owner Trustee"). The
Receivables will be sold and contributed by PF to the Transferor, assigned by
the Transferor to the Depositor and further assigned by the Depositor to the
Issuer pursuant to a Sale and Servicing Agreement (the "Sale and Servicing
Agreement") by and among PF, as a seller and servicer (in such capacity, the
"Servicer"), the Depositor, the Transferor, the Issuer, the Indenture Trustee
and Norwest Bank Minnesota, National Association, as back-up servicer and
custodian. The Issuer will pledge the Receivables to the Indenture Trustee
pursuant to the terms of the Indenture.
<PAGE>
Norwest Bank Minnesota, National Association has agreed to act as
custodian (the "Custodian") for the Receivables Files pursuant to a Custodial
Agreement (the "Custodial Agreement") among PF, the Servicer, the Transferor,
the Owner Trustee, the Indenture Trustee and the Custodian.
The Offered Securities will have the benefit of a note guaranty
insurance policy (the "Policy") issued by Financial Security Assurance Inc. (the
"Insurer") pursuant to the terms of an Insurance and Indemnity Agreement (the
"Insurance Agreement") among the Insurer, PF, the Transferor and the Issuer.
The Transferor, the Insurer and Norwest Bank Minnesota, National
Association, as indenture collateral agent (the "Collateral Agent") will enter
into a Master Reserve Account Agreement governing the reserve account (the
"Reserve Account Agreement").
The Depositor, the Parent, PF and the Transferor will enter into an
indemnification agreement (the "Depositor Indemnification Agreement") pursuant
to which the Parent, PF and the Transferor will agree to indemnify the Depositor
against certain losses, claims, damages or liabilities arising in connection
with the Transaction Documents and the Offered Securities.
The Indenture, the Sale and Servicing Agreement, the Trust Agreement,
the Custodial Agreement, the Depositor Indemnification Agreement, the Policy,
the Insurance Agreement and the Reserve Account Agreement are collectively
referred to herein as the "Transaction Documents." The Parent, PF and the
Transferor are collectively referred to herein as the "PF Entities."
The terms and rights of any particular issuance of Securities shall be
as specified in the Underwriting Agreement relating thereto and in or pursuant
to the Indenture identified in such Underwriting Agreement. The Securities
which are the subject of any particular Underwriting Agreement into which these
Standard Provisions are incorporated are herein referred to as the "Offered
Securities."
The Depositor has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (File No. 333-52021),
including a prospectus relating to the Securities under the Securities Act of
1933, as amended (the "1933 Act"). The term "Registration Statement" means such
registration statement as amended to the date of the Underwriting Agreement.
The Depositor proposes to file with the Commission pursuant to Rule 424(b)
("Rule 424(b)") under the 1933 Act a supplement (the "Prospectus Supplement") to
the prospectus included in the Registration Statement (such prospectus, in the
form it appears in the Registration Statement or in the form most recently
revised and filed with the Commission pursuant to Rule 424(b) is hereunder
referred to as the "Base Prospectus") specifically relating to the Offered
Securities. The Base Prospectus and the Prospectus Supplement, together with
any amendment thereof or supplement thereto, is hereunder referred to as the
"Prospectus". The term "Preliminary Prospectus" means a preliminary prospectus
supplement specifically relating to the Offered Securities together with the
Base Prospectus.
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<PAGE>
2. OFFERING BY THE UNDERWRITERS. Upon the execution of the
Underwriting Agreement applicable to any Offered Securities and the
authorization by the Representative of the release of such Offered Securities,
the several Underwriters propose to offer for sale to the public the Offered
Securities at the prices and upon the terms set forth in the Prospectus.
3. PURCHASE, SALE AND DELIVERY OF THE OFFERED SECURITIES. Unless
otherwise specified in the Underwriting Agreement, payment for the Offered
Securities shall be made by wire transfer to an account designed by the
Depositor in immediately available funds, at the time and place set forth in the
Underwriting Agreement, upon delivery to the Representative of the Offered
Securities in definitive form (which delivery shall be made through the
facilities of The Depository Trust Company ("DTC")). The time and date of such
payment and delivery with respect to the Offered Securities are herein referred
to as the "Closing Date".
4. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The respective
obligations of the several Underwriters pursuant to the Underwriting Agreement
shall be subject, in the discretion of the Representative, to the accuracy in
all material respects of the representations and warranties of the Depositor and
the PF Entities contained herein as of the date of the Underwriting Agreement
and as of the Closing Date as if made on and as of the Closing Date, to the
accuracy in all material respects of the statements of the officers of the
Issuer, the Depositor and the PF Entities made in any certificates pursuant to
the provisions hereof and of the Underwriting Agreement, to the performance by
each of the Depositor and the PF Entities of their respective covenants and
agreements contained herein and to the following additional conditions
precedent:
(a) All actions required to be taken and all filings required to be
made by or on behalf of the Depositor under the 1933 Act and the Securities
Exchange Act of 1934, as amended (the "1934 Act") prior to the sale of the
Offered Securities shall have been duly taken or made.
(b) (i) No stop order suspending the effectiveness of the Registration
Statement shall be in effect; (ii) no proceedings for such purpose shall be
pending before or threatened by the Commission, or by any authority
administering any state securities or "Blue Sky" laws; (iii) any requests
for additional information on the part of the Commission shall have been
complied with to the Representative's reasonable satisfaction; (iv) since
the respective dates as of which information is given in the Registration
Statement and the Prospectus except as otherwise stated therein, there
shall have been no material adverse change in the condition, financial or
otherwise, earnings, affairs, regulatory situation or business prospects of
the Depositor or any PF Entity; (v) there are no material actions, suits or
proceedings pending before any court or governmental agency, authority or
body or threatened, affecting the Depositor or any PF Entity or the
transactions contemplated by the Underwriting Agreement; (vi) neither the
Depositor nor any PF Entity is in violation of its charter, operating
agreement or its by-laws, as applicable, or in default in the performance
or observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its properties may be
bound, which violations or defaults separately or in
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the aggregate would have a material adverse effect on the Depositor or such
PF Entity, as the case may be; and (vii) the Representative shall have
received, on the Closing Date a certificate, dated the Closing Date and
signed by an executive officer of the Depositor and each PF Entity, to the
foregoing effect.
(c) Subsequent to the execution of the Underwriting Agreement, there
shall not have occurred any of the following: (i) if at or prior to the
Closing Date, trading in securities on the New York Stock Exchange shall
have been suspended or any material limitation in trading in securities
generally shall have been established on such exchange, or a banking
moratorium shall have been declared by New York State or federal
authorities; (ii) if at or prior to the Closing Date, there shall have been
an outbreak or escalation of hostilities between the United States and any
foreign power, or of any other insurrection or armed conflict involving the
United States which results in the declaration of a national emergency or
war, and, in the reasonable opinion of the Representative, makes it
impracticable or inadvisable to offer or sell the Offered Securities; or
(iii) if at or prior to the Closing Date, a general moratorium on
commercial banking activities in the State of New York shall have been
declared by either federal or New York State authorities.
(d) The Representative shall have received, on the Closing Date, true
and correct copies of the letter from each nationally recognized
statistical rating organization (as that term is defined by the Commission
for purposes of Rule 436(g)(2) under the 1933 Act) that rated the Offered
Securities and confirming that, unless otherwise specified in the
Underwriting Agreement, the Offered Securities have been rated in the
highest rating categories by each such organization and that each such
rating has not been rescinded since the date of the applicable letter.
(e) The Representative shall have received, on the Closing Date, from
Rogers & Wells LLP, special counsel for the PF Entities, a favorable
opinion, dated the Closing Date and reasonably satisfactory in form and
substance to the Representative and containing opinions substantially to
the effect set forth in Exhibit A.
(f) The Representative shall have received, on the Closing Date, from
Rogers & Wells LLP, special counsel to the PF Entities a favorable opinion,
dated the Closing Date, with respect to (i) the characterization of the
transfer of the Receivables from PF to the Transferor as a true sale and
(ii) nonconsolidation under the Bankruptcy Code of the assets and
liabilities of the Transferor on the one hand, and those of either Parent,
PF or any other Affiliate subject to the Bankruptcy Code on the other, in
the event the Parent, PF or any such Affiliate were to become subject of a
case under the Bankruptcy Code, and such opinions shall be in substantially
the form previously agreed with the Representative and its counsel and in
any event satisfactory in form and in substance to the Representative and
its counsel.
(g) The Representative shall have received, on the Closing Date, from
Saxon, Barry, Gardner & Kincannon, special California counsel for the PF
Entities, a favorable
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opinion, dated the Closing Date and reasonably satisfactory in form and
substance to the Representative and containing opinions substantially to
the effect set forth in Exhibit B.
(h) The Representative shall have received, on the Closing Date, from
Mayer, Brown & Platt, its special counsel, a favorable opinion, dated the
Closing Date and reasonably satisfactory in form and substance to the
Representative, and PF, the Transferor, the Depositor and the Issuer shall
have furnished to the Representative's special counsel such documents as it
may request for the purpose of enabling them to pass on certain matters.
(i) The Representative shall have received, on the Closing Date, an
opinion of counsel for the Indenture Trustee, dated the Closing Date, in
form and substance satisfactory to the Representative and counsel for the
Underwriters and containing opinions substantially to the effect set forth
in Exhibit C.
(j) The Representative shall have received, on the Closing Date, an
opinion of counsel for the Issuer and the Owner Trustee, dated the Closing
Date, in form and substance satisfactory to the Representative and counsel
for the Underwriters and containing opinions substantially to the effect
set forth in Exhibit D.
(k) The Representative shall have received, on the Closing Date, an
opinion of Fred Robustelli, Esq., Associate General Counsel for the
Depositor, dated the Closing Date, in form and substance satisfactory to
the Representative and counsel for the Underwriters and containing
opinion's substantially to the effect set forth in Exhibit E.
(l) The Representative shall have received, on the Closing Date, an
opinion of the Associate General Counsel or General Counsel of the Insurer,
dated the Closing Date, in form and substance satisfactory to the
Representative and counsel for the Underwriters.
(m) The Representative shall have received, on or prior to the date of
first use of the Prospectus Supplement, and on the Closing Date if
requested by the Representative, letters of independent accountants of the
PF Entities in the form and reflecting the performance of the procedures
previously requested by the Representative.
(n) Each of the PF Entities and the Depositor shall have furnished or
caused to be furnished to the Representative on the Closing Date a
certificate of an executive officer of such entity satisfactory to the
Representative as to the accuracy of the representations and warranties of
such entity herein at and as of such Closing Date as if made as of such
date, as to the performance by such entity of all of its obligations
hereunder to be performed at or prior to such Closing Date, and as to such
other matters as the Representative may reasonably request;
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(o) The Insurance 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 Supplement.
(p) On or prior to the Closing Date there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any intended or
potential downgrading or (ii) any review or possible change in rating the
direction of which has not been indicated, in the rating accorded the
Insurer's claims paying ability by any "nationally recognized statistical
rating organization," as such term is defined for purposes of the 1933 Act.
(q) There has not occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations, since September 30, 1999, of the Insurer,
that is in the Representative's judgment material and adverse and that
makes it in the Representative's judgment impracticable to market the
Offered Securities on the terms and in the manner contemplated in the
Prospectus.
(r) The PF Entities shall executed and delivered the Depositor
Indemnification Agreement at or prior to the Closing Date, and such
Depositor Indemnification Agreement shall be in form acceptable to the
Representative and the Depositor.
(s) The Representative shall have been furnished such further
information, certificates, documents and opinions as the Representative may
reasonably request.
5. COVENANTS OF THE DEPOSITOR AND THE PF ENTITIES.
(a) In further consideration of the agreements of the Underwriters
contained in the Underwriting Agreement, the Depositor covenants as
follows:
i. To furnish the Representative, without charge, copies of the
Registration Statement and any amendments thereto including exhibits
and as many copies of the Prospectus and any supplements and
amendments thereto as the Representative may from time to time
reasonably request.
ii. Immediately following the execution of the Underwriting
Agreement, the Depositor will prepare a prospectus supplement setting
forth the principal amount, notional amount or stated amount, as
applicable, of Offered Securities covered thereby, the price at which
the Offered Securities are to be purchased by the Underwriters from
the Issuer, either the initial public offering price or prices or the
method by which the price or prices at which the Offered Securities
are to be sold will be determined, the selling concessions and
reallowances, if any, any delayed delivery arrangements, and such
other information as the Representative, PF and the Depositor deem
appropriate in connection with the offering of the Offered Securities,
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but the Depositor will not file any amendment to the Registration
Statement or any supplement to the Prospectus of which the
Representative shall not previously have been advised and furnished
with a copy a reasonable time prior to the proposed filing or to which
the Representative shall have reasonably objected. The Depositor will
cause any amendment to the Registration Statement to become effective
as soon as is reasonably possible after filing. During the time when
a Prospectus is required to be delivered under the 1933 Act, the
Depositor will comply so far as it is able with all requirements
imposed upon it by the 1933 Act and the rules and regulations
thereunder to the extent necessary to permit the continuance of sales
or of dealings in the Offered Securities in accordance with the
provisions hereof and of the Prospectus, and the Depositor will file
with the Commission, promptly upon request by the Representative, any
amendments to the Registration Statement or supplements to the
Prospectus which may be necessary or advisable in connection with the
distribution of the Offered Securities by the Underwriters, and will
cause the same to become effective as soon as is reasonably possible.
The Depositor will advise the Representative, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement or any amended Registration Statement has
become effective or any supplement to the Prospectus or any amended
Prospectus has been filed. The Depositor will advise the
Representative, promptly after it receives notice or obtains knowledge
thereof, of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus, or the suspension of the qualification of the
Offered Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose, or
of any request made by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information, and the Depositor will use reasonable efforts
to prevent the issuance of any such stop order or any order suspending
any such qualification, and if any such order is issued, to obtain the
lifting thereof as promptly as possible.
iii. During the period when a prospectus is required by law to
be delivered in connection with the sale of the Offered Securities
pursuant to the Underwriting Agreement, the Depositor will file, on a
timely and complete basis, all documents that are required to be filed
by the Depositor with the Commission pursuant to Sections 13, 14, or
15(d) of the 1934 Act.
iv. To qualify the Offered Securities for offer and sale under
the securities or "Blue Sky" laws of such jurisdictions as the
Representative shall reasonably request; provided that the PF Entities
shall pay all expenses (including fees and disbursements of counsel)
in connection with such qualification of the eligibility of the
Offered Securities for investment under the laws of such jurisdictions
as the Representative may designate; and provided, further, that in
connection therewith the Depositor shall not be required to qualify to
do business or to file a general consent to service of process in any
jurisdiction.
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v. To make generally available to the Depositor's security
holders, as soon as practicable, but in any event not later than
eighteen months after the date on which the filing of the Prospectus,
as amended or supplemented, pursuant to Rule 424 under the 1933 Act
first occurs, an earnings statement of the Depositor covering a
twelve-month period beginning after the date of the Underwriting
Agreement, which shall satisfy the provisions of Section 11(a) of the
1933 Act and the applicable rules and regulations of the Commission
thereunder (including, at the option of the Depositor, Rule 158).
vi. The Depositor will cause any Computational Materials and any
Structural Term Sheets with respect to the Offered Securities that are
delivered by an Underwriter to the Depositor pursuant to Section 8 to
be filed with the Commission on a Current Report on Form 8-K (a
"Current Report") pursuant to Rule 13a-11 under the Exchange Act in
accordance with Section 10 on the business day immediately following
the date on which this Agreement is executed and delivered. The
Depositor will cause any Collateral Term Sheet with respect to the
Offered Securities that is delivered by the Underwriters to the
Depositor in accordance with the provisions of Sections 9 to be filed
with the Commission on a Current Report pursuant to Rule 13a-11 under
the Exchange Act in accordance with Section 10 on the business day
immediately following the day on which such Collateral Term Sheet is
delivered to counsel for the Depositor by an Underwriter. In
addition, if at any time prior to the availability of the related
Prospectus, an Underwriter has delivered to any prospective investor a
subsequent Collateral Term Sheet that reflects, in the reasonable
judgment of the Representative and the Depositor, a material change in
the characteristics of the Receivables from those on which a
Collateral Term Sheet with respect to the Offered Securities
previously filed with the Commission was based, the Depositor will
cause any such Collateral Term Sheet that is delivered by a
Underwriter to the Depositor in accordance with the provisions of
Section 9 hereof to be filed with the Commission on a Current Report
in accordance with Section 10. Each such Current Report shall be
incorporated by reference in the related Prospectus and the related
Registration Statement.
(b) In further consideration of the agreements of the Underwriters
contained in the Underwriting Agreement, each of the PF Entities covenants
as follows:
i. To furnish the Representative, without charge, as many copies
of the Prospectus and any supplements and amendments thereto as the
Representative may from time to time reasonably request.
ii. Immediately following the execution of the Underwriting
Agreement, the PF Entities will prepare a prospectus supplement
setting forth the principal amount, notional amount or stated amount,
as applicable, of Offered Securities covered thereby, the price at
which the Offered Securities are to be purchased by the
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Underwriters from the Depositor, either the initial public offering
price or prices or the method by which the price or prices at which
the Offered Securities are to be sold will be determined, the selling
concessions and reallowances, if any, any delayed delivery
arrangements, and such other information as the Representative, the PF
Entities and the Depositor deem appropriate in connection with the
offering of the Offered Securities. During the time when a Prospectus
is required to be delivered under the 1933 Act, the PF Entities will
prepare, so that the Depositor may file with the Commission, promptly
upon request by the Representative, any supplements to the Prospectus
which may be necessary or advisable in connection with the
distribution of the Offered Securities by the Underwriters.
iii. If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the 1933 Act, any event
occurs as a result of which the Prospectus as then amended or
supplemented would 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, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary for any other reason to amend or supplement the Prospectus
to comply with the 1933 Act, to promptly notify the Representative
thereof and upon their request to prepare and file with the
Commission, at the expense of the PF Entities, an amendment or
supplement which will correct such statement or omission or any
amendment which will effect such compliance.
iv. For so long as any of the Offered Securities remain
outstanding, the PF Entities will furnish to the Representative, as
soon as available, a copy of (i) the annual statement of compliance
delivered by the Servicer to the Indenture Trustee under the
applicable Sale and Servicing Agreement, (ii) the annual independent
public accountants' servicing report furnished to the Indenture
Trustee pursuant to the applicable Sale and Servicing Agreement, (iii)
each report regarding the Offered Securities mailed to the holders of
such Securities, and (iv) from time to time, such other information
concerning such Securities as the Representative may reasonably
request.
v. PF agrees, for so long as any of the Offered Securities
remain outstanding, to furnish to the Representative upon request in
writing copies of such financial statements and other periodic and
special reports as any PF Entity may from time to time distribute
generally to its creditors or the holders of the Offered Securities
and to furnish to the Representative copies of each annual or other
report that any PF Entity shall be required to file with the
Commission.
6. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND THE PF
ENTITIES.
(a) The Depositor represents and warrants to, and agrees with, each
Underwriter, as of the date of the Underwriting Agreement, as follows:
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i. The Registration Statement including a prospectus relating to
the Securities and the offering thereof from time to time in
accordance with Rule 415 under the 1933 Act has been filed with the
Commission and such Registration Statement, as amended to the date of
the Underwriting Agreement, has become effective. No stop order
suspending the effectiveness of such Registration Statement has been
issued and no proceeding for that purpose has been initiated or
threatened by the Commission. A prospectus supplement prepared by PF
specifically relating to the Offered Securities will be filed with the
Commission pursuant to Rule 424 under the 1933 Act; provided, however,
that a supplement to the Prospectus prepared pursuant to Section 5(b)
hereof shall be deemed to have supplemented the Base Prospectus only
with respect to the Offered Securities to which it relates. The
conditions to the use of a registration statement on Form S-3 under
the 1933 Act, as set forth in the General Instructions on Form S-3,
and the conditions of Rule 415 under the 1933 Act, have been satisfied
with respect to the Depositor and the Registration Statement. There
are no contracts or documents of the Depositor that are required to be
filed as exhibits to the Registration Statement pursuant to the 1933
Act or the rules and regulations thereunder that have not been so
filed.
ii. On the effective date of the Registration Statement, the
Registration Statement conformed in all material respects to the
requirements of the 1933 Act and the rules and regulations thereunder,
and did not include any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; on the date of the
Underwriting Agreement and as of the Closing Date, the Registration
Statement conforms, and as amended or supplemented, if applicable,
will conform in all material respects to the requirements of the 1933
Act and the rules and regulations thereunder, and on the date of the
Underwriting Agreement and as of the Closing Date, the Registration
Statement does not include any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Registration Statement as amended or supplemented, if applicable, will
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.
iii. The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
iv. The Depositor has all requisite power and authority
(corporate and other) and all requisite authorizations, approvals,
orders, licenses, certificates and permits of and from all government
or regulatory officials and bodies to own its properties, to conduct
its business as described in the Registration Statement and the
Prospectus and to execute, deliver and perform these Standard
Provisions, the Underwriting Agreement, and each Transaction Document
to which it is a party,
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except such as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution by the Underwriter of
the Offered Securities; all such authorizations, approvals, orders,
licenses, certificates are in full force and effect and contain no
unduly burdensome provisions; and, except as set forth or contemplated
in the Registration Statement or the Prospectus, there are no legal or
governmental proceedings pending or, to the best knowledge of the
Depositor, threatened that would result in a material modification,
suspension or revocation thereof.
v. The execution and delivery by the Depositor of these Standard
Provisions, the Underwriting Agreement, and each Transaction Document
to which it is a party are within the corporate power of the Depositor
and none of the execution and delivery by the Depositor of these
Standard Provisions, the Underwriting Agreement, and each Transaction
Document to which it is a party, the consummation by the Depositor of
the transactions therein contemplated, or the compliance by the
Depositor with the provisions thereof, will conflict with or result in
a breach of, or constitute a default under, the charter or the by-laws
of the Depositor or any of the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on the Depositor
or its properties, or any of the provisions of any indenture,
mortgage, contract or other instrument to which the Depositor is a
party or by which it is bound, or will result in the creation or
imposition of a lien, charge or encumbrance upon any of its property
pursuant to the terms of any such indenture, mortgage, contract or
other instrument, except such as have been obtained under the 1933 Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Offered
Securities by the Underwriters.
vi. The Underwriting Agreement has been, and at the Closing Date
each Transaction Document to which it is a party will have been, duly
authorized, executed and delivered by the Depositor.
vii. At the Closing Date, each of the Underwriting Agreement,
and each Transaction Document to which it is a party will constitute a
legal, valid and binding obligation of the Depositor, enforceable
against the Depositor, in accordance with its terms, subject, as to
the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of
creditors generally, and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
viii. No filing or registration with, notice to, or consent,
approval, non-disapproval, authorization or order or other action of,
any court or governmental authority or agency is required for the
consummation by the Depositor of the
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transactions contemplated by the Underwriting Agreement, or the
Transaction Documents, except such as have been obtained and except
such as may be required under the 1933 Act, the rules and regulations
thereunder, or state securities or "Blue Sky" laws, in connection with
the purchase and distribution of the Offered Securities by the
Underwriters.
ix. The Depositor owns or possesses or has obtained all material
governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may be,
and to operate, its properties and to carry on its business as
presently conducted and has received no notice of proceedings relating
to the revocation of any such license, permit, consent, order or
approval, which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially adversely
affect the conduct of the business, results of operations, net worth
or condition (financial or otherwise) of the Depositor.
x. There are no legal or governmental proceedings pending to
which the Depositor is a party or of which any property of the
Depositor is the subject which, if determined adversely to the
Depositor would individually or in the aggregate have a material
adverse effect on the condition (financial or otherwise), earnings,
affairs, or business or business prospects of the Depositor and, to
the best of the Depositor's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others.
xi. Any taxes, fees and other governmental charges in connection
with the execution, delivery and issuance of the Underwriting
Agreement, these Standard Provisions, the Transaction Documents and
the Offered Securities have been or will be paid at or prior to the
Closing Date.
(b) Each PF Entity represents and warrants to, and agrees with, each
Underwriter and the Depositor, as of the date of the Underwriting
Agreement, as follows:
i. Such PF Entity is either a corporation or a limited liability
company that has been duly organized and is validly existing in good
standing under the laws of its jurisdiction of organization.
ii. Each of the PF Entities has all requisite power and
authority (corporate and other) and all requisite authorizations,
approvals, orders, licenses, certificates and permits of and from all
government or regulatory officials and bodies to own its properties,
to conduct its business as described in the Prospectus and to execute,
deliver and perform these Standard Provisions, the Underwriting
Agreement, and the Transaction Documents to which it is a party,
except such as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution by the Underwriters
of the Offered Securities; all such authorizations, approvals, orders,
licenses, certificates are in full force and effect and
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contain no unduly burdensome provisions; and, except as set forth or
contemplated in the Prospectus, there are no legal or governmental
proceedings pending or, to the best knowledge of the PF Entities,
threatened that would result in a material modification, suspension or
revocation thereof.
iii. The Offered Securities have been duly authorized, and when
the Offered Securities are issued and delivered pursuant to the
Underwriting Agreement, the Offered Securities will have been duly
executed, issued and delivered and will be entitled to the benefits
provided by the applicable Indenture, subject, as to the enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting the rights of creditors generally,
and to general principles of equity (regardless of whether the
entitlement to such benefits is considered in a proceeding in equity
or at law), and will conform in substance to the description thereof
contained in the Registration Statement and the Prospectus, and will
in all material respects be in the form contemplated by the Indenture.
iv. The execution and delivery by each of the PF Entities of
these Standard Provisions, the Underwriting Agreement and the
Transaction Documents to which it is a party are within the corporate
power of such PF Entity and none of the execution and delivery by such
PF Entity of these Standard Provisions, the Underwriting Agreement,
and the Transaction Documents to which it is a party, the consummation
by such PF Entity of the transactions therein contemplated, or the
compliance by such PF Entity with the provisions thereof, will
conflict with or result in a breach of, or constitute a default under,
the charter, or the by-laws, operating agreement or other
organizational documents, as applicable of such PF Entity or any of
the provisions of any law, governmental rule, regulation, judgment,
decree or order binding on such PF Entity or its properties, or any of
the provisions of any indenture, mortgage, contract or other
instrument to which such PF Entity is a party or by which it is bound,
or will result in the creation or imposition of a lien, charge or
encumbrance upon any of its property pursuant to the terms of any such
indenture, mortgage, contract or other instrument, except such as have
been obtained under the 1933 Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Offered Securities by the
Underwriters.
v. The Underwriting Agreement has been, and at the Closing Date
the Transaction Documents to which it is a party will have been, duly
authorized, executed and delivered by such PF Entity.
vi. At the Closing Date, each of the Underwriting Agreement and
the Transaction Documents to which it is a party will constitute a
legal, valid and binding obligation of such PF Entity, enforceable
against such PF Entity, in accordance with its terms, subject, as to
the enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the
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<PAGE>
rights of creditors generally, and to general principles of equity and
the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law).
vii. No filing or registration with, notice to, or consent,
approval, non-disapproval, authorization or order or other action of,
any court or governmental authority or agency is required for the
consummation by such PF Entity of the transactions contemplated by the
Underwriting Agreement and the Transaction Documents, except such as
have been obtained and except such as may be required under the 1933
Act, the rules and regulations thereunder, or state securities or
"Blue Sky" laws, in connection with the purchase and distribution of
the Offered Securities by the Underwriters.
viii. Such PF Entity owns or possesses or has obtained all
material governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to lease, own or license, as the
case may be, and to operate, its properties and to carry on its
business as presently conducted and has received no notice of
proceedings relating to the revocation of any such license, permit,
consent, order or approval, which singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
materially adversely affect the conduct of the business, results of
operations, net worth or condition (financial or otherwise) of such PF
Entity.
ix. Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which such
PF Entity is a party or of which any property of such PF Entity is the
subject which, if determined adversely to such PF Entity would
individually or in the aggregate have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, or business or
business prospects of such PF Entity and, to the best of such PF
Entity's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others.
x. At the Closing Date or any Subsequent Transfer Date, as the
case may be, each of the Receivables which is a subject of the
Transaction Documents, and all such Receivables in the aggregate will
meet the criteria for selection described in the Prospectus, and at
the Closing Date or any Subsequent Transfer Date, as the case may be,
the representations and warranties made by such PF Entity in the
Transaction Documents will be true and correct as of such date.
xi. At the time of execution and delivery of the Sale and
Servicing Agreement and each Subsequent Transfer Agreement, such PF
Entity will have good and marketable title to the Receivables being
transferred to the Transferor and then assigned from the Transferor to
the Depositor and then from the Depositor to the Issuer pursuant
thereto, free and clear of any lien, mortgage, pledge, charge,
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<PAGE>
encumbrance, adverse claim or other security interest (collectively,
"Liens"), and neither PF nor the Transferor will have assigned to any
person (other than, the Transferor, the Issuer and the Indenture
Trustee) any of its right, title or interest in such Receivables or in
such Transaction Documents. Each of PF and the Transferor will have
the power and authority to transfer such Receivables, and upon
execution and delivery of the Sale and Servicing Agreement and each
Subsequent Transfer Agreement and delivery of the Receivables to, or
on behalf of, the Issuer, the Issuer will have good and marketable
title to the Receivables free and clear of any Liens.
xii. Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the
Underwriting Agreement and the Transaction Documents and the Offered
Securities have been or will be paid at or prior to the Closing Date.
xiii. On the date of the Underwriting Agreement and as of the
Closing Date, the Prospectus conforms, and as amended or supplemented,
if applicable, will conform in all material respects to the
requirements of the 1933 Act and the rules and regulations thereunder,
and on the date of the Underwriting Agreement and as of the Closing
Date, neither the Prospectus nor any ABS Term Sheets or Computational
Materials furnished to prospective investors includes any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and each such document, as amended or
supplemented, if applicable, will 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; provided, however, that the foregoing does not apply to
statements or omissions in any of such documents based upon the
Underwriter Information (as defined herein) or the Depositor
Information (as defined herein).
7. INDEMNIFICATION AND CONTRIBUTION.
(a) the Depositor and the Underwriters:
i. The Depositor agrees to indemnify and hold harmless each
Underwriter (including Prudential Securities Incorporated acting in
its capacity as Representative and as one of the Underwriters), and
each of its directors and each person or entity who controls any
Underwriter within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages or liabilities, joint or several,
to which such Underwriter or such director, officer or controlling
person may become subject under the 1933 Act, the 1934 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a
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material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter
and each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter or such director or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action.
ii. Each Underwriter will indemnify and hold harmless the
Depositor, each of the Depositor's directors, each of the Depositor's
officers who signed the Registration Statement and each person, if
any, who controls the Depositor, within the meaning of the 1933 Act or
the 1934 Act, against any losses, claims, damages or liabilities to
which the Depositor, or any such director, officer or controlling
person may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or any other
prospectus relating to the Offered Securities, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statements or alleged untrue
statements or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Depositor
by any Underwriter through the Representative specifically for use
therein; and each Underwriter will reimburse any legal or other
expenses reasonably incurred by the Depositor or any such director,
officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have. The Depositor acknowledges that the
statements set forth in the second paragraph and the clause after the
comma in the first sentence in the third paragraph under the caption
"UNDERWRITING" in the Prospectus Supplement (the "Underwriter
Information") constitute the only information furnished to the
Depositor by or on behalf of any Underwriter for use in the
Registration Statement, any Preliminary Prospectus or the Prospectus,
and each of the several Underwriters represents and warrants that such
statements are correct as to it.
iii. Promptly after receipt by an indemnified party under this
Section 7(a) 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 this Section 7(a), notify the
indemnifying party in writing of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability which the indemnifying party may
have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. 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
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entitled to participate therein and, to the extent that it may elect
by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under
this Section 7(a) for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses
available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party
shall not be liable for the expenses of more than one separate
counsel.
iv. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding parts of this Section 7(a) is for any reason held to be
unavailable to or insufficient to hold harmless an indemnified party
under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled,
there shall be considered the relative benefits received by the
Depositor on the one hand, and the Underwriters on the other, from the
offering of the Offered Securities (taking into account the portion of
the proceeds of the offering realized by each), the Depositor's and
the Underwriters' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission, and
any other equitable considerations appropriate in the circumstances.
The Depositor and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated
as one entity for such purpose). No Underwriter or person controlling
such Underwriter shall be obligated to make contribution hereunder
which in the aggregate exceeds the total underwriting fee of the
Offered Securities purchased by such Underwriter under the
Underwriting Agreement, less the aggregate amount of any damages which
such Underwriter and its controlling persons have otherwise been
required to pay in respect of the same or any substantially similar
claim. The Underwriters' obligation to contribute hereunder are
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several in proportion to their respective underwriting obligations and
not joint. For purposes of this Section 7(a), each officer or
director and each person, who controls an Underwriter within the
meaning of the 1933 Act shall have the same rights to contribution as
such Underwriter, and each director of the Depositor, each officer of
the Depositor who signed the Registration Statement, and each person,
if any, who controls the Depositor within the meaning of Section 15 of
the 1933 Act, shall have the same rights to contribution as the
Depositor.
(b) The PF Entities and the Underwriters.
i. Each of the PF Entities agrees (severally and not jointly)
(A) to indemnify and hold harmless each Underwriter (including
Prudential Securities Incorporated acting in its capacity as
Representative and as one of the Underwriters), and each of its
directors and each person or entity who controls any Underwriter or
any such person, within the meaning of the 1933 Act or the 1934 Act,
against any losses, claims, damages or liabilities, joint and several,
to which such Underwriter or such person or entity may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of
any material fact contained in any ABS Term Sheets or Computational
Materials furnished to prospective investors or any Current Report or
any amendment or supplement thereof, the Prospectus, any amendment or
supplement to the Prospectus or the omission or the alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, but only to
the extent that such untrue statement or alleged untrue statement or
omission or alleged omission does not relate to (x) the Underwriter
Information and (y) the information under the headings "Summary of
Terms -- Depositor" and "The Depositor" in the Prospectus Supplement;
this indemnity agreement will be in addition to any liability which
the PF Entities may otherwise have; and (B) to indemnify and to hold
each Underwriter harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that such
Underwriter may sustain in any way related to the failure of any of
the PF Entities to perform its duties in compliance with the terms of
the Transaction Documents.
ii. Each Underwriter will indemnify and hold harmless each of
the PF Entities, each of its directors, and each person or entity who
controls any PF Entity, within the meaning of the 1933 Act or the 1934
Act, against any losses, claims, damages or liabilities to which such
PF Entity, or any such director or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any
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amendment or supplement thereto, or any other prospectus relating to
the Offered Securities, 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 light
of the circumstances under which they were made, not misleading, and
in each case to the extent, but only to the extent, that such untrue
statements or alleged untrue statements or omission or alleged
omission was made in reliance upon and in conformity with the
Underwriter Information; and each Underwriter will reimburse any legal
or other expenses reasonably incurred by the PF Entities or any such
director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any liability
which such Underwriter may otherwise have. Each of the PF Entities
acknowledges that the Underwriter Information constitutes the only
information furnished by or on behalf of any Underwriter for use in
the Registration Statement, any preliminary Prospectus or the
Prospectus, and each of the several Underwriters represents and
warrants that such statements are correct as to it.
iii. Promptly after receipt by an indemnified party under this
Section 7(b) 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 this Section 7(b), notify the
indemnifying party in writing of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability which the indemnifying party may
have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. 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
elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to
such indemnified party. After notice from the indemnifying party to
such indemnified party of its election to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
under this Section 7(b) for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided,
however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses
available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party
shall not be liable for the expenses of more than one separate
counsel.
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iv. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding parts of this Section 7(b) is for any reason held to be
unavailable to or insufficient to hold harmless an indemnified party
under subsection (i) or (ii) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled,
there shall be considered the relative benefits received by the PF
Entities on the one hand, and the Underwriters on the other, from the
offering of the Offered Securities (taking into account the portion of
the proceeds of the offering realized by each), the PF Entities' and
the Underwriters' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission, and
any other equitable considerations appropriate in the circumstances.
The PF Entities and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated
as one entity for such purpose). No Underwriter or person controlling
such Underwriter shall be obligated to make contribution hereunder
which in the aggregate exceeds the total underwriting fee of the
Offered Securities purchased by such Underwriter under the
Underwriting Agreement, less the aggregate amount of any damages which
such Underwriter and its controlling persons have otherwise been
required to pay in respect of the same or any substantially similar
claim. The Underwriters' obligation to contribute hereunder are
several in proportion to their respective underwriting obligations and
not joint. For purposes of this Section 7(b), each officer, each
director and each person who controls an Underwriter within the
meaning of the 1933 Act shall have the same rights to contribution as
such Underwriter, and each officer, each director, and each person who
controls any PF Entity within the meaning of the 1933 Act, shall have
the same rights to contribution as such PF Entity.
(c) The parties hereto agree that the first sentence of Section 5 of
the Indemnification Agreement dated as of the Closing Date among the Note
Insurer, the Issuer, the Depositor and the Underwriters shall not be
construed as limiting the Depositor's right to enforce its rights under
Section 7(a) of these Standard Provisions. The parties further agree that,
as between the parties hereto, to the extent that the provisions of Section
5 of the Indemnification Agreement conflict with Section 7(a) hereof, the
provisions of Section 7(a) hereof shall govern. The indeminification
provided in this Underwriting Agreement will be in addition to any
liability which the parties may otherwise have and shall in no way limit
any obligations of the parties to the Depositor Indemnification Agreement.
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8. COMPUTATIONAL MATERIALS AND STRUCTURAL TERM SHEETS.
(a) Each Underwriter agrees to provide to the Depositor no less than
one business day prior to the date on which the Prospectus is proposed to
be filed pursuant to Rule 424(b) under the Act, for the purpose of
permitting the Depositor to comply with the filing requirement set forth in
Section 7(i), all information (in such written or electronic format as
required by the Depositor) with respect to the Offered Securities which
constitutes "Computational Materials", as defined in the Commission's No-
Action Letter, dated May 20, 1994, addressed to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated and Kidder Structured
Asset Corporation, and the no-action letter dated May 27, 1994 issued by
the Division of Corporation Finance of the Commission to the Public
Securities Association (together, the "Kidder Letters"), the filing of
which material is a condition of the relief granted in such letters (such
materials being the "Computational Materials"), and (ii) "Structural Term
Sheets" within the meaning of the no-action letter dated February 17, 1995
issued by the Division of Corporation Finance of the Commission to the
Public Securities Association (the "PSA Letter") and the filing of such
material is a condition of the relief granted in such letter (such
materials being the "Structural Term Sheets"), such delivery to be made not
later than 10:30 a.m. New York on the business day immediately following
the date on which such Computational Materials or Structural Term Sheets
was first delivered to a prospective investors in the Offered Securities.
Each delivery of Computational Materials and Structural Terms Sheets to the
Depositor pursuant to this paragraph (a) shall be effected in accordance
with Section 10.
(b) Each Underwriter represents and warrants to and agrees with the
Depositor, as of the date hereof and as of the Closing Date, that:
i. the Computational Materials furnished to the Depositor by
such Underwriter pursuant to Section 8(a) constitute (either in
original, aggregated or consolidated form) all of the materials
furnished to prospective investors by such Underwriter prior to the
time of delivery thereof to the Depositor that are required to be
filed with the Commission with respect to the Offered Securities in
accordance with the Kidder Letters, and such Computational Materials
comply with the requirements of the Kidder Letters; and
ii. the Structural Term Sheets furnished to the Depositor by
such Underwriter pursuant to Section 8(a) constitute all of the
materials furnished to prospective investors by such Underwriter prior
to the time of delivery thereof to the Depositor that are required to
be filed with the Commission as "Structural Term Sheets" with respect
to the Offered Securities in accordance with the PSA Letter, and such
Structural Term Sheets comply with the requirements of the PSA Letter.
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9. COLLATERAL TERM SHEETS.
(a) Prior to the delivery of any "Collateral Term Sheet" within the
meaning of the PSA Letter, the filing of which material is a condition of
the relief granted in such letter (such material being the "Collateral Term
Sheets"), to a prospective investor in the Offered Securities, the
Underwriters shall notify the Depositor and its counsel by telephone of
their intention to deliver such materials and the approximate date on which
the first such delivery of such materials is expected to occur. On the
business day immediately following the date on which any Collateral Term
Sheet was first delivered to a prospective investor in the Offered
Securities, the Underwriters shall deliver to the Depositor one complete
copy of all materials provided by the Underwriters to prospective investors
in such Offered Securities which constitute "Collateral Term Sheets." Each
delivery of a Collateral Term Sheet to the Depositor pursuant to this
paragraph (a) shall be effected in accordance with Section 10. (Collateral
Term Sheets and Structural Term Sheets are, together, referred to herein as
"ABS Term Sheets.") At the time of each such delivery, the Underwriter
making such delivery shall indicate in writing that the materials being
delivered constitute Collateral Term Sheets, and, if there has been any
prior such delivery with respect to the Offered Securities, shall indicate
whether such materials differ in any material respect from any Collateral
Term Sheets previously delivered to the Depositor with respect to the
Offered Securities pursuant to this Section 9(a) as a result of the
occurrence of the material change in the characteristics of the related
Receivables.
(b) Each Underwriter represents and warrants to and agrees with the
Depositor as of the date of this Agreement and as of the Closing Date, that
the Collateral Term Sheets furnished to the Depositor by such Underwriter
pursuant to Section 9(a) constitute all of the materials furnished to
prospective investors by such Underwriter prior to time of delivery thereof
to the Depositor that are required to be filed with the Commission as
"Collateral Term Sheets" with respect to the Offered Securities in
accordance with the PSA Letter, and such Collateral Term Sheets comply with
the requirements of the PSA Letter.
(c) If, at any time when a Prospectus relating to the Offered
Securities is required to be delivered under the Act, it shall be necessary
to amend or supplement the related Prospectus as a result of an untrue
statement of a material fact contained in any Collateral Term Sheets
provided by any Underwriter pursuant to this Section 9 or the omission to
state therein a material fact required, when considered in conjunction with
the related Prospectus, to be stated therein or necessary to make the
statements therein, when read in conjunction with the related Prospectus,
not misleading, or if it shall be necessary to amend or supplement any
Current Report relating to any Collateral Term Sheets to comply with the
Act or the rules thereunder, such Underwriter and PF promptly will prepare
and furnish to the Depositor for filing with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance.
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10. DELIVERY AND FILING OF CURRENT REPORTS, COLLATERAL TERM SHEETS,
STRUCTURAL TERM SHEETS.
(a) Any Current Report, Collateral Term Sheet or Structural Term Sheet
that is required to be delivered by the Underwriter to the Depositor
hereunder shall be effected by the delivery of one copy to counsel for the
Depositor and, if requested, one copy in computer readable format to a
financial printer specified by the Depositor on or prior to the date so
specified herein.
(b) The Depositor shall cause its counsel or the financial printer to
file with the Commission any such Current Report, Collateral Term Sheet or
Structural Term Sheet within one business day immediately following the
delivery thereof pursuant to the preceding subsection.
11. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective representations, warranties, agreements, covenants, indemnities and
other statements of the Depositor and the PF Entities, their officers and the
several Underwriters set forth in, or made pursuant to, the Underwriting
Agreement shall remain in full force and effect, regardless of any
investigation, or statement as to the result thereof, made by or on behalf of
any Underwriter, the Depositor, the PF Entities or any of the officers or
directors or any controlling person of any of the foregoing, and shall survive
the delivery of and payment for the Offered Securities.
12. TERMINATION.
(a) The Underwriting Agreement may be terminated by the Depositor by
notice to the Representative in the event that a stop order suspending the
effectiveness of the Registration Statement shall have been issued or
proceedings for that purpose shall have been instituted or threatened.
(b) The Underwriting Agreement may be terminated by the Representative
by notice to the Depositor in the event that the Depositor shall have failed,
refused or been unable to perform all obligations and satisfy all conditions to
be performed or satisfied hereunder by the Depositor at or prior to the Closing
Date.
(c) Termination of the Underwriting Agreement pursuant to this Section
12 shall be without liability of any party to any other party other than as
provided in Sections 7 and 14 hereof.
13. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters
defaults or default in their obligation to purchase Offered Securities which it
or they have agreed to purchase under the Underwriting Agreement and the
aggregate principal amount of the Offered Securities which such defaulting
Underwriter or Underwriters agreed but failed to purchase is ten percent (10%)
or less of the aggregate principal amount, notional amount or stated amount, as
applicable, of the Offered Securities to be sold under the Underwriting
Agreement, as the case may be, the other
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Underwriters shall be obligated severally in proportion to their respective
commitments under the Underwriting Agreement to purchase the Offered Securities
which such defaulting Underwriter or Underwriters agreed but failed to purchase.
If any Underwriter or Underwriters so defaults or default and the aggregate
principal amount of the Offered Securities with respect to which such default or
defaults occurs or occur is more than ten percent (10%) of the aggregate
principal amount, notional amount or stated amount, as applicable, of Offered
Securities to be sold under the Underwriting Agreement, as the case may be, and
arrangements satisfactory to the Representative and the Depositor for the
purchase of such Offered Securities by other persons (who may include one or
more of the non-defaulting Underwriters including the Representative) are not
made within 36 hours after any such default, the Underwriting Agreement will
terminate without liability on the part of any non-defaulting Underwriters or
the Depositor except for the expenses to be paid or reimbursed by the Depositor
pursuant to Section 11 hereof. As used in the Underwriting Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10. Nothing herein shall relieve a defaulting Underwriter from liability
for its default.
14. EXPENSES.
(a) PF agrees with the several Underwriters that:
i. whether or not the transactions contemplated in the
Underwriting Agreement are consummated or the Underwriting Agreement
is terminated, PF will pay all fees and expenses incident to the
performance of its obligations under the Underwriting Agreement,
including, but not limited to, (i) the expenses of printing and
distributing the Underwriting Agreement and any related underwriting
documents, any Preliminary Prospectus, the Prospectus, any amendments
or supplements to the Registration Statement or the Prospectus, any
ABS Term Sheets and Computational Materials (including in each case
all exhibits, amendments and supplements thereto) and any Blue Sky
memorandum or legal investment survey and any supplements thereto and
(ii) fees and expenses of rating agencies, accountants and counsel for
the Depositor.
ii. all out-of-pocket expenses, including counsel fees,
disbursements and expenses, reasonably incurred by the Underwriters in
connection with investigating, preparing to market and marketing the
Offered Securities and proposing to purchase and purchasing the
Offered Securities under the Underwriting Agreement will be borne and
paid by PF if the Underwriting Agreement is terminated by the
Depositor pursuant to Section 12(a) hereof or by the Representative on
account of the failure, refusal or inability on the part of the
Depositor to perform all obligations and satisfy all conditions on the
part of the Depositor to be performed or satisfied hereunder; and
iii. PF will pay the cost of preparing the certificates for the
Offered Securities.
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(b) In connection with the transactions contemplated under this
Underwriting Agreement and the Transaction Documents, PF shall promptly pay
(or shall promptly reimburse the Depositor to the extent that the Depositor
shall have paid or otherwise incurred): (i) the fees and disbursements of
the Depositor's and the PF Entities' counsel; (ii) the fees of S&P and
Moody's; (iii) any of the fees of the Indenture Trustee and the fees and
disbursements of the Indenture Trustee's counsel; (iv) any of the fees of
the Owner Trustee and the fees and disbursements of the Owner Trustee's
counsel; (v) expenses incurred in connection with printing the Prospectus,
the Prospectus Supplement, any ABS Term Sheets and Computational Materials
and any amendment or supplement thereto, any Preliminary Prospectus and the
Offered Securities; (vi) fees and expenses relating to the filing of
documents with the Commission (including without limitation periodic
reports under the Exchange Act); (vii) the shelf registration fee of 0.05%
of the principal balance of the Offered Securities on the Closing Date,
paid in connection with the issuance of Offered Securities]; (viii) the
fees and disbursements for KPMG, accountants for the PF Entities; and (ix)
all of the initial expenses of the Insurer including, without limitation,
legal fees and expenses, accountant fees and expenses and expenses in
connection with due diligence conducted on the Receivables Files but not
including the initial premium paid to the Insurer. For the avoidance of
doubt, the parties hereto acknowledge that it is the intention of the
parties that the Depositor shall not pay any of the Indenture Trustee's or
Owner Trustee's fees and expenses in connection with the transactions
contemplated by this Underwriting Agreement and the Transaction Documents.
All other costs and expenses in connection with the transactions
contemplated hereunder shall be borne by the party incurring such expenses.
(c) Except as otherwise provided in this Section 14, the Underwriters
agree to pay all of their expenses (excluding the fees and expenses of
their counsel, which shall be paid by PF) in connection with investigating,
preparing to market and marketing the Offered Securities and proposing to
purchase and purchasing the Offered Securities under the Underwriting
Agreement, including any advertising expenses incurred by them in making
offers and sales of the Offered Securities.
15. NOTICES. All communications under the Underwriting Agreement
shall be in writing and, (i) if sent to the Underwriters, shall be mailed,
delivered or telegraphed and confirmed to the Representative at the address and
to the attention of the person specified in the Underwriting Agreement, (ii) if
sent to the Depositor, shall be mailed, delivered or telegraphed and confirmed
to Prudential Securities Secured Financing Corporation, One New York Plaza, New
York, New York 10292, Attention: Managing Director-Asset Backed Finance Group;
and (iii) if sent to the PF Entities, shall be mailed, delivered or telegraphed
and confirmed to PeopleFirst Finance, LLC, 401 West A Street, Suite 1000, San
Diego, California 92101, Attention: Gary J. Miller; provided, however, that any
notice to any Underwriter pursuant to the Underwriting Agreement shall be
mailed, delivered or telegraphed and confirmed to such Underwriter at the
address furnished by it.
16. REPRESENTATIVE OF UNDERWRITERS. Any Representative identified in
the Underwriting Agreement will act for the Underwriters of the Offered
Securities and any action taken
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by the Representative under the Underwriting Agreement will be binding upon all
of such Underwriters.
17. SUCCESSORS. The Underwriting Agreement shall inure to the
benefit of and shall be binding upon the several Underwriters, the Depositor and
the PF Entities and their respective successors and legal representatives, and
nothing expressed or mentioned herein or in the Underwriting Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of the Underwriting Agreement, or any
provisions herein contained, the Underwriting Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the representations and warranties of the Depositor and the PF Entities
contained herein or in the Underwriting Agreement shall also be for the benefit
of any person or persons who controls or control any Underwriter within the
meaning of Section 15 of the 1933 Act, and (ii) the indemnities by the several
Underwriters shall also be for the benefit of the directors of the Depositor,
the officers of the Depositor who have signed the Registration Statement and any
person or persons who control the Depositor within the meaning of Section 15 of
the 1933 Act. No purchaser of the Offered Securities from any Underwriter shall
be deemed a successor because of such purchase. These Standard Provisions and
each Underwriting Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. TIME OF THE ESSENCE. Time shall be of the essence of each
Underwriting Agreement.
19. GOVERNING LAW. These Standard Provisions and each Underwriting
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
[Signature Page Follows]
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If the foregoing is in accordance with your understanding, please sign
and return two counterparts hereof.
Yours truly,
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:_____________________________
Name:
Title:
PEOPLEFIRST FINANCE, LLC
By:_____________________________
Name:
Title:
PEOPLEFIRST.COM INC.
By:_____________________________
Name:
Title:
PF FUNDING II, LLC
By:_____________________________
Name:
Title:
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Accepted as of the date hereof:
PRUDENTIAL SECURITIES INCORPORATED,
As Representative of the Several Underwriters
By:________________________________________
Name:
Title:
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EXHIBIT A
Form of Opinion of Rogers & Wells LLP
(1) Each of Parent and the Transferor has been duly organized and is
validly existing and in good standing under the laws of its jurisdiction of
organization. Each of Parent and the Transferor has power and authority (a) to
own its properties and conduct its business as now conducted by it; (b) to own,
sell and assign the Receivables and the other Trust Property; and (c) to
execute and deliver each of the Underwriting Agreement, the Standard Provisions
and the Transaction Documents (collectively, the "Basic Documents") to which it
is a party and to carry out their respective terms.
(2) The execution, delivery, and performance by the Parent and the
Transferor of the Basic Documents to which it is a party and the consummation of
the transactions contemplated thereby have been duly authorized by the Parent
and the Transferor, respectively, by all necessary corporate action. The Basic
Documents to which each of the Parent and the Transferor is a party have been
duly executed and delivered by, and each constitutes a legal, valid and binding
obligation of, the Parent and the Transferor, respectively, enforceable against
the Parent and the Transferor, respectively, in accordance with its respective
terms.
(3) The execution, delivery and performance by each of the Parent and the
Transferor of the Basic Documents to which it is a party, the consummation of
the transactions contemplated thereby and the compliance with the terms and
provisions thereof will not materially conflict with or result in a material
breach of any of the terms or provisions of, or constitute (with or without
notice or lapse of time or both) a material default under or result in the
creation or imposition of any Lien (other than as contemplated by the Basic
Documents) upon any of its properties pursuant to the terms of, (A) its
certificate of incorporation, articles of association or bylaws, (B) to the
actual knowledge of such counsel, any material indenture, contract, lease,
mortgage, deed of trust or other instrument or agreement to which it is a party
or by which it is bound, which breach or default would reasonably be expected to
have a material adverse impact on the Parent or the Transferor, as applicable,
or the transactions contemplated by the Basic Documents, (C) any order, writ,
judgment, award, injunction or decree binding on the Parent or the Transferor,
as applicable, or (D) any law, rule or regulation applicable to the Parent or
the Transferor, as applicable.
(4) No consent, approval, authorization, license or other order or action
of, or filing or registration with, any court or governmental authority, bureau
or agency is required in connection with the execution, delivery or performance
by either of the Parent or the Transferor of the Basic Documents to which it is
a party, or the consummation of the transactions contemplated thereby, except as
may be required under the Act and the Rules and Regulations and state securities
laws and any filings of UCC financing statements.
(5) When the Receivables have been transferred to the Trust, the Basic
Documents have been executed, the Securities have been authenticated by the
Trustee and Indenture
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Trustee, as applicable in accordance with the Basic Documents, and the Notes and
Certificates have been delivered and paid for pursuant to the Underwriting
Agreement and the Certificate Purchase Agreement, the Securities will be validly
issued and outstanding and entitled to the benefits provided by the Basic
Documents, and the Indenture and the Notes will constitute legal, valid and
binding obligations of the Trust, enforceable in accordance with their
respective terms.
(6) There are no proceedings or investigations pending or, to such
counsel's actual knowledge, after due inquiry, threatened to which either the
Parent or the Transferor is a party before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over the Parent or the Transferor, (A) that are required to be
disclosed in the Registration Statement or the Prospectus, other than those
disclosed therein, (B) asserting the invalidity of any of the Basic Documents,
(C) seeking to prevent the issuance of the Securities or the consummation of any
of the transactions contemplated by any of the Basic Documents, (D) seeking any
determination or ruling that could materially and adversely affect the
performance of the Parent's or the Transferor's obligations under, or the
validity or enforceability of, any of the Basic Documents to which it is a
party, (E) that may affect materially and adversely the federal or state income,
excise, franchise or similar tax attributes of any of the Securities, or (F)
that would reasonably be expected to materially adversely affect the interests
of the holders of any of the Securities.
(7) Such counsel is generally familiar with the standard operating
procedures relating to the PF's acquisition of a perfected security interest in
the vehicles financed by PF pursuant to auto loans in the ordinary course of
PF's business. Assuming that PF's standard procedures are followed with respect
to the perfection of security interests in the Financed Vehicles, PF has
acquired or will acquire a perfected security interest in the Financed Vehicles.
(8) To such counsel's actual knowledge, there are no contracts or other
documents to which the Parent or the Transferor is a party of a character
required to be filed as an exhibit to the Registration Statement or required to
be described in the Registration Statement or the Prospectus which are not filed
or described as required.
(9) The statements in the Prospectus Supplement under the headings
"Description of the Notes," "Description of the Certificates," and "Description
of the Trust Agreements" and in the Base Prospectus under the headings
"Description of the Securities" and "Description of the Trust Agreements" to
the extent they purport to summarize the provisions of the Offered Securities
and Basic Documents, constitute a fair summary of the Offered Securities and the
Basic Documents. The statements in the Prospectus under the headings "Summary
of Terms - Tax Status," "Summary of Terms - ERISA Considerations," "Federal
Income Tax Consequences" and "ERISA Considerations" accurately describe the
material Federal income tax and ERISA consequences to Noteholders and Note
Owners and, to the extent they constitute descriptions of matters of law or
legal conclusions with respect thereto, have been prepared or reviewed by such
counsel and are correct in all material respects.
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<PAGE>
(10) The Trust will be classified for federal income tax purposes as a
partnership and not as an association taxable as a corporation, and the Notes
will be characterized as debt for federal income tax purposes.
(11) The Trust Agreement is not required to be qualified and the Indenture
has been duly qualified under the Trust Indenture Act of 1939, as amended, and
the Trust is not required to be registered as an "investment company" under the
Investment Company Act of 1940, as amended.
(12) The Securities and the Basic Documents each conforms in all material
respects with the descriptions thereof contained in the Registration Statement
and the Prospectus.
(13) The provisions of Section 2.1 the Sale and Servicing Agreement are
effective to create either an ownership interest or a valid and enforceable
security interest in the Initial Receivables and the other Transferor Property
and the proceeds thereof, which security interest has attached. To the extent,
if any, that the transfer of the Initial Receivables and the other Transferor
Property pursuant to the Sale and Servicing Agreement from PF to the Transferor
does not constitute a valid sale, transfer and assignment of the Initial
Receivables and the other Transferor Property from PF to the Transferor, PF
would be deemed to have granted to the Transferor a valid and enforceable
security interest in the Initial Receivables and the other Transferor Property
and the proceeds thereof.
(14) The provisions of Section 2.3 the Sale and Servicing Agreement are
effective to create a valid and enforceable security interest in favor of the
Depositor in the Initial Receivables and the other Transferor Property and the
proceeds thereof, which security interest has attached.
(15) The provisions of Section 2.4 the Sale and Servicing Agreement are
effective to create a valid and enforceable security interest in favor of the
Trust in the Initial Receivables and the other Depositor Property and the
proceeds thereof, which security interest has attached.
(16) The provisions of the Granting Clause of the Indenture are effective
to a create a valid and enforceable security interest in favor of the Indenture
Trustee in the Initial Receivables and the other Collateral and the proceeds
thereof to secure the Issuer Secured Obligations, which security interest has
attached.
(17) The provisions of Section 2.03 of the Reserve Account Agreement are
effective to create a valid and enforceable security interest in favor of the
Collateral Agent in the Collateral (as defined in the Reserve Account
Agreement), which security interest has attached.
(18) Nothing has come to such counsel's attention that would cause it to
believe that as of the date of the Prospectus and at the Closing Date (x) the
Registration Statement, the
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Prospectus and any amendments and supplements thereto (other than the financial
statements and other accounting, statistical and financial information contained
therein or omitted therefrom, as to which such counsel need express no belief)
contained or contain any untrue statement of a material fact or omitted or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading and (y) the descriptions therein of laws, rules,
regulations, governmental proceedings, legal matters, contracts and documents
are not accurate in all material respects or do not fairly present the
information required to be shown therein.
(20) The standard form of Note and Security Agreement creates a legal,
valid, binding and enforceable obligation of the Obligor in accordance with its
terms.
(21) The Receivables constitute "chattel paper" as defined in Section 9-
105(b) of the Uniform Commercial Code as in effect in the State of New York (the
"NY UCC"). Pursuant to Section 9-103 of the NY UCC, (i) perfection of a
possessory security interest in the chattel paper is governed by the law of the
jurisdiction where the chattel paper is located "when the last event occurs on
which is based the assertion that the security interest is perfected or
unperfected" and (ii) perfection of a non-possessory security interest in
chattel paper is governed by the law (including the conflict of law rules) of
the jurisdiction in which the debtor has its place of business, if it has only
one place of business, or at its chief executive office, if it has more than one
place of business.
(22) All filings necessary under applicable law to perfect the transfer of
the Receivables and the other Depositor Property by the Depositor to the Trust
have been made and, provided that the Depositor does not relocate its principal
places of business, no other filings (other than the filing of continuation
statements) need be made to maintain such perfection, and the interest of the
Trust, will constitute a perfected security or ownership interest prior to any
other security or ownership interest that may be perfected by the filing of a
financing statement under the UCC.
Such opinion may be made subject to the qualifications that the
enforceability of the terms of the Basic Documents may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of the rights of creditors of national banks
generally and to equitable limitations on the availability of specific
remedies.
32
<PAGE>
EXHIBIT B
Form of Opinion of Saxon, Barry, Gardner & Kincannon, special
California counsel to PeopleFirst Finance, LLC
(1) PF is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of California. PF has power and
authority (a) to own its properties and conduct its business as now conducted by
it; (b) to own, contribute, sell, assign and, in its capacity as Servicer,
service the Receivables and the other Trust Property; and (c) to execute and
deliver each of the Underwriting Agreement, the Standard Provisions and the
Transaction Documents (collectively, the "Basic Documents") to which it is a
party and to carry out their respective terms.
(2) The execution, delivery, and performance by PF of the Basic Documents
to which it is a party and the consummation of the transactions contemplated
thereby have been duly authorized by PF by all necessary action. The Basic
Documents to which PF is a party have been duly executed and delivered by, and
each constitutes a legal, valid and binding obligation of, PF, enforceable
against PF in accordance with its respective terms.
(3) The execution, delivery and performance by PF of the Basic Documents
to which it is a party, the consummation of the transactions contemplated
thereby and the compliance with the terms and provisions thereof will not
materially conflict with or result in a material breach of any of the terms or
provisions of, or constitute (with or without notice or lapse of time or both) a
material default under or result in the creation or imposition of any Lien
(other than as contemplated by the Basic Documents) upon any of its properties
pursuant to the terms of, (A) its articles of organization or operating
agreement, (B) to the actual knowledge of such counsel, any material indenture,
contract, lease, mortgage, deed of trust or other instrument or agreement to
which it is a party or by which it is bound, which breach or default would
reasonably be expected to have a material adverse impact on PF or the
transactions contemplated by the Basic Documents, (C) any order, writ, judgment,
award, injunction or decree binding on PF or (D) any law, rule or regulation
applicable to PF.
(4) No consent, approval, authorization, license or other order or action
of, or filing or registration with, any federal or California governmental
authority, bureau or agency is required in connection with the execution,
delivery or performance by PF of the Basic Documents to which it is a party, or
the consummation of the transactions contemplated thereby, except as may be
required under the 1933 Act and the Rules and Regulations and state securities
laws and any filings of UCC financing statements.
(5) There are no proceedings or investigations pending or, to such
counsel's actual knowledge, after due inquiry of PF's officers, threatened to
which PF is a party before any court, regulatory body, administrative agency or
other tribunal or governmental
33
<PAGE>
instrumentality having jurisdiction over PF, (A) that are required to be
disclosed in the Registration Statement or the Prospectus, other than those
disclosed therein, (B) asserting the invalidity of any of the Basic Documents,
(C) seeking to prevent the issuance of the Securities or the consummation of any
of the transactions contemplated by any of the Basic Documents, (D) seeking any
determination or ruling that could materially and adversely affect the
performance of PF of its obligations under, or the validity or enforceability
of, any of the Basic Documents to which it is a party, (E) that may affect
materially and adversely the federal or state income, excise, franchise or
similar tax attributes of any of the Securities, or (F) that would reasonably be
expected to materially adversely affect the interests of the holders of any of
the Securities.
(6) PF has all licenses and qualifications necessary in connection with
the origination and servicing of the Receivables in all States in which
Receivables assigned to the Issuer were originated and the Receivables are in
compliance with all requirements of applicable federal, state and local laws in
all material respects.
(7) All filings necessary under applicable law to perfect (A) the transfer
of the Receivables by PF to the Transferor and (B) the assignment of the
Receivables by the Transferor to the Depositor have been made and, provided that
PF and the Transferor do not relocate their respective principal places of
business, no other filings (other than the filing of continuation statements)
need be made to maintain such perfection, and the interest of the Transferor and
the Depositor, respectively, will constitute a perfected security or ownership
interest prior to any other security or ownership interest that may be perfected
by the filing of a financing statement under the UCC.
(8) The statements in the Prospectus under the headings "Summary of
Terms--Tax Status" and "State Tax Consequences" accurately describe the material
California corporation franchise tax consequences to Noteholders and Note Owners
and, to the extent they constitute descriptions of matters of law or legal
conclusions with respect thereto, have been prepared or reviewed by such counsel
and are correct in all material respects.
(9) Except as described in the Prospectus, the Trust will not be subject
to income or franchise taxation in California.
(10) Noteholders who are not residents of, or domiciled in, or otherwise
subject to taxation in California will not be subject to California income or
California franchise taxation in such state solely by reason of being
Noteholders.
(11) franchise tax purposes.
(12) A court applying California law would hold that the standard form of
Contract used by PF with Obligors domiciled in the State of California (the
"California Contract"), upon negotiation of the check attached thereto, creates
a legal, valid, binding and enforceable
34
<PAGE>
obligation of the Obligor thereunder in accordance with the terms of the
California Contract, and given the existence of such enforceable obligation: (a)
a court applying California law would hold that the California Contract creates
a valid security interest in the rights of the related Obligor in the related
Financed Vehicle (each a "California Financed Vehicle") in favor of PF; and (b)
a court applying California law would hold that the California Contract
constitutes chattel paper under Article 9 of the UCC.
(13) Following the assignment by PF to the Transferor of PF's security
interest in California Financed Vehicles, the assignment by the Transferor to
the Depositor of the Transferor's security interest in the California Financed
Vehicles, the assignment by the Depositor to the Issuer of the Depositor's
security interest in the California Financed Vehicles, and the assignment by the
Trust to the Indenture Trustee of the Trust's security interest in the
California Financed Vehicles, such security interests will be perfected security
interests of first priority in favor of the Transferor, the Depositor, the
Issuer and the Indenture Trustee, as applicable.
(14) The Transferor is registered to transact business as a limited
liability company in the State of California.
Such opinion may be made subject to the qualifications that the
enforceability of the terms of the Basic Documents may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of the rights of creditors of national banks
generally and to equitable limitations on the availability of specific
remedies.
35
<PAGE>
EXHIBIT C
Form of Opinion of Counsel to Indenture Trustee
(1) The Indenture Trustee is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. The Indenture
Trustee has full power, authority and legal right to execute, deliver and
perform the Basic Documents to which it is a party and carry out their
respective terms.
(2) The execution, delivery and performance by the Indenture Trustee of
the Basic Documents to which it is a party and the consummation of the
transactions contemplated thereby have been duly authorized by the Indenture
Trustee by all necessary action. The Basic Documents to which it is a party have
been duly executed and delivered by the Indenture Trustee, and when executed and
delivered by the other parties thereto, will constitute legal, valid and binding
obligations of the Indenture Trustee.
(3) The Notes have been duly authenticated and delivered by the Indenture
Trustee.
(4) No consent, approval, authorization, license or other order or action
of, or filing or registration with, any court or governmental authority, bureau
or agency is required in connection with the execution, delivery or performance
of the Basic Documents to which it is a party by the Indenture Trustee or the
consummation of the transactions contemplated thereby.
(5) The execution, delivery and performance of the Basic Documents to
which it is a party by the Indenture Trustee, the consummation of the
transactions contemplated thereby and compliance with the terms and provisions
thereof will not conflict with or result in a breach or violation of any of the
terms and provisions of, constitute (with or without notice or lapse of time or
both) a default under or result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of, (A) the charter, articles of
association or bylaws of the Indenture Trustee, (B) any indenture, contract,
lease, mortgage, deed of trust or other instrument or agreement to which the
Indenture Trustee is a party or by which the Indenture Trustee is bound or any
of its properties are subject, or (C) any law, order, rule or regulation
applicable to the Indenture Trustee or its properties, of any regulatory body,
any court, administrative agency or other governmental instrumentality having
jurisdiction over the Indenture Trustee or any of its properties.
(6) There are no actions, suits or proceedings pending or, to the best of
such counsel's knowledge, threatened against the Indenture Trustee before any
court, or by or before any federal, state, municipal or other governmental
department, commission, board, bureau or governmental agency or instrumentality,
or arbitrator which would, if adversely determined, affect in any material
respect the consummation, validity or enforceability against the Indenture
Trustee of the Indenture.
36
<PAGE>
(7) If the Indenture Trustee were acting as Servicer under the Basic
Documents as of the date of this Agreement, the Indenture Trustee would have the
corporate power and authority to perform the obligations of the Servicer as
provided in the Basic Documents.
Such opinion may be made subject to the qualifications that the
enforceability of the terms of the Basic Documents may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of the rights of creditors of national banks
generally and to equitable limitations on the availability of specific
remedies.
37
<PAGE>
EXHIBIT D
Form of Opinion of Counsel to Owner Trustee
(1) The Owner Trustee has been duly organized and is validly existing and
in good standing as a [Delaware banking corporation]. The Owner Trustee has full
power, authority and legal right to execute, deliver and perform the Basic
Documents to which it is a party and to carry out their respective terms.
(2) The execution, delivery and performance by the Owner Trustee of each
of the Basic Documents to which the Owner Trustee or the Trust is a party and
the consummation of the transactions contemplated thereby, have been duly
authorized by the Owner Trustee by all necessary action. The Basic Documents to
which the Owner Trustee is a party have been duly executed and delivered by the
Owner Trustee, and, when executed and delivered by the other parties thereto,
such Basic Documents will constitute legal, valid and binding obligations of the
Owner Trustee enforceable against the Owner Trustee in accordance with their
respective terms. The Basic Documents to which the Trust is a party have been
duly executed and delivered by the Trust, and when executed and delivered by the
other parties thereto, such Basic Documents will constitute legal, valid and
binding obligations of the Trust enforceable against the Trust in accordance
with their respective terms.
(3) No consent, approval, authorization, license or other order or action
of, or filing or registration with, any court or governmental authority, bureau
or agency is required in connection with the execution, delivery or performance
by the Owner Trustee or the Trust of the Basic Documents to which it is a party
or the consummation of the transactions contemplated thereby except such as have
been obtained and made under the Act and the Rules and Regulations or state
securities laws and the filing of any UCC financing statements required to
perfect the Trust's interest in the Receivables.
(4) The execution, delivery and performance by the Owner Trustee of the
Basic Documents to which it is a party, the consummation of the transactions
contemplated thereby and the compliance with the terms and provisions thereof
will not conflict with or result in a breach or violation of any of the terms
and provisions of, constitute (with or without notice or lapse of time or both)
a default under or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of, (A) the articles of association or
bylaws of the Owner Trustee, (B) any indenture, contract, lease, mortgage, deed
of trust or other instrument or agreement to which the Owner Trustee is a party
or by which the Owner Trustee is bound or any of its properties are subject, or
(C) any law, order, rule or regulation applicable to the Owner Trustee or its
properties, of any regulatory body, any court, administrative agency or other
governmental instrumentality having jurisdiction over the Owner Trustee or any
of its properties.
(5) The Certificates have been duly executed, authenticated and delivered
by the Owner Trustee.
38
<PAGE>
(6) When the Notes have been duly executed and delivered by the Owner
Trustee on behalf of the Trust and authenticated by the Indenture Trustee, all
in accordance with the Trust Agreement and the Indenture, and delivered to and
paid for by the purchasers thereof, the Notes will be valid and binding
obligations of the Trust, enforceable against the Trust, in accordance with
their terms and the terms of the Indenture.
(7) There are no actions, suits or proceedings pending or, to the best of
such counsel's knowledge, threatened against the Owner Trustee before any court,
or by or before any federal, state, municipal or other governmental department,
commission, board, bureau or governmental agency or instrumentality, or
arbitrator which would, if adversely determined, affect in any material respect
the consummation, validity or enforceability against the Owner Trustee of any of
the Basic Documents.
(8) The Trust has been duly formed and is validly existing as a statutory
business trust under the laws of the State of Delaware, with full power and
authority to execute, deliver and perform its obligations under the Basic
Documents to which it is a party.
(9) All filings necessary under applicable law to perfect the pledge of
the Receivables by the Issuer to the Indenture Trustee have been made and,
provided that the Issuer does not relocate its principal places of business, no
other filings (other than the filing of continuation statements) need be made to
maintain such perfection, and the interest of the Indenture Trustee will
constitute a perfected security or ownership interest prior to any other
security or ownership interest that may be perfected by the filing of a
financing statement under the UCC.
Such opinion may be made subject to the qualifications that the
enforceability of the terms of the Basic Documents may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of the rights of creditors of national banks
generally and to equitable limitations on the availability of specific
remedies.
39
<PAGE>
EXHIBIT E
Form of Opinion of Counsel to the Depositor
(1) The Depositor is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and is duly qualified
to do business as a foreign corporation in the State of New York.
(2) The Depositor has corporate power and authority to enter into the
Basic Documents to which it is a party.
(3) The execution, delivery and performance by the Depositor of the Basic
Documents to which it is a party do not conflict with the Certificate of
Incorporation or the Bylaws of the Depositor and to such counsel's knowledge,
(A) do not conflict with or violate or constitute a material breach of, or
constitute a default under, any material written contract, indenture,
undertaking or other agreement or instrument by which the Depositor is bound or
to which it is now a party, and (B) do not conflict with or violate any order,
writ, injunction or decree of any court or governmental authority against the
Depositor.
(4) The Basic Documents to which the Depositor is a party have been
authorized by all necessary action on the part of the Depositor and have been
duly executed and delivered by the Depositor.
Such opinion may be made subject to the qualifications that the
enforceability of the terms of the Basic Documents may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of the rights of creditors of national banks
generally and to equitable limitations on the availability of specific
remedies.
40
<PAGE>
EXHIBIT 4.1
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1
Class A-1 6.415% Asset Backed Notes
Class A-2 6.685% Asset Backed Notes
Class A-3 6.835% Asset Backed Notes
---------------------------
INDENTURE
Dated as of November 1, 1999
---------------------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Indenture Trustee
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE.................................... 2
SECTION 1.1. Definitions............................................................ 2
SECTION 1.2. Incorporation by Reference of Trust Indenture Act...................... 10
SECTION 1.3. Rules of Construction.................................................. 10
ARTICLE II. THE NOTES..................................................................... 10
SECTION 2.1. Form................................................................... 10
SECTION 2.2. Execution, Authentication and Delivery................................. 11
SECTION 2.3. Temporary Notes........................................................ 11
SECTION 2.4. Registration; Registration of Transfer and Exchange.................... 11
SECTION 2.5. Mutilated, Destroyed, Lost or Stolen Notes............................. 12
SECTION 2.6. Persons Deemed Owner................................................... 13
SECTION 2.7. Payment of Principal and Interest; Defaulted Interest.................. 13
SECTION 2.8 Cancellation........................................................... 14
SECTION 2.9. Release of Collateral.................................................. 14
SECTION 2.10. Book-Entry Notes....................................................... 15
SECTION 2.11. Notices to Clearing Agency............................................. 16
SECTION 2.12. Definitive Notes....................................................... 16
ARTICLE III COVENANTS..................................................................... 16
SECTION 3.1. Payment of Principal and Interest...................................... 16
SECTION 3.2. Maintenance of Office or Agency........................................ 16
SECTION 3.3. Money for Payments To Be Held in Trust................................. 16
SECTION 3.4. Existence.............................................................. 18
SECTION 3.5. Protection of Trust Fund............................................... 18
SECTION 3.6. Opinions as to Trust Fund.............................................. 19
SECTION 3.7. Performance of Obligations; Servicing of Receivables................... 19
SECTION 3.8. Negative Covenants..................................................... 21
SECTION 3.9. Annual Statement as to Compliance...................................... 21
SECTION 3.10. Issuer May Consolidate, Etc. Only on Certain Terms..................... 21
SECTION 3.11. Successor or Transferee................................................ 23
SECTION 3.12. No Other Business...................................................... 23
SECTION 3.13. No Borrowing........................................................... 24
SECTION 3.14. Servicer's Obligations................................................. 24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities......................... 24
SECTION 3.16. Capital Expenditures...................................................... 24
SECTION 3.17. Compliance with Laws...................................................... 24
SECTION 3.18. Restricted Payments....................................................... 24
SECTION 3.19. Notice of Events of Default............................................... 24
SECTION 3.20. Further Instruments and Acts.............................................. 25
SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust Agreement............ 25
SECTION 3.22. Income Tax Characterization............................................... 25
ARTICLE IV SATISFACTION AND DISCHARGE....................................................... 25
SECTION 4.1. Satisfaction and Discharge of Indenture................................... 25
SECTION 4.2. Application of Trust Money................................................ 26
SECTION 4.3. Repayment of Moneys Held by Paying Agent.................................. 26
ARTICLE V. EVENTS OF DEFAULT; REMEDIES...................................................... 26
SECTION 5.1. Events of Default......................................................... 26
SECTION 5.2. Rights Upon Event of Default.............................................. 28
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee. 29
SECTION 5.4. Remedies.................................................................. 31
SECTION 5.5. Optional Preservation of the Trust Fund................................... 32
SECTION 5.6. Priorities................................................................ 32
SECTION 5.7. Limitation of Suits....................................................... 33
SECTION 5.8. Unconditional Rights of Noteholders To Receive Principal and Interest..... 34
SECTION 5.9. Restoration of Rights and Remedies........................................ 34
SECTION 5.10. Rights and Remedies Cumulative............................................ 34
SECTION 5.11. Delay or Omission Not a Waiver............................................ 34
SECTION 5.12. Control by Noteholders.................................................... 34
SECTION 5.13. Waiver of Past Defaults................................................... 35
SECTION 5.14. Undertaking for Costs..................................................... 35
SECTION 5.15. Waiver of Stay or Extension Laws.......................................... 35
SECTION 5.16. Action on Notes........................................................... 36
</TABLE>
ii
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<TABLE>
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<S> <C>
SECTION 5.17. Performance and Enforcement of Certain Obligations......................... 36
SECTION 5.18. Claims Under Policy........................................................ 36
SECTION 5.19. Preference Claims.......................................................... 37
ARTICLE VI. THE INDENTURE TRUSTEE............................................................. 38
SECTION 6.1. Duties of Indenture Trustee................................................ 38
SECTION 6.2. Rights of Indenture Trustee................................................ 40
SECTION 6.3. Individual Rights of Indenture Trustee..................................... 41
SECTION 6.4. Indenture Trustee's Disclaimer............................................. 41
SECTION 6.5. Notice of Defaults......................................................... 41
SECTION 6.6. Reports by Indenture Trustee to Holders.................................... 41
SECTION 6.7. Compensation and Indemnity................................................. 41
SECTION 6.8. Replacement of Indenture Trustee........................................... 42
SECTION 6.9. Successor Indenture Trustee by Merger...................................... 43
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee.......... 44
SECTION 6.11. Eligibility; Disqualification.............................................. 45
SECTION 6.12. Preferential Collection of Claims Against Issuer........................... 45
SECTION 6.13. Appointment and Powers..................................................... 45
SECTION 6.14. Performance of Duties...................................................... 45
SECTION 6.15. Limitation on Liability.................................................... 46
SECTION 6.16. Reliance Upon Documents.................................................... 46
SECTION 6.17. [RESERVED]................................................................. 46
SECTION 6.18. [RESERVED]................................................................. 46
SECTION 6.19. Representations and Warranties of the Indenture Trustee.................... 46
SECTION 6.20. Waiver of Setoffs.......................................................... 47
SECTION 6.21. Control by the Controlling Party........................................... 47
ARTICLE VII. NOTEHOLDERS' LISTS AND REPORTS.................................................... 47
SECTION 7.1. Issuer To Furnish To Indenture Trustee Names and Addresses of Noteholders.. 47
SECTION 7.2. Preservation of Information; Communications to Noteholders................. 47
SECTION 7.3. Reports by Issuer.......................................................... 48
SECTION 7.4. Reports by Indenture Trustee............................................... 48
SECTION 7.5. Fiscal Year................................................................ 48
</TABLE>
iii
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<TABLE>
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<S> <C>
ARTICLE VIII. ACCOUNTS, DISBURSEMENTS AND RELEASES........................................... 48
SECTION 8.1. Collection of Money....................................................... 48
SECTION 8.2. Trust Accounts............................................................ 49
SECTION 8.3. General Provisions Regarding Accounts..................................... 49
SECTION 8.4. Release of Trust Fund..................................................... 50
SECTION 8.5. Opinion of Counsel........................................................ 50
ARTICLE IX. SUPPLEMENTAL INDENTURES........................................................ 51
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders.................... 51
SECTION 9.2. Supplemental Indentures with Consent of Noteholders....................... 52
SECTION 9.3. Execution of Supplemental Indentures...................................... 53
SECTION 9.4. Effect of Supplemental Indenture.......................................... 53
SECTION 9.5. Conformity With Trust Indenture Act....................................... 53
SECTION 9.6. Reference in Notes to Supplemental Indentures............................. 53
ARTICLE X. REDEMPTION OF NOTES............................................................ 54
SECTION 10.1. Redemption................................................................ 54
SECTION 10.2. Form of Redemption Notice................................................. 54
SECTION 10.3. Notes Payable on Redemption Date.......................................... 55
ARTICLE XI. MISCELLANEOUS.................................................................. 55
SECTION 11.1. Compliance Certificates and Opinions, etc................................. 55
SECTION 11.2. Form of Documents Delivered to Indenture Trustee.......................... 57
SECTION 11.3. Acts of Noteholders....................................................... 57
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer, Insurer and Rating Agencies.. 58
SECTION 11.5. Notices to Noteholders; Waiver............................................ 59
SECTION 11.6. Alternate Payment and Notice Provisions................................... 59
SECTION 11.7. Conflict with Trust Indenture Act......................................... 59
SECTION 11.8. Effect of Headings and Table of Contents.................................. 59
SECTION 11.9. Successors and Assigns.................................................... 59
SECTION 11.10. Separability.............................................................. 60
SECTION 11.11. Benefits of Indenture..................................................... 60
SECTION 11.12. Legal Holidays............................................................ 60
SECTION 11.13. GOVERNING LAW............................................................. 60
</TABLE>
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<S> <C>
SECTION 11.14. Counterparts............................................................. 60
SECTION 11.15. Recording of Indenture................................................... 60
SECTION 11.16. Trust Obligation......................................................... 60
SECTION 11.17. No Petition.............................................................. 61
SECTION 11.18. Inspection............................................................... 61
</TABLE>
Exhibit A - Schedule of Receivables
Exhibit B-1 - Form of Class A-1 Note
Exhibit B-2 - Form of Class A-2 Note
Exhibit B-3 - Form of Class A-3 Note
v
<PAGE>
CROSS REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section
<S> <C>
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 (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
</TABLE>
<PAGE>
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.
2
<PAGE>
INDENTURE dated as of November 1, 1999, between PEOPLEFIRST.COM AUTO
RECEIVABLES OWNER TRUST 1999-1, a Delaware business trust (the "Issuer") and
Norwest Bank Minnesota, National Association, a national banking association, as
trustee (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Issuer's Class A-1 6.415% Asset
Backed Notes, Class A-2 6.685% Asset Backed Notes and the Class A-3 6.835% Asset
Backed 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 Trustee on
behalf of the Noteholders.
Financial Security Assurance Inc., a New York financial guaranty insurance
company (the "Insurer"), has issued and delivered a financial guaranty insurance
policy, dated the Closing Date (with endorsements, the "Policy"), pursuant to
which the Insurer guarantees Scheduled Payments, as defined in the Policy.
As an inducement to the Insurer to issue and deliver the Policy, the Issuer
and the Insurer have executed and delivered the Insurance and Indemnity
Agreement, dated as of November 1, 1999 (as amended from time to time, the
"Insurance Agreement"), among the Insurer, the Issuer, the Transferor and
PeopleFirst Finance, LLC.
As an additional inducement to the Insurer to issue the Policy, and as
security for the performance by the Issuer of the Insurer Secured Obligations
and as security for the performance by the Issuer of the Indenture Trustee
Secured Obligations, the Issuer has agreed to assign the Collateral (as defined
below) as collateral to the Indenture Trustee for the benefit of the Issuer
Secured Parties, as their respective interests may appear.
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee on 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 all
accounts, money, chattel paper, securities, instruments, documents, deposit
accounts, certificates of deposit, letters of credit, advices of credit,
banker's acceptances, general intangibles, contract rights, investment property,
goods and other property consisting of, arising from or relating to (a) the
Initial Receivables, and all moneys due thereon after the Initial Cutoff Date;
(b) the Subsequent Receivables and all moneys due thereon or in respect thereof
after the related Subsequent Cutoff Date; (c) an assignment of the security
interests in the Financed Vehicles granted by Obligors pursuant to the Initial
Receivables and any Subsequent Receivables and any other interest of the Issuer
in the Financed Vehicles; (d) any proceeds with respect to the Initial
Receivables and the Subsequent Receivables repurchased pursuant to the terms of
the Sale and Servicing Agreement; (e) all rights under any Service Contracts on
the related Financed Vehicles; (f) any proceeds with respect to the Initial
Receivables and the Subsequent Receivables from claims on any physical damage,
theft, credit life or disability insurance policies covering Financed Vehicles
or Obligors and any proceeds from liquidation of any Initial Receivable or
Subsequent Receivable and Net Liquidation Proceeds with respect to the Initial
Receivables and any Subsequent Receivable; (g) all funds on deposit or other
property 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
dividends, earnings, profits or other distributions of cash or other property
thereon); (h) the Issuer's rights and benefits, but none of its obligations or
burdens, under the
<PAGE>
Sale and Servicing Agreement and each Subsequent Transfer Agreement, including
the delivery requirements, representations and warranties and the cure and
repurchase obligations of PeopleFirst Finance, LLC and PF Funding II, LLC under
the Sale and Servicing Agreement and each Subsequent Transfer Agreement; (i) all
items contained in the Receivables Files, computer tapes or disk drives, and any
and all other documents that PeopleFirst Finance, LLC keeps on file in
accordance with its customary procedures relating to the Receivables, the
Obligors or the Financed Vehicles, and (j) all present and future claims,
demands, causes and chooses 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 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, and all
amounts owing hereunder 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 Trustee on behalf of the Holders of the Notes, and for the
benefit of the 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 in accordance with the terms
hereof.
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).
---
"Authorized Officer" means, with respect to the Issuer and the Servicer,
------------------
any officer 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 the Servicer to the Indenture Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter) or, in the case of the Owner Trustee, a Responsible Officer of the
Owner Trustee.
"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.
"Class A-1 Interest Rate" means 6.415%.
-----------------------
"Class A-2 Interest Rate" means 6.685%.
-----------------------
"Class A-3 Interest Rate" means 6.835%.
-----------------------
"Class A-1 Notes" means the Class A-1 Notes, substantially in the form of
---------------
Exhibit B-1.
2
<PAGE>
"Class A-2 Notes" means the Class A-2 Notes, substantially in the form of
---------------
Exhibit B-2.
"Class A-3 Notes" means the Class A-3 Notes, substantially in the form of
---------------
Exhibit B-3.
"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.
"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.
"Corporate Trust Office" means the principal office of the Indenture
----------------------
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 Norwest Center, Sixth Street and Marquette Avenue, MAC N9311-161 Minneapolis,
Minnesota 55479, Attention: Corporate Trust Services/Asset Backed
Administration, Attention: Corporate Trust Department or at such other address
as the Indenture Trustee may designate from time to time by notice to the
Noteholders, the Insurer, the Servicer and the Issuer, or the principal
corporate trust office of any successor Indenture Trustee (the address of which
the successor Indenture 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.
------------
"Executive Officer" means, with respect to any corporation or limited
-----------------
liability company, 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 or limited liability company;
with respect to any partnership, any general partner thereof, and with respect
to any limited liability company, any Manager.
"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.
3
<PAGE>
"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 Trustee" means Norwest Bank Minnesota, National Association not
-----------------
in its individual capacity but as trustee under this Indenture, or any successor
Indenture Trustee under this Indenture.
"Indenture Trustee Secured Obligations" means all amounts and obligations
-------------------------------------
which the Issuer may at any time owe to the Indenture Trustee in its individual
capacity and the Noteholders under this Indenture or the Notes.
"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 Trustee 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 Trustee 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 Indenture Cross Default" has the meaning assigned to
-------------------------------------------
such term in the Insurance Agreement.
"Insurer Default" has the meaning assigned to such term in the Insurance
---------------
Agreement.
"Insurer Secured Obligations" means all amounts and obligations which the
---------------------------
Issuer may at any time owe to or on behalf of the Insurer under this Indenture,
the Insurance Agreement or any other Basic Document.
4
<PAGE>
"Interest Rate" means with respect to the (i) Class A-1 Notes, the Class
-------------
A-1 Interest Rate, (ii) Class A-2 Notes, the Class A-2 Interest Rate, and (iii)
Class A-3 Notes, the Class A-3 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 Indenture Trustee.
"Issuer Secured Obligations" means the Insurer Secured Obligations and the
--------------------------
Indenture Trustee Secured Obligations.
"Issuer Secured Parties" means each of (i) the Indenture Trustee in respect
----------------------
of the Indenture Trustee Secured Obligations and (ii) the Insurer in respect of
the Insurer Secured Obligations.
"Note" means any of the Class A-1 Notes, Class A-2 Notes or Class A-3 Notes
----
substantially in the form of Exhibit B-1, Exhibit B-2 and Exhibit B-3,
respectively.
"Note Depository Agreement" means the agreement among the Issuer, the
-------------------------
Indenture Trustee, the Servicer and The Depository Trust Company, as the initial
Clearing Agency, dated November 30, 1999, substantially in the form of
Exhibit C.
"Note Majority" means the Holders of Notes evidencing a majority of the
-------------
Outstanding Amount of the Notes.
"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 of Claim" has the meaning specified in Section 5.18.
---------------
"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
Section 314, and delivered to the Indenture 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 Issuer.
"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 Indenture Trustee and, if addressed to the Insurer, satisfactory to the
Insurer, and which shall comply with any applicable requirements of Section
11.01, and shall be in form and substance satisfactory to the Indenture Trustee,
and if addressed to the Insurer, satisfactory to the Insurer.
"Outstanding" means, as of the date of determination, all Notes theretofore
-----------
authenticated and delivered under this Indenture except:
5
<PAGE>
(i) Notes theretofore canceled by the Note Registrar or delivered
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
amount has been theretofore deposited with the Indenture Trustee or Paying
Agent in trust for the Holders of such Notes (provided, however, that if
such Notes are to be redeemed, notice of such has been duly given pursuant
to this Indenture or provision, satisfactory to the Indenture Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which have
authenticated and delivered pursuant to this Indenture unless evidence
satisfactory to the Indenture Trustee is presented that any such Notes are
by a bona fide purchaser;
provided, however, that Notes which have been paid with proceeds of the
-------- -------
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Insurer delivered
to the Indenture Trustee, and the Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the 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 on the Notes, the Seller, the Servicer, or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Indenture 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
Indenture 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 Indenture 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 Indenture Trustee or any other Person that meets
------------
the eligibility standards for the Indenture 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.
"Policy" means the financial guaranty insurance policy issued by the
------
Insurer with respect to the Notes, including any endorsements thereto, in the
form of Annex I to the Insurance Agreement.
"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.
----------------
"Proceeding" means any suit in equity, action at law or other judicial or
----------
administrative proceeding.
6
<PAGE>
"Record Date" means, with respect to a Payment Date or Redemption Date, the
-----------
close of business on the Business Day preceding such Payment Date or Redemption
Date.
"Redemption Date" means 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(b), the
Payment Dates specified by the Servicer or the Issuer pursuant to Section
10.1(a) or (b) 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
the then Outstanding Amount of each class of Notes being redeemed plus accrued
and unpaid interest thereon to but excluding the Redemption Date, or (b) in the
case of a payment made to Noteholders pursuant to Section 10.1(b), the amount on
deposit in the Note Distribution Account, but not in excess of the amount
specified in clause (a) above.
"Responsible Officer" means, (i) with respect to the Indenture Trustee, any
-------------------
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary, or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers 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 and (ii) with respect to the Owner Trustee, any officer
within the Corporate Trust Administration office of the Owner Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary or any other officer of the Owner Trustee customarily performing
functions similar to those performed by any of the above designated officers 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 November 1, 1999, among the Issuer, the Seller, the Servicer, the
Transferor, the Depositor, the Indenture Trustee, the Backup Servicer and the
Custodian, 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); as supplemented on
each Subsequent Transfer Date to reflect the assignment to the Issuer of
Subsequent Receivables.
"Scheduled Payments" has the meaning specified in the Policy.
------------------
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"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 to occur of (i) the expiration of the
----------------
Policy and the return of the Policy to the Insurer for cancellation, (ii) the
date on which the Insurer shall have received payment and performance of all
Insurer Issuer Secured obligations and (iii) the date on which the Indenture
Trustee shall have received payment and performance of all Indenture Trustee
Secured Obligations.
"Trust Fund" 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 of the Noteholders (including all property and
interests Granted to the Indenture Trustee), including all proceeds thereof.
7
<PAGE>
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
------------------- ---
force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
---
Code, as in effect in the relevant jurisdiction, as amended from time to time.
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:
<TABLE>
<CAPTION>
Section of Sale
Term and Servicing Agreement
---- -----------------------
<S> <C>
Affiliate.................................. Section 1.1
Backup Servicer............................ Section 1.1
Backup Servicer Fee........................ Section 1.1
Basic Documents............................ Section 1.1
Business Day............................... Section 1.1
Class...................................... Section 1.1
Closing Date............................... Section 1.1
Collection Account......................... Section 1.1
Controlling Party.......................... Section 1.1
Depositor.................................. Section 1.1
Distribution Amount........................ Section 1.1
Draw Date.................................. Section 1.1
Payment Date............................... Section 1.1
Eligible Investments....................... Section 1.1
Final Scheduled Payment Date............... Section 1.1
Financed Vehicle........................... Section 1.1
Indenture Trustee Fee...................... Section 1.1
Noteholders' Distributable Amount.......... Section 1.1
Obligor.................................... Section 1.1
Original Pool Balance...................... Section 1.1
Payment Date............................... Section 1.1
Person..................................... Section 1.1
Policy Claim Amount........................ Section 1.1
Pool Balance............................... Section 1.1
Rating Agency.............................. Section 1.1
Rating Agency Condition.................... Section 1.1
Receivable................................. Section 1.1
Remaining Pre-Funding Amount............... Section 1.1
Seller..................................... Section 1.1
Servicer................................... Section 1.1
Servicer Default........................... Section 1.1
Trust Accounts............................. Section 1.1
</TABLE>
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.
8
<PAGE>
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 Securityholder" means a Noteholder. "Indenture to be qualified"
means this Indenture. "indenture trustee" or "institutional trustee" means the
Indenture 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, the Class A-2 Notes and the
----
Class A-3 Notes, in each case, together with the Indenture Trustee's certificate
of authentication, shall be in substantially the form set forth in Exhibit B-1,
Exhibit B-2 and Exhibit B-3, 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.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibit B 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.
9
<PAGE>
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 Indenture Trustee shall upon receipt of the Policy and Issuer Order
authenticate and deliver Class A-1 Notes for original issue in an aggregate
principal amount of $56,000,000, Class A-2 Notes for original issue in the
aggregate principal amount of $42,000,000 and Class A-3 Notes for original issue
in the aggregate principal amount of $18,000,000. Notes Outstanding at any time
may not exceed such amount 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
$1,000 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
Indenture 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 Indenture
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 Indenture Trustee shall authenticate and deliver in exchange therefor a like
principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary 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 Indenture 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 Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture 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 Indenture Trustee shall have the
right
10
<PAGE>
to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture 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 Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture 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.
Subject to the restrictions set forth in this Section 2.4, 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 Indenture
Trustee shall authenticate and the Noteholder shall obtain from the Indenture
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 Indenture 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 substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such Note and such
other documents as the Indenture 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 Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee and the 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 Indenture Trustee
and the Insurer harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture 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 Indenture 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
- -------
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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 Indenture Trustee and the 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 Indenture 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 Indenture
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 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 Indenture Trustee, any
agent of the Issuer, the Indenture Trustee or the Insurer 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 Indenture Trustee nor any
agent of the Issuer, the Insurer or the Indenture 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, the Class A-2 Note and the Class A-3 form of the Note set
forth in Exhibits B-1, B-2 and B-3, 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 Payment Date
for such Note (and except for the Redemption Price for any Note called for
redemption
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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 to the person registered as the holder thereof on the related
Record Date as provided in the forms of the Class A-1 Note, the Class A-2 Note
and the Class A-3 Note set forth in Exhibits B-1, B-2 and B-3, 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 Indenture 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 Indenture 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 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 Indenture
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 Indenture Trustee, the Indenture Trustee shall, if the Insurer has paid
any amount in respect of the Notes under the Policy or otherwise which has not
been reimbursed to it, deliver such surrendered Notes to the Insurer.
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 Indenture Trustee, be delivered to
the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.
Subject to Section 2.7(d), the Issuer may at any time deliver to the Indenture
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 Indenture 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
Indenture 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 Indenture Trustee.
SECTION 2.9. Release of Collateral. The Indenture Trustee shall, on or
---------------------
after the Termination Date, release any remaining portion of the Trust Fund 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 Trustee 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 meeting the applicable
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requirements of Section 11.1 and (if required by the TIA) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1).
Notwithstanding this Section 2.9 or any other provision of this Agreement,
the Issuer may (A) collect, liquidate, sell or otherwise dispose of Receivables
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.
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 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 Note Registrar and the Indenture 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 Indenture 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
Indenture 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, until
Definitive Notes shall have been issued to Note Owners pursuant to Section 2.12,
the Indenture Trustee shall give all such notices and communications specified
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herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
SECTION 2.12. Definitive Notes. If (i) the Servicer advises the Indenture
----------------
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 Indenture 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 Indenture
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
Indenture 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
Indenture 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 Indenture Trustee shall authenticate the Definitive
Notes in accordance with the instructions of the Clearing Agency. None of the
Issuer, the Note Registrar or the Indenture 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 Indenture Trustee shall recognize the Holders of the Definitive Notes
as Noteholders.
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, subject
to Section 8.2(c), the Issuer will cause to be distributed all amounts on
deposit in the Note Distribution Account on each Payment Date deposited therein,
pursuant to the Sale and Servicing Agreement (i) for the benefit of the Class A-
1 Notes, to Class A-1 Noteholders, (ii) for the benefit of the Class A-2 Notes,
to Class A-2 Noteholders and (iii) for the benefit of the Class A-3 Notes, to
Class A-3 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 Indenture
Trustee to serve as its agent for the foregoing purposes. The Issuer will give
prompt written notice to the Indenture 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
Indenture 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 Indenture Trustee as its agent to receive all such surrenders,
notices and demands.
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 pursuant to Section 8.2(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so
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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.
On or before each Payment Date and Redemption Date, the Issuer shall
deposit or cause to be deposited 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 Indenture Trustee) shall promptly notify the Indenture
Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee and the Insurer an instrument in
which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture 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 Indenture Trustee notice of any default by the
Issuer of which it has actual knowledge (or any other obligor upon the
Notes) 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 Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture 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 Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture 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 Indenture 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 Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two (2)
years after such amount has become due and payable shall be discharged from such
trust and be paid to the Issuer on Issuer Request and with the consent of the
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 Indenture Trustee or such Paying
Agent with respect to such
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trust money shall thereupon cease; provided, however, that if such money or any
portion thereof had been previously deposited by the Insurer or Indenture
Trustee for the payment of principal or interest on the Notes, to the extent any
amounts are owing to the Insurer, such amounts shall be paid promptly to the
Insurer upon receipt of a written request by the Insurer to such effect, and
provided, further, that the Indenture 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 Indenture 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 Indenture 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 Fund.
SECTION 3.5. Protection of Trust Fund. 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 Fund, and the
Issuer shall take all actions necessary to obtain and maintain, in favor of the
Indenture Trustee, for the benefit of the Issuer Secured Parties, a first lien
on and a first priority, perfected security interest in the Trust Fund. 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
Fund;
(ii) maintain or preserve the lien and security interest
(and the priority thereof) in favor of the Indenture Trustee 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 Fund and the
rights of the Indenture Trustee in such Trust Fund against the claims of
all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon
the Trust Fund when due.
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The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any such financing statement, continuation statement
or other instrument delivered by or on behalf of the Issuer to the Indenture
Trustee for execution. The Indenture Trustee shall not have any liability for
the perfection or priority of the security interest granted hereby and shall
have no duty to prepare or file any continuation statements or other related
instruments.
SECTION 3.6. Opinions as to Trust Fund.
-------------------------
(a) On the Closing Date, the Issuer shall furnish to the
Indenture Trustee and the Insurer an Opinion of Counsel 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 Trustee, 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 120 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 furnish to the Indenture Trustee and the
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
maintain the lien and 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 the 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 Fund 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
Insurer (so long as no Insurer Default shall have occurred and be continuing) to
assist it in performing its duties under this Indenture, and any performance of
such duties by a Person identified to the Indenture Trustee and the 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 Fund, 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
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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
Indenture Trustee (given at the direction of the Controlling Party) or the
Controlling Party.
(d) If an 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 Indenture Trustee, the 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 with respect to the Receivables, the Issuer shall take all reasonable
steps available to it to remedy such failure.
(e) If an Insurer Default shall have occurred and be continuing
and if the Issuer 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 Issuer 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 Indenture Trustee. As soon as a Successor Servicer (other than the Indenture
Trustee) is appointed, the Issuer shall notify the Indenture 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 or the Seller of their respective duties under the
Basic Documents (x) without the prior consent of the 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.
(h) Without derogating from the absolute nature of the
assignment granted to the Indenture Trustee under this Indenture or the rights
of the Indenture Trustee hereunder, the Issuer agrees that, unless such action
is specifically permitted hereunder or under the other Basic Documents, it will
not, without the prior written consent of the Indenture Trustee (to be given at
the direction of the Controlling Party) amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral or the Basic
Documents, or waive timely performance or observance by the Servicer or the
Seller under the Sale and Servicing Agreement; provided that no such amendment
--------
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, 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. If any such amendment, modification, supplement or
waiver shall be so consented to by the Indenture Trustee or such Controlling
Party, the Issuer agrees, promptly following a request by the Indenture Trustee
to do so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as the Indenture Trustee
may deem necessary or appropriate under the circumstances.
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 Fund, unless directed to do so by the Controlling Party;
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(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 Fund; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Indenture
Trustee 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 Fund or any part thereof or any
interest therein or the proceeds thereof (other than tax liens, mechanics'
liens and other liens that arise by operation of law, 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) security interest in the Trust Fund or (D) amend,
modify or fail to comply with the provisions of the Basic Documents without
the prior written consent of the Controlling Party.
(iv) take any action or fail to take any action that would
cause the Issuer to be treated as an association (or publicly traded
partnership) taxable as a corporation for U.S. Federal income tax purposes.
SECTION 3.9. Annual Statement as to Compliance. The Issuer will deliver
---------------------------------
to the Indenture Trustee and the Insurer, within 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year ended December 31,
2000) 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 Indenture Trustee, in form satisfactory to the Indenture
Trustee and the 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;
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(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 Indenture Trustee and the
Insurer (so long as no Insurer Default shall have occurred or be
continuing)) to the effect that such transaction will not have any material
adverse tax consequence to the Trust, the Insurer or any Noteholder or any
Certificateholder;
(v) all actions necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee
and the Insurer an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation or merger 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 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
Insurer 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 Fund, 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 Indenture Trustee, in form satisfactory to
the Indenture Trustee and the 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;
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(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 Indenture Trustee and the
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 Insurer or 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 Indenture Trustee
and the Insurer 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 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
Insurer 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.
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), the Issuer 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 Indenture Trustee stating that the Trust 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. After the Pre-Funding Period, the Issuer
shall not fund the purchase any additional Receivables.
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 and (ii) obligations owing from time to
time to the 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
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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 Pre-
Funding Account and the Capitalized Interest Account, the Reserve Account and
the Yield Supplement Account and to pay the Issuer's organizational,
transactional and start-up expenses.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the Servicer
----------------------
to comply with 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 Indenture Trustee, the Noteholders, the
Certificateholders and the Insurer 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
Indenture Trustee, the Insurer and the Rating Agencies prompt written notice of
each Event of Default hereunder 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 Indenture
----------------------------
Trustee or the 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.
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 Indenture Trustee, the Insurer or the
Holders of the Notes consent to amendments thereto as provided therein.
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SECTION 3.22. Income Tax Characterization. For purposes of federal
---------------------------
income, state and local income and franchise and any other 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, 3.20, 3.21 and 3.22, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee
under Section 4.2) and (vi) the rights of Noteholders as beneficiaries hereof
with respect to the property so deposited with the Indenture Trustee payable to
all or any of them, and the Indenture 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 Indenture Trustee for cancellation and the Policy has
expired and been returned to the Insurer for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
(i) have become due and payable,
(ii) will become due and payable at their respective Final
Scheduled Payment Dates within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of notice
of redemption by the Indenture 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 Trustee
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 Indenture Trustee for cancellation when due to the Final Scheduled
Payment 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 Secured
Obligations and all Indenture Trustee Secured Obligations; and
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(C) the Issuer has delivered to the Indenture Trustee and the Insurer an
Officer's Certificate, an Opinion of Counsel and, if required by the TIA,
the Indenture Trustee or the 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
--------------------------
Indenture 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
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such moneys have been deposited with the
Indenture 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 Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture 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.
ARTICLE V.
EVENTS OF DEFAULT; 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 Indenture
Trustee (solely for purposes of this clause, a payment on the Notes funded
by the 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 Payment Date (solely for purposes of
this clause, a payment on the Notes funded by the 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 Indenture Cross Default;
provided, however, that the occurrence of an Insurance Agreement Indenture
Cross Default may not form the basis of an Event of Default unless the
Insurer shall, upon prior written notice to the Rating Agencies, have
delivered (and not rescinded) to the Issuer and the Indenture Trustee a
written notice specifying that such Insurance Agreement Indenture Cross
Default constitutes an Event of Default under the Indenture; or
(iv) so long as an Insurer Default shall have occurred and
be continuing, default in the observance or performance of any covenant or
agreement of the Issuer made in this
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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 Indenture 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 Indenture
Trustee or to the Issuer and the Indenture Trustee by the Holders of at
least 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) so long as an Insurer Default shall have occurred and be
continuing, 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 Fund 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 Seller, the Transferor or the
Issuer or for any substantial part of the Trust Fund, or ordering the
winding-up or liquidation of the Seller's, the Transferor's or the Issuer's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(vi) so long as an Insurer Default shall have occurred and be
continuing, 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 Seller, the Transferor or the Issuer or for any substantial part of
the Trust Fund, or the making by the Seller, the Transferor or the Issuer
of any general assignment for the benefit of creditors, or the failure by
the Seller, the Transferor or 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 Indenture Trustee and the 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 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 Indenture Trustee shall continue to be entitled to make
claims under the Policy pursuant to Section 5.18 hereof for Scheduled Payments
on the Notes. Payments under the Policy following acceleration of any Notes
shall be applied by the Indenture Trustee:
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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.
(b) In the event any Notes are accelerated due to an Event of Default,
the Insurer shall have the right (in addition to its obligation to pay Scheduled
Payments on the Notes in accordance with the Policy), but not the obligation, to
make payments under the Policy or otherwise of interest and principal due on
such Notes, in whole or in part, on any date or dates following such
acceleration as the 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 Indenture Trustee in
its discretion may, or if so requested in writing by a Note Majority, 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 Indenture Trustee as hereinafter in this Article V provided, a Note
Majority, by written notice to the Issuer and the Indenture Trustee, may rescind
and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture 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 Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Indenture 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
-------------------------------------------------------
Indenture 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 Indenture Trustee,
pay to it, for the benefit of the Holders of the Notes, the whole amount then
due and payable on such Notes for principal and
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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 Indenture 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 Related 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 Fund.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may in its discretion but with the consent of the Controlling Party and
shall, at the direction of the Controlling Party (except as provided in Section
5.3(d) below), proceed to protect and enforce its rights and the rights of the
Noteholders by such appropriate Proceedings as the Indenture 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
Indenture Trustee by this Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture (including without limitation Sections 5.4(a), 5.12, 5.13 and 5.17)
and regardless of whether an Insurer Default shall have occurred and be
continuing, if the Issuer fails to perform its obligations under Section 10.1
hereof when and as due, the Indenture Trustee may in its discretion (and without
the consent of the Controlling Party) proceed to protect and enforce its rights
and the rights of the Noteholders by such appropriate proceedings as the
Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for specific performance 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 Indenture
Trustee by this Indenture or by law; provided that the Indenture Trustee shall
only be entitled to take any such actions without the consent of the Controlling
Party to the extent such actions are taken only to enforce the Issuer's
obligations to redeem the principal amount of Notes and pay interest thereon at
the applicable Interest Rate and are taken only against the portion of the
Collateral, if any, consisting of the Pre-Funding Account, the Capitalized
Interest Account, any investments therein and any proceeds thereof.
(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 Fund, 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 Indenture
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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 Indenture 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:
(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 Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of gross 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 Indenture 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 Indenture
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 Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(f) Nothing herein contained shall be deemed to authorize the
Indenture 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 Indenture 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 Indenture 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 Indenture Trustee shall be brought in its own name as
Indenture Trustee of an express trust, and any recovery of judgment, subject to
the payment of the expenses, disbursements and compensation of the Indenture
Trustee, each predecessor Indenture 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 Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture),
the Indenture 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 Fund;
(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 Indenture Trustee and the Holders of the Notes; and
(iv) direct the Indenture Trustee to sell the Trust Fund 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 the Indenture Trustee, or, if the Insurer is the
-------- -------
Controlling Party, the Insurer, may not sell or otherwise liquidate the
Trust Fund following an Insurance Agreement Indenture Cross Default unless:
(I) such Insurance Agreement Indenture Cross Default arises
from a claim being made on the Policy or from the insolvency of
the Trust, 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
if the Indenture Trustee is the Controlling Party, the Indenture Trustee may not
sell or otherwise liquidate the Trust Fund following an Event of Default unless
either
(x) the Holders of 100% of the Outstanding Amount of
the Notes consents thereto, or
(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 Indenture Trustee determines that the Trust
Fund will not continue to provide sufficient funds for the
payment of principal of and
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interest on the Notes as they would have become due if the
Notes had not been declared due and payable, and the
Indenture Trustee provides 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 (y)
and (z), the Indenture 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 Fund for such purpose.
SECTION 5.5. Optional Preservation of the Trust Fund. If the Indenture
---------------------------------------
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 Indenture Trustee
may, but need not, elect to maintain possession of the Trust Fund. It is the
desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest on the Notes, and
the Indenture Trustee shall take such desire into account when determining
whether or not to maintain possession of the Trust Fund. In determining whether
to maintain possession of the Trust Fund, the Indenture 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 Fund 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(iii),
5.1(v) or 5.1(vi), the Distribution Amount, including any money or property
collected pursuant to this Article V, shall be applied by the Indenture Trustee
in the following order of priority:
(i) FIRST: amounts due and owing and required to be
distributed to the Servicer, the Backup Servicer, the Custodian, the Owner
Trustee and the Indenture Trustee, respectively, pursuant to priorities (i)
and (ii) of Section 5.6(b) of the Sale and Servicing Agreement and not
previously distributed, in the order of such priorities and without
preference or priority of any kind within such priorities;
(ii) 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;
(iii) THIRD: to Noteholders for amounts due and unpaid on the
Notes for principal, ratably, (a) to the Class A-1 Noteholders, (b) to the
Class A-2 Noteholders and (c) to the Class A-3 Noteholders, according to
the amounts due and payable on the Notes for principal;
(iv) FOURTH: amounts due and owing and required to be
distributed to the Insurer pursuant to priority (v) of Section 5.6(b) of
the Sale and Servicing Agreement and not previously distributed; and
(v) FIFTH: all remaining amounts to the Owner Trustee for
distribution to Certificateholders in accordance with Section 5.2(d) of the
Trust Agreement;
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(vi) SIXTH: to or upon the order of the Transferor;
provided that any amounts collected from the Pre-Funding Account shall be
paid, first, for amounts due and unpaid on the Notes for principal, if any, for
distribution to Noteholders in accordance with Section 10.1(b) and, second, in
accordance with priorities ONE through SIXTH above.
(b) The Indenture Trustee may fix a special record date and payment
date for any payment to Noteholders pursuant to this Section. At least 15 days
before such special record date the Issuer shall mail to each Noteholder and the
Indenture Trustee a notice that states the record date, the payment date and the
amount to be paid.
SECTION 5.7. Limitation of Suits. Neither the Insurer, nor any 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) the Insurer or such Holder has previously given
written notice to the Indenture Trustee of a continuing Event of Default;
(ii) the Insurer or the Holders of not less than 25% of the
Outstanding Amount of the Notes have made written request to the Indenture
Trustee to institute such proceeding in respect of such Event of Default in
its own name as Indenture Trustee hereunder;
(iii) the Insurer or such Holder or Holders have offered and
provided to the Indenture Trustee indemnity reasonably satisfactory to it
against the costs, expenses and liabilities to be incurred in complying
with such request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer and provision of indemnity has failed to
institute such proceedings;
(v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Outstanding Amount of the Notes; and
(vi) with respect to such Holder, an Insurer Default shall
have occurred and be continuing;
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 Indenture 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 Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
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
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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 Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture 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 Indenture 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 Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.12. Control by Noteholders. Following the occurrence and
----------------------
continuation of an Insurer Default, 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 Indenture Trustee with
respect to the Notes or exercising any trust or power conferred on the Indenture
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 Indenture Trustee to sell or liquidate the Trust Fund
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 Indenture Trustee elects to retain the Trust Fund
pursuant to such Section, then any direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the Outstanding Amount of
the Notes to sell or liquidate the Trust Fund shall be of no force and
effect; and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction;
provided, however, that, subject to Section 6.1, the Indenture 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.
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SECTION 5.13. Waiver of Past Defaults. 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, a Note Majority 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 or (b) in respect of a
covenant or provision hereof which cannot be modified or amended without the
consent of the Holder of each Note. In the case of any such waiver, the Issuer,
the Indenture 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, 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 Indenture Trustee for any action taken, suffered or omitted by it as
Indenture 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
Indenture 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 Indenture
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 Indenture 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 Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Trust Fund or
upon any of the assets of the Issuer.
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SECTION 5.17. Performance and Enforcement of Certain Obligations.
--------------------------------------------------
(a) Promptly following a request from the Indenture Trustee to do so
and at the Servicer's expense, the Issuer agrees to take all such lawful action
as the Indenture Trustee may request to compel or secure the performance and
observance by the Seller, the Transferor 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 Indenture Trustee, including the transmission of
notices of default on the part of the Seller, the Transferor 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 Indenture Trustee is a Controlling Party and if an Event of
Default has occurred and is continuing, the Indenture Trustee may, and, at the
direction (which direction shall be in writing) of the Holders of at least 66-
2/3% of the Outstanding Amount of the Notes and upon receipt of indemnity
reasonably satisfactory to the Indenture Trustee shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller, the
Transferor 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, the Transferor 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 Policy.
-------------------
(a) In the event that the Indenture Trustee has delivered a Deficiency
Notice with respect to any Determination Date pursuant to Section 5.4 of the
Sale and Servicing Agreement, the Indenture Trustee shall on the related Draw
Date determine the Policy Claim Amount for the related Payment Date. If the
Policy Claim Amount for such Payment Date is greater than zero, the Indenture
Trustee shall furnish to the Insurer no later than 3:00 p.m. New York City time
on the related Draw Date a completed Notice of Claim in the amount of the Policy
Claim Amount. Amounts paid by the Insurer pursuant to a claim submitted under
this Section 5.18(a) shall be deposited by the Indenture Trustee into the Note
Distribution Account for payment to Noteholders on the related Payment Date.
(b) Any notice delivered by the Indenture Trustee to the Insurer
pursuant to subsection 5.18(a) shall specify the Policy Claim Amount claimed
under the Policy and shall constitute a "Notice of Claim" under the Policy. In
accordance with the provisions of the Policy, the Insurer is required to pay to
the Indenture Trustee the Policy Claim Amount properly claimed thereunder by
12:00 noon, New York City time, on the later of (i) the third Business Day
following the Business Day on which the Notice of Claim was received, and (ii)
the applicable Payment Date. Any payment made by the Insurer under the Policy
shall be applied solely to the payment of the Notes, and for no other purpose.
(c) The Indenture Trustee shall (i) receive as attorney-in-fact of
each Noteholder any Policy Claim Amount from the 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 Policy
Claim Amounts disbursed by the Indenture Trustee from claims made under the
Policy shall not be considered payment by the Issuer with respect to such Notes,
and shall not discharge the obligations of the Issuer with respect thereto. The
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
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and conditioned upon any payment with respect to the Notes by or on behalf of
the Insurer, the Indenture Trustee shall assign to the 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 Insurer, and the 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 Policy. To evidence
such subrogation, the Note Registrar shall note the Insurer's rights as subrogee
upon the register of Noteholders upon receipt from the Insurer of proof of
payment by the 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 Scheduled
Payment in respect of the Notes.
(d) The Indenture Trustee shall keep a complete and accurate record of
all funds deposited by the Insurer into the Note Distribution Account and the
allocation of such funds to payment of interest on and principal paid in respect
of any Note. The Insurer shall have the right to inspect such records at
reasonable times upon one Business Day's prior notice to the Indenture Trustee.
(e) The Indenture Trustee shall be entitled to enforce on behalf of
the Noteholders the obligations of the Insurer under the Policy. Notwithstanding
any other provision of this Agreement or any Basic Documents, the Noteholders
are not entitled to institute proceedings directly against the Insurer.
SECTION 5.19. Preference Claims.
-----------------
(a) In the event that the Indenture Trustee has received a certified
copy of an order of the appropriate court that any Noteholders' Interest
Distributable Amount or Noteholders' Principal Distributable Amount paid on a
Note has been avoided in whole or in part as a preference payment under
applicable bankruptcy law, the Indenture Trustee shall so notify the Insurer,
shall comply with the provisions of the Policy to obtain payment by the Insurer
of such avoided payment, and shall, at the time it provides notice to the
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 Policy. The Indenture Trustee shall furnish
to the Insurer its records evidencing the payments of principal of and interest
on Notes, if any, which have been made by the Indenture Trustee and subsequently
recovered from Noteholders, and the dates on which such payments were made.
Pursuant to the terms of the Policy, the Insurer will make such payment on
behalf of the Noteholder to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy named in the Order (as defined in the Policy) and not to
the Indenture Trustee or any Noteholder directly (unless a Noteholder has
previously paid such payment to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy, in which case the Insurer will make such payment to
the Indenture Trustee for distribution to such Noteholder upon proof of such
payment reasonably satisfactory to the Insurer).
(b) The Indenture Trustee shall promptly notify the Insurer of any
proceeding or the institution of any action (of which the Indenture 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 Indenture Trustee hereby agree that so
long as an Insurer Default shall not have occurred and be continuing, the
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 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 Insurer shall
be subrogated to, and each Noteholder and the Indenture Trustee hereby
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delegate and assign, to the fullest extent permitted by law, the rights of the
Indenture 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 action with respect to any court order issued
in connection with any such Preference Claim.
ARTICLE VI.
The Indenture Trustee
---------------------
SECTION 6.1. Duties of Indenture Trustee.
---------------------------
(a) If an Event of Default actually known to a Responsible Officer of
the Indenture Trustee has occurred and is continuing, the Indenture 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 Indenture Trustee has actual knowledge:
(i) The Indenture 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 Indenture Trustee.
(ii) In the absence of bad faith on its part, the Indenture
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 Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture and, if applicable, the other
Basic Documents.
(c) The Indenture Trustee may not be relieved from liability for its
own grossly negligent action, its own grossly 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 Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was grossly negligent in ascertaining the
pertinent facts; and
(iii) the Indenture 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 or 5.17.
(d) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(e) Money held in trust by the Indenture 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.
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(f) No provision of this Indenture shall require the Indenture
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 Indenture Trustee
shall be subject to the provisions of this Section, Section 6.2 and provisions
of the TIA.
(h) The Indenture Trustee shall, upon reasonable prior notice to the
Indenture Trustee, permit any representative of the Insurer or the Noteholders,
during the Indenture Trustee's normal business hours, to examine all books of
account, records, reports and other papers of the Indenture Trustee relating to
the Notes, to make copies and extracts therefrom and to discuss the Indenture
Trustee's affairs and actions, as such affairs and actions relate to the
Indenture Trustee's duties with respect to the Notes, with the Indenture
Trustee's officers and employees responsible for carrying out the Indenture
Trustee's duties with respect to the Notes.
(i) The Indenture 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 Indenture Trustee shall, and hereby agrees that it will, hold
the Policy in trust, and will hold any proceeds of any claim on the Policy in
trust solely for the use and benefit of the Noteholders.
(k) Without limiting the generality of this Section 6.1, the
Indenture Trustee shall have no duty unless specifically set forth in this
Indenture or the Basic Documents (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 Indenture
Trustee pursuant to this Indenture or the Sale and Servicing Agreement believed
by the Indenture 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 of 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.
SECTION 6.2. Rights of Indenture Trustee.
---------------------------
(a) The Indenture Trustee may rely on and shall be protected in
acting or refraining from acting upon any document believed by it to be genuine
and to have been signed or presented by the proper person. The Indenture Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture 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.
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(c) The Indenture 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 Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of, or for
the supervision of, PeopleFirst Finance, LLC, or any other such agent, attorney,
custodian or nominee appointed with due care by it hereunder.
(d) The Indenture 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, that the Indenture Trustee's conduct does
not constitute willful misconduct, gross negligence or bad faith.
(e) The Indenture 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 Indenture Trustee shall be under no obligation to
institute, conduct or defend any litigation under this Indenture or in relation
to this Indenture or otherwise exercise any rights or powers vested in it by
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 and
provided to the Indenture Trustee security or indemnity reasonably satisfactory
to the Indenture Trustee against the costs, expenses and liabilities that may be
incurred therein or thereby; provided however, that the Indenture Trustee shall,
upon the occurrence of an Event of Default (that has not been cured), exercise
the rights and powers vested in it by this Indenture with reasonable care and
skill.
(g) The Indenture 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, and may conclusively rely on the
correctness of any statement made therein but the Indenture Trustee shall make
such investigation if requested in writing to do so by the Insurer (so long as
no, if the Insurer Default shall have occurred and be continuing) or (if an
Insurer Default shall have occurred and be continuing), the Controlling Party,
or 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 Indenture 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
Indenture Trustee, not reasonably assured to the Indenture Trustee by the
security afforded to it by the terms of this Indenture or the Sale and Servicing
Agreement, the Indenture Trustee may require indemnity reasonably satisfactory
to the Indenture Trustee 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 Indenture Trustee, shall
be reimbursed by the Person making such request upon demand.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture
--------------------------------------
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 Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee shall
------------------------------
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Trust Fund or the Notes; the Indenture Trustee
shall not be accountable for the Issuer's use of the proceeds from the Notes,
and it
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shall not be responsible for any recitals or statement of the Issuer in this
Indenture or in any document issued in connection with the sale of the Notes or
in the Notes other than the Indenture Trustee's certificate of authentication.
SECTION 6.5. Notice of Defaults. If a Default occurs and is continuing
------------------
and if it is either actually known by, or written notice of the existence
thereof has been delivered to, a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall mail to each Noteholder notice of the Default within
90 days 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 Indenture 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 Indenture Trustee to Holders. Within the
---------------------------------------
prescribed period for tax reporting purposes after the end of each calendar year
during the term of this Indenture, the Indenture Trustee shall deliver to each
Noteholder such information in its possession relating to the payments made by
the Indenture Trustee on the Notes 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) Pursuant to Section 5.6(b) of the Sale and Servicing
Agreement, the Issuer shall, or shall cause the Servicer to, pay to the
Indenture Trustee from time to time compensation for its services and
reimbursement for its expenses in accordance with a separate agreement between
the Servicer and the Indenture Trustee. The Indenture Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Indenture Trustee shall notify the Issuer and the Servicer promptly
of any claim for which it may seek indemnity. Failure by the Indenture 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 Indenture 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 Indenture Trustee through
the Indenture Trustee's own willful misconduct, negligence or bad faith.
(b) The payment obligations to the Indenture Trustee pursuant to
this Section shall survive the Termination Date and the discharge of this
Indenture subject to a satisfaction of the Rating Agency Condition. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified in
Section 5.1(v) or (vi) 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 Indenture Trustee agrees that the obligations of the Issuer (but
not the Servicer) to the Indenture Trustee hereunder and under the Basic
Documents shall be recourse to the Trust Fund only and specifically shall not be
recourse to the assets of the Seller, the Transferor, the Depositor, the Issuer
or any Noteholder or any Certificateholder. In addition, the Indenture Trustee
agrees that its recourse to the Seller, the Transferor, the Depositor, the
Issuer, the Trust Fund and the Seller shall be limited to the right to receive
the distributions referred to in Section 5.6(b) of the Sale and Servicing
Agreement
SECTION 6.8. Replacement of Indenture Trustee. (a) The Indenture
--------------------------------
Trustee may resign at any time by so notifying the Issuer and the Insurer. The
Controlling Party may remove the Indenture Trustee by
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so notifying the Indenture Trustee and may appoint a successor Indenture
Trustee. The Issuer shall remove the Indenture Trustee, if:
(i) the Indenture Trustee fails to comply with
Section 6.11;
(ii) a court having jurisdiction in the premises in
respect of the Indenture 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 Indenture
Trustee or for any substantial part of the Indenture Trustee's property, or
ordering the winding-up or liquidation of the Indenture 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 Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture 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 Indenture
Trustee or for any substantial part of the Indenture 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 Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee, acceptable to the Insurer
in its sole discretion (so long as an Insurer Default shall not have occurred
and be continuing). If the Issuer fails to appoint such a successor Indenture
Trustee, the Controlling Party may appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, to the Issuer and to the Insurer
(so long as no Insurer Default shall have occurred and be continuing). Thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights, powers
and duties of the Indenture Trustee under this Indenture subject to satisfaction
of the Rating Agency Condition. The successor Indenture Trustee shall mail a
notice of its succession to Noteholders. The retiring Indenture Trustee shall
promptly transfer all property held by it as Indenture Trustee to the successor
Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer or the Controlling Party may petition any court of competent
jurisdiction for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
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Any resignation or removal of the Indenture Trustee and appointment of a
successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to Section 6.8 and payment of all fees and expenses
owed to the outgoing Indenture Trustee.
Notwithstanding the replacement of the Indenture 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 Indenture Trustee.
(b) Every temporary or permanent successor Indenture Trustee
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and to the Indenture 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 Indenture Collateral to the
successor 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 Trustee 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
Trustee, any and all such written instruments shall, at the request of the
temporary or permanent successor Indenture Trustee, be forthwith executed,
acknowledged and delivered by the Issuer. The designation of any successor
Indenture Trustee and the instrument or instruments removing any Indenture
Trustee 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 Trustee in each place where such filing or
recording is necessary to effect the transfer of the Collateral to the successor
Indenture Trustee or to protect or continue the perfection of the security
interests granted hereunder.
SECTION 6.9. Successor Indenture Trustee by Merger. If the Indenture
-------------------------------------
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 Indenture Trustee and shall
provide written notice thereof to the Issuer, the Insurer, and each Rating
Agency provided, however that such corporation or banking association shall be
otherwise qualified and eligible under Section 6.11 hereto.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture 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 Indenture 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 Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture 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 Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
---------------------------------------------------------
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
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located, the Indenture Trustee with the consent of the Insurer (so long as an
Insurer Default shall 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 Indenture 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.
(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 Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture 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
Indenture 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 Indenture 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 Fund 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 Indenture 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 Indenture 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 Indenture
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
Indenture 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 Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture 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 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 Indenture Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Indenture Trustee shall
-----------------------------
at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at
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least $50,000,000 as set forth in its most recent published annual report of
condition or its parent and it or its parent shall have a long term debt rating
of BBB- or better by the Rating Agencies. The Indenture Trustee shall provide
copies of such reports to the Insurer upon request. The Indenture 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
------------------------------------------------
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture 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 Norwest Bank
Minnesota, National Association, in its capacity as Indenture Trustee, as the
collateral agent with respect to the Collateral, and Norwest Bank Minnesota,
National Association hereby accepts such appointment and agrees to act as
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 with respect to the
Collateral in accordance with the provisions of this Indenture. Each Issuer
Secured Party hereby authorizes the Indenture Trustee 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 Trustee by the terms hereof, together with such
actions, rights, remedies, powers and privileges as are reasonably incidental
thereto. The Indenture Trustee 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 Trustee 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 are in violation of any applicable law, rule or regulation or (iii)
for which the Indenture Trustee has not received reasonable indemnity. Receipt
of such instructions shall not be a condition to the exercise by the Indenture
Trustee of its express duties hereunder, except where this Indenture provides
that the Indenture Trustee is permitted to act only following and in accordance
with such instructions.
SECTION 6.14. Performance of Duties. The Indenture Trustee shall have no
---------------------
duties or responsibilities except those expressly set forth in this Indenture
and the other Basic Documents to which the Indenture Trustee is a party or as
directed by the Controlling Party in accordance with this Indenture. The
Indenture Trustee 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 Trustee 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. Neither the Indenture Trustee nor
-----------------------
any of its directors, officers or employees shall be liable for any action taken
or omitted to be taken by it or them hereunder, or in connection herewith,
except that the Indenture Trustee shall be liable for its negligence, bad faith
or willful misconduct; nor shall the Indenture Trustee 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 Trustee
shall incur no liability to the Issuer or the Issuer Secured Parties for any
action taken or omitted by the Indenture Trustee in connection with the
Collateral, except for the negligence, bad faith or willful misconduct on the
part of the Indenture
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Trustee, 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
Trustee 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 Trustee to be genuine and to
have been duly executed by the appropriate signatory, and (absent actual
knowledge to the contrary) the Indenture Trustee shall not be required to make
any independent investigation with respect thereto. The Indenture Trustee 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 Trustee 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 written advice of
such counsel. The Indenture Trustee 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 Trustee against
the costs, expenses and liabilities which might be incurred by it.
SECTION 6.16. Reliance Upon Documents. In the absence of negligence, bad
-----------------------
faith or willful misconduct on its part, the Indenture Trustee 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. [RESERVED].
SECTION 6.18. [RESERVED]
SECTION 6.19. Representations and Warranties of the Indenture Trustee. The
-------------------------------------------------------
Indenture Trustee represents and warrants to the Issuer and to each Issuer
Secured Party as follows:
(a) Due Organization. The Indenture Trustee is a national banking
----------------
association, 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 Trustee has all requisite
---------------
right, power and authority to execute and deliver this Indenture and to perform
all of its duties as Indenture Trustee hereunder.
(c) Due Authorization. The execution and delivery by the
-----------------
Indenture Trustee of this Indenture and the other Basic Documents to which it is
a party, and the performance by the Indenture Trustee of its duties hereunder
and thereunder, have been duly authorized by all necessary organizational
proceedings and no further approvals or filings, including any governmental
approvals, are required for the valid execution and delivery by the Indenture
Trustee, or the performance by the Indenture Trustee, of this Indenture and such
other Basic Documents to which it is a party.
(d) Valid and Binding Indenture. The Indenture Trustee 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 Trustee,
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enforceable against the Indenture Trustee 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 Trustee hereby expressly
-----------------
waives any and all rights of setoff that the Indenture 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 Trustee 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 and be continuing, the Indenture Trustee 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 Indenture Trustee Names and Addresses
----------------------------------------------------------
of Noteholders. The Issuer will furnish or cause to be furnished to the
- --------------
Indenture Trustee (a) not more than five (5) days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Holders as of such Record Date, (b) at such other times as the Indenture
Trustee may request in writing, within thirty (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 ten (10) days prior to the time such list is furnished; provided,
however, that so long as the Indenture Trustee is the Note Registrar, no such
list shall be required to be furnished. The Indenture Trustee or, if the
Indenture Trustee is not the Note Registrar, the Issuer shall furnish to the
Insurer in writing on an annual basis on each March 31 and at such other times
as the Insurer may request, a copy of the list.
SECTION 7.2. Preservation of Information; Communications to Noteholders.
----------------------------------------------------------
(a) The Indenture 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 Indenture Trustee as provided in
Section 7.1 and the names and addresses of Holders received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture 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 Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
SECTION 7.3. Reports by Issuer. The Issuer shall:
-----------------
(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies of the
annual reports and of the information,
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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 Indenture 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 covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
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.
SECTION 7.4. Reports by Indenture Trustee. If required by TIA Section
----------------------------
313(a), within 60 days after each June 30, beginning with June 30, 2000, the
Indenture 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 Indenture 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 Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
SECTION 7.5. Fiscal Year.
-----------
Unless the Issuer otherwise determines, the fiscal year of the Issuer shall
end on December 31 of each year.
ARTICLE VIII.
Accounts, Disbursements and Releases
------------------------------------
SECTION 8.1. Collection of Money. Except as otherwise expressly provided
-------------------
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply
all such money received by it 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 Fund, the Indenture 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 establish
or shall cause the Servicer to establish and maintain, in the name of the
Indenture Trustee, for the benefit of the Noteholders,
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the Insurer and Certificateholders, as applicable, the Trust Accounts as
provided in Section 5.1 of the Sale and Servicing Agreement.
(b) Subject to Section 5.6 of the Sale and Servicing Agreement,
on each Payment Date and Redemption Date, the Indenture 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 the Notes, the amount in the Note Distribution Account shall be applied
to the payment of such interest on the each class of Notes pro rata on the
--- ----
basis of the amount of accrued and unpaid interest due on each class of
Notes;
(ii) any amounts deposited in the Note Distribution
Account with respect to the Remaining Pre-Funding Amount shall be
distributed in accordance with Section 10.1 hereof;
(iii) principal to the Holders of the Class A-1 Notes until
the Outstanding Amount of the Class A-1 Notes is reduced to zero;
(iv) principal to the Holders of the Class A-2 Notes until
the Outstanding Amount of the Class A-2 Notes is reduced to zero; and
(v) principal to the Holders of the Class A-3 Notes until
the Outstanding Amount of the Class A-3 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 and reinvested in Eligible Investments by the Indenture 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 a Trust Account shall be deposited (or caused to be deposited) by
the Indenture Trustee in such Trust Account, and any loss resulting from such
investments shall be charged to such account. The Issuer will not direct the
Indenture 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 Indenture Trustee to make
any such investment or sale, the Issuer shall deliver to the Indenture Trustee
an Opinion of Counsel, acceptable to the Indenture Trustee, to such effect.
(b) [Reserved]
(c) Subject to Section 6.1(c), the Indenture 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 Indenture Trustee's failure to make
payments on such Eligible Investment issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with
their terms.
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(d) If (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 2:00 p.m. Eastern Time (or such other time as may be agreed by the
Issuer and Indenture 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 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 Fund are being applied
in accordance with Section 5.5 as if there had not been such a declaration; then
the Indenture Trustee shall, to the fullest extent practicable, invest and
reinvest funds in the Trust Accounts in investments of the type set forth in
clause (c) of the definition of Eligible Investments maturing no later than the
Business Day immediately preceding the next scheduled Payment Date.
SECTION 8.4. Release of Trust Fund.
---------------------
(a) Subject to the payment of its fees and expenses pursuant to
Section 6.7, the Indenture Trustee may, and when required by the provisions of
this Indenture and the Sale and Servicing Agreement shall, execute instruments
to release property from the lien of this Indenture, or convey the Indenture
Trustee'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 Trustee as provided in this Article VIII
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7
have been paid, release any remaining portion of the Trust Fund from the lien of
this Indenture and release for deposit into the Certificate Distribution Account
or to any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture 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 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 Trustee shall receive at
------------------
least seven days 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
Indenture Trustee shall also require as a condition to such action, an Opinion
of Counsel, in form and substance satisfactory to the Indenture 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 Fund. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX.
Supplemental Indentures
-----------------------
SECTION 9.1. Supplemental Indentures.
-----------------------
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(a) Without the consent of the Holders of any Notes but with the
prior written consent of the 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 Indenture Trustee, the Issuer and the Indenture
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 Indenture 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 Trustee 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 Trustee;
(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;
(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 Indenture 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.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders of the Notes
but with the consent of the Insurer, if there is no Insurer Default, and with
prior notice to the Rating Agencies by the Issuer, as evidenced to the Indenture
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
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not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Noteholder.
SECTION 9.2. Supplemental Indentures with Consent of Noteholders.
---------------------------------------------------
(a) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, also may, with prior written notice to the Rating Agencies, with
the consent of the Insurer (unless an Insurer Default shall have occurred and be
continuing) and if the Insurer is no longer the Controlling Party, with the
consent of the Holders of not less than a majority of the Outstanding Amount of
the Notes, enter into an indenture or indentures supplemental hereto for any
purpose; provided, however, that, 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 Fund 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;
(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 Indenture Trustee to direct the Issuer to
sell or liquidate the Trust Fund 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;
(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; or
(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 Fund or, except as otherwise permitted or
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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.
(b) The Indenture 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 Indenture Trustee shall not be liable
for any such determination made in good faith.
(c) 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.
(d) Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Insurer and 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
Indenture 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.
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 Indenture 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 Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture 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
Indenture Trustee, the Issuer, the Insurer 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 Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
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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 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
Indenture Trustee not later than 35 days prior to the Redemption Date and the
Issuer shall deposit with the Indenture Trustee in the Note Distribution Account
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) If on the Payment Date on which the Pre-Funding Period ends
(or on the Payment Date on or immediately following the last day of the Pre-
Funding Period, if the Pre-Funding Period does not end on a Payment Date), any
Pre-Funded Amount remains on deposit in the Pre-Funding Account after giving
effect to the purchase of all Subsequent Receivables, including any such
purchase on such Redemption Date, the Notes will be redeemed in whole or in
part, in an aggregate principal amount equal to the Prepayment Amount which will
be distributed pro rata to Holders of each Class of Notes based on the
Outstanding Amount of each such Class; provided that if the Remaining Pre-
Funding Amount is $100,000 or less such amount shall be applied sequentially to
release the Outstanding Amount of the Class of Notes having the lowest numerical
designation then outstanding until paid in full, and then to the Class of Notes
having the next lowest numerical designation then outstanding.
(c) In the event that the assets of the Trust are sold pursuant
to Section 9.2 of the Trust 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. 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
Indenture Trustee 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 shall be given by
the Indenture Trustee by facsimile or by first-class mail, postage prepaid,
transmitted or mailed prior to the applicable Redemption Date to the Insurer and
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;
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(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 (unless the Issuer shall default in the payment
of the Redemption Price) interest on the Notes shall cease to accrue on the
Redemption Date. Notice of redemption of the Notes shall be given by the
Indenture 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 Section 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), on the Redemption Date become due and
payable at the 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
Indenture Trustee to take any action under any provision of this Indenture, the
Issuer shall furnish to the Indenture Trustee and to the Insurer (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,
and (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;
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(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) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee 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 Indenture Trustee and the 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.
(i) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (a)
above, the Issuer shall also deliver to the Indenture Trustee and the
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 (a) above and this clause
(b)(i), 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.
(ii) 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 Trustee and the 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.
(iii) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (a)
above, the Issuer shall also furnish to the Indenture Trustee and the
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 Liquidated 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 (a)
above and this clause (b)(iii), 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.
(iv) Notwithstanding Section 2.9 or any other provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose
of Receivables 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.
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SECTION 11.2. Form of Documents Delivered to Indenture 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 Indenture 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 Indenture 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 Indenture 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 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 Indenture 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 Indenture
Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
56
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(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
Indenture 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 Indenture Trustee, Issuer, Insurer 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 Indenture 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
Indenture Trustee at its Corporate Trust Office, or
(b) The Issuer by the Indenture 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: PeopleFirst.com Auto Receivables Owner Trust 1999-1, in care of
Wilmington Trust Company, 1100 North Market Street, Rodney Square, North
Wilmington, Delaware 19890, Attention: Corporate Trust Administration or at any
other address previously furnished in writing to the Indenture Trustee by
Issuer. The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee.
(c) The Insurer by the Issuer or the Indenture 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 Insurer: Financial Security Assurance Inc.
350 Park Avenue
New York. New York 10022
Attention: Surveillance Department
Telex No.: (212) 688-3101
Confirmation: (212) 826-0100
Telecopy No.: (212) 339-3518 or
(212) 339-3529
(In each case in which notice or other communication to the Insurer refers
to an Event of Default, a claim on the Policy or with respect to which failure
on the part of the Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head--Financial Guaranty
Group "URGENT MATERIAL ENCLOSED.")
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee, or the Owner Trustee shall be in writing, personally
delivered, delivered by overnight courier or mailed certified mail, return
receipt requested to (i) Standard & Poor's, at the following address: Standard &
Poor's Structured Finance Ratings, 55 Water Street, 41/st/ Floor, New York, New
York, 10041-0003, Attention of Asset Backed Surveillance Department and (ii)
Moody's, at the following address: Moody's Investors
57
<PAGE>
Service, Inc., 99 Church Street, New York, New York, 10004, Attention: ABS
Monitoring 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 here
in 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 Indenture 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 Indenture 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 Indenture 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 Indenture Trustee (which consent shall not be unreasonably withheld).
The Issuer will furnish to the Indenture Trustee a copy of each such agreement
and the Indenture 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.
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
58
<PAGE>
Indenture Trustee 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 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, and the Noteholders, and any other party secured hereunder, and any
other person with an Ownership interest in any part of the Trust Fund, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
The 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 Policy, upon delivery of a written
notice to the Indenture 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, INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATION LAW, BUT OTHERWISE 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 11.14. 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 Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) 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
Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation.
----------------
(a) No recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Seller, the Transferor, the
Depositor, the Servicer, the Owner Trustee or the Indenture Trustee on the Notes
or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Seller, the Transferor, the
Depositor, the Servicer, the Owner Trustee or the Indenture 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 Transferor, the
59
<PAGE>
Depositor, the Servicer, the Owner Trustee, or the Indenture Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Seller, the Transferor, the Depositor, the Servicer, the Owner Trustee, or the
Indenture Trustee or of any successor or assign of the Seller, the Transferor,
the Depositor, the Servicer, the Owner Trustee or the Indenture Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee 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.
(b) It is expressly understood and agreed to by the parties hereto
that (a) this Indenture is executed and delivered by Wilmington Trust Company,
not individually or personally but solely as Owner Trustee of the
PeopleFirst.com Auto Receivables Owner Trust 1999-1, in the exercise of the
powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Indenture or any other related documents.
SECTION 11.17. No Petition. The Indenture Trustee, by entering into this
-----------
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Transferor, the Depositor,
or the Issuer, or join in any institution against the Transferor, the Depositor,
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 Indenture Trustee or of the
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 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 Indenture 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 Indenture Trustee may reasonably
determine that such disclosure is consistent with its Obligations hereunder.
[THIS SPACE LEFT INTENTIONALLY BLANK]
60
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee 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.
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but solely as Owner
Trustee,
By: ________________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual capacity but
solely as Indenture Trustee,
By: ________________________________________
Name:
Title:
61
<PAGE>
EXHIBIT B-1
[Form of Note]
REGISTERED $56,000,000 No.
----------
SEE REVERSE FOR CERTAIN DEFINITIONS
[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).]
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.
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1
Class A-1 6.415% ASSET BACKED NOTES
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1, a Delaware 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 FIFTY-SIX MILLION DOLLARS
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $56,000,000 and the
denominator of which is $56,000,000 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
Class A-1 Payment Date in May, 2002 (the "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. With respect to any Payment Date, interest on the Outstanding Amount
of this Note will be an amount equal to one-twelfth of the rate shown above,
multiplied by the Outstanding Amount 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 for the related Interest
Period. 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 financial guaranty insurance
policy (the "Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments to the Noteholders to the extent set forth in the Indenture.
B-1
<PAGE>
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
Indenture 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.
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.
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee
By:________________________________
Name:
Title:
Date:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Date:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee,
By:________________________________
Authorized Signatory
B-2
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 6.415% Asset Backed Notes (herein called the "Class
A-1 Notes"), all issued under an Indenture dated as of November 1, 1999 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee
(the "Indenture Trustee", which term includes any successor Indenture Trustee
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 Indenture 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, the Class A-2 Notes and the Class A-3 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 December, 1999.
As provided in the Indenture and subject to the restrictions on transfer
and 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 Indenture 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 Indenture 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 by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Transferor, the Depositor, or the Issuer or join in
any institution against the Transferor, the Depositor, 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.
By acceptance of this Note each Noteholder covenants and agrees to treat
such Note as indebtedness for purposes of federal income, State and local income
and franchise and any other taxes.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and the Insurer and any agent of the Issuer, the
Indenture 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
B-3
<PAGE>
in the Indenture) is registered as the owner hereof for all purposes, whether or
not this Note be overdue, and neither the Issuer, the Indenture Trustee nor any
such agent shall be affected by notice to the contrary.
The Indenture permits 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
or, if an Insurer Default has occurred and is continuing, with the consent of
the Holders of Notes representing a majority of the Outstanding Amount of all
Notes at time Outstanding. The Indenture also contains provisions permitting
the Insurer (and in certain circumstances described in the Indenture, 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 Controlling
Party or the Holder of this Note (or any one of 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 Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.
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 Indenture 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, including Section 5-1401 of the General Obligations
Law, but otherwise 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 Wilmington Trust
Company, 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.
B-4
<PAGE>
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.
B-5
<PAGE>
EXHIBIT B-2
[Form of Class A-2 Note]
REGISTERED $42,000,000 No.
----------
SEE REVERSE FOR CERTAIN DEFINITIONS
[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).]
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.
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1
CLASS A-2 6.685% ASSET BACKED NOTES
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1, a Delaware 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-TWO MILLION DOLLARS
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $42,000,000 and the
denominator of which is $42,000,000 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
Class A-2 Payment Date in November 2003 (the "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. With respect to any Payment Date, interest on the Outstanding Amount of
this Note will be an amount equal to one-twelfth of the rate shown above,
multiplied by the Outstanding Amount 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 for the related Interest
Period. 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 financial guaranty insurance
policy (the "Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments to the Noteholders to the extent set forth in the Indenture.
B-6
<PAGE>
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
Indenture 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.
B-7
<PAGE>
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.
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee
By:_______________________________
Name:
Title:
Date:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Date:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee,
By:_______________________________
Authorized Signatory
B-8
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-2 6.685% Asset Backed Notes (herein called the "Class
A-2 Notes"), all issued under an Indenture dated as of November 1, 1999 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee
(the "Indenture Trustee", which term includes any successor Indenture Trustee
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 Indenture 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, the Class A-2 Notes and the Class A-3 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 December, 1999.
As provided in the Indenture and subject to the restrictions on transfer
and 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 Indenture 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 Indenture 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 by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Transferor, the Depositor, or the Issuer or join in
any institution against the Transferor, the Depositor, 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.
By acceptance of this Note each Noteholder covenants and agrees to treat
such Note as indebtedness for purposes of federal income, State and local income
and franchise and any other taxes.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and the Insurer and any agent of the Issuer, the
Indenture 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
B-9
<PAGE>
in the Indenture) is registered as the owner hereof for all purposes, whether or
not this Note be overdue, and neither the Issuer, the Indenture Trustee nor any
such agent shall be affected by notice to the contrary.
The Indenture permits 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
or, if an Insurer Default has occurred and is continuing, with the consent of
the Holders of Notes representing a majority of the Outstanding Amount of all
Notes at time Outstanding. The Indenture also contains provisions permitting
the Insurer (and in certain circumstances described in the Indenture, 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 Controlling
Party or the Holder of this Note (or any one of 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 Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.
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 Indenture 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, including Section 5-1401 of the General Obligations
Law, but otherwise 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 Wilmington Trust
Company, 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.
B-10
<PAGE>
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.
B-11
<PAGE>
EXHIBIT B-3
[Form of Class A-3 Note]
REGISTERED $14,000,000 No.
----------
SEE REVERSE FOR CERTAIN DEFINITIONS
[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).]
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.
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1
CLASS A-3 6.835% ASSET BACKED NOTES
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1, a Delaware 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 FOURTEEN MILLION DOLLARS
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $14,000,000 and the
denominator of which is $14,000,000 by (ii) the aggregate amount, if any,
payable from the Note Distribution Account in respect of principal on the Class
A-3 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
Class A-3 Payment Date in September, 2005 (the "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. With respect to any Payment Date, interest on the Outstanding Amount of
this Note will be an amount equal to one-twelfth of the rate shown above,
multiplied by the Outstanding Amount 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 for the related Interest
Period. 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 financial guaranty insurance
policy (the "Policy") issued by Financial Security Assurance Inc. (the
"Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payments to the Noteholders to the extent set forth in the Indenture.
B-12
<PAGE>
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
Indenture 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.
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.
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee
By:______________________________
Name:
Title:
Date:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Date:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely as
Indenture Trustee,
By:______________________________
Authorized Signatory
B-13
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-3 6.835% Asset Backed Notes (herein called the "Class
A-3 Notes"), all issued under an Indenture dated as of November 1, 1999 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee
(the "Indenture Trustee", which term includes any successor Indenture Trustee
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 Indenture 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, the Class A-2 Notes and the Class A-3 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-3 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 December, 1999.
As provided in the Indenture and subject to the restrictions on transfer
and 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 Indenture 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 Indenture 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 by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Transferor, the Depositor, or the Issuer or join in
any institution against the Transferor, the Depositor, 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.
By acceptance of this Note each Noteholder covenants and agrees to treat
such Note as indebtedness for purposes of federal income, State and local income
and franchise and any other taxes.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and the Insurer and any agent of the Issuer, the
Indenture 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
B-14
<PAGE>
in the Indenture) is registered as the owner hereof for all purposes, whether or
not this Note be overdue, and neither the Issuer, the Indenture Trustee nor any
such agent shall be affected by notice to the contrary.
The Indenture permits 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
or, if an Insurer Default has occurred and is continuing, with the consent of
the Holders of Notes representing a majority of the Outstanding Amount of all
Notes at time Outstanding. The Indenture also contains provisions permitting
the insurer (and in certain circumstances described in the Indenture, 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 Controlling
Party or the Holder of this Note (or any one of 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 Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of Holders of the Notes issued thereunder.
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 Indenture 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, including Section 5-1401 of the General Obligations
Law, but otherwise 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 Wilmington Trust
Company, 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.
B-15
<PAGE>
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.
B-16
<PAGE>
EXHIBIT 4.2
- --------------------------------------------------------------------------------
TRUST AGREEMENT
between
PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION,
as Depositor
and
WILMINGTON TRUST COMPANY,
as
Owner Trustee
Dated as of November 1, 1999
- --------------------------------------------------------------------------------
<PAGE>
Table of Contents
<TABLE>
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Page
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ARTICLE I DEFINITIONS................................................................................. 1
SECTION 1.1 Capitalized Terms...................................................................... 1
SECTION 1.2 Other Definitional Provisions.......................................................... 3
ARTICLE II ORGANIZATION................................................................................ 3
SECTION 2.1 Name................................................................................... 3
SECTION 2.2 Office................................................................................. 4
SECTION 2.3 Purposes and Powers.................................................................... 4
SECTION 2.4 Appointment of Owner Trustee........................................................... 4
SECTION 2.5 Initial Capital Contribution of Trust Estate........................................... 4
SECTION 2.6 Declaration of Trust................................................................... 5
SECTION 2.7 Liability of the Transferor............................................................ 5
SECTION 2.8 Title to Trust Property................................................................ 5
SECTION 2.9 Situs of Trust......................................................................... 5
SECTION 2.10 Representations and Warranties of the Depositor........................................ 5
SECTION 2.11 Federal Income Taxes................................................................... 6
SECTION 2.12 [Reserved]............................................................................. 7
SECTION 2.13 Covenants of the Holders............................................................... 7
ARTICLE III TRUST CERTIFICATES AND TRANSFER OF INTERESTS................................................ 8
SECTION 3.1 Initial Ownership...................................................................... 8
SECTION 3.2 The Trust Certificates................................................................. 8
SECTION 3.3 Authentication of Trust Certificates................................................... 8
SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates............................ 8
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates................................ 10
SECTION 3.6 Persons Deemed Certificateholders...................................................... 11
SECTION 3.7 Access to List of Certificateholders' Names and Addresses.............................. 11
SECTION 3.8 Maintenance of Office or Agency........................................................ 11
SECTION 3.9 Appointment of Certificate Paying Agent................................................ 11
SECTION 3.10 [Reserved]............................................................................. 12
SECTION 3.11 [Reserved]............................................................................. 12
SECTION 3.12 [Reserved]............................................................................. 12
SECTION 3.13 ERISA Restrictions..................................................................... 12
SECTION 3.14 [Reserved]............................................................................. 12
SECTION 3.15 [Reserved]............................................................................. 12
SECTION 3.16 [Reserved]............................................................................. 12
SECTION 3.17 Original Issuance...................................................................... 12
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SECTION 3.18 Actions of Certificateholders.......................................................... 12
ARTICLE IV ACTIONS BY OWNER TRUSTEE.................................................................... 13
SECTION 4.1 Prior Notice to Holders with Respect to Certain Matters................................ 13
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters........................... 13
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy................................ 14
SECTION 4.4 Restrictions on Certificateholders' Power.............................................. 14
SECTION 4.5 Majority Control....................................................................... 14
SECTION 4.6 Rights of Insurer...................................................................... 15
ARTICLE V APPLICATION OF TRUST FUNDS: CERTAIN DUTIES.................................................. 15
SECTION 5.1 Establishment of Certificate Distribution Account...................................... 15
SECTION 5.2 Application of Funds in Certificate Distribution Account............................... 15
SECTION 5.3 [Reserved.]............................................................................ 17
SECTION 5.4 Method of Payment...................................................................... 17
SECTION 5.5 No Segregation of Monies; No Interest.................................................. 17
SECTION 5.6 Accounting and Reports to the Noteholders, Certificateholders, the Internal Revenue
Service and Others..................................................................... 17
SECTION 5.7 Signature on Returns; Tax Matters Partner.............................................. 17
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE....................................................... 18
SECTION 6.1 General Authority...................................................................... 18
SECTION 6.2 General Duties......................................................................... 18
SECTION 6.3 Action upon Instruction................................................................ 18
SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions..................... 19
SECTION 6.5 No Action Except under Specified Documents or Instructions............................. 19
SECTION 6.6 Restrictions........................................................................... 19
ARTICLE VII CONCERNING THE OWNER TRUSTEE................................................................ 19
SECTION 7.1 Acceptance of Trusts and Duties........................................................ 19
SECTION 7.2 Furnishing of Documents................................................................ 21
SECTION 7.3 Representations and Warranties......................................................... 21
SECTION 7.4 Reliance; Advice of Counsel............................................................ 21
SECTION 7.5 Not Acting in Individual Capacity...................................................... 22
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Receivables......................... 22
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes..................................... 22
SECTION 7.8 Payments from Owner Trust Estate....................................................... 22
SECTION 7.9 Doing Business in Other Jurisdictions.................................................. 22
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE............................................................... 23
SECTION 8.1 Owner Trustee's Fees and Expenses...................................................... 23
SECTION 8.2 Indemnification........................................................................ 23
</TABLE>
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<S> <C>
SECTION 8.3 Payments of Owner Trustee.............................................................. 23
SECTION 8.4 Non-recourse Obligations............................................................... 23
ARTICLE IX TERMINATION OF TRUST AGREEMENT.............................................................. 23
SECTION 9.1 Termination of Trust Agreement......................................................... 23
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES...................................... 25
SECTION 10.1 Eligibility Requirements for Owner Trustee............................................. 25
SECTION 10.2 Resignation or Removal of Owner Trustee................................................ 25
SECTION 10.3 Successor Owner Trustee................................................................ 25
SECTION 10.4 Merger or Consolidation of Owner Trustee............................................... 26
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee.......................................... 26
ARTICLE XI MISCELLANEOUS............................................................................... 27
SECTION 11.1 Supplements and Amendments............................................................. 27
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders............................. 28
SECTION 11.3 Limitations on Rights of Others........................................................ 28
SECTION 11.4 Notices................................................................................ 28
SECTION 11.5 [Reserved]............................................................................. 29
SECTION 11.6 Severability........................................................................... 29
SECTION 11.7 Separate Counterparts.................................................................. 29
SECTION 11.8 Third-Party Beneficiaries.............................................................. 29
SECTION 11.9 [Reserved.]............................................................................ 29
SECTION 11.10 No Petition............................................................................ 29
SECTION 11.11 No Recourse............................................................................ 30
SECTION 11.12 Headings............................................................................... 30
SECTION 11.13 GOVERNING LAW.......................................................................... 30
SECTION 11.14 Agreement Creates No Partnership Except for Tax Purposes.............................. 30
SECTION 11.15 Servicer............................................................................... 30
</TABLE>
iii
<PAGE>
TRUST AGREEMENT dated as of November 1, 1999 between PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION, a Delaware corporation, as Depositor, and
WILMINGTON TRUST COMPANY, a Delaware banking corporation 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:
"Actual Knowledge" means, with respect to the Owner Trustee, any
----------------
officer within the Corporate Trust Administration office of the Owner Trustee
responsible for administering the Trust hereunder, or under the Basic Documents,
who has actual knowledge of an action taken or an action not taken with regard
to the Trust. Actions taken or actions not taken of which the Owner Trustee
should have had knowledge, and constructive knowledge, do not meet the
definition of Actual Knowledge hereunder.
"Agreement" shall mean this Trust Agreement, as the same may be
---------
amended and supplemented from time to time.
"Basic Documents" shall mean Certificate of Trust, the Trust
---------------
Agreement, the Sale and Servicing Agreement, each Subsequent Transfer Agreement,
the Indenture, the Insurance Agreement, the Reserve Account Agreement, the
Custodial Agreement, the Depository Agreement and the other documents and
certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
------------
3.13.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
----------------------
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"Certificate" means a Trust 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 Majority" means over 50% of Holders of the Certificates.
--------------------
"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 and shall initially be the Trustee.
"Certificate Register" and "Certificate Registrar" shall mean the
-------------------- ---------------------
register mentioned and the registrar appointed pursuant to Section 3.4.
"Closing Date" means November 30, 1999.
------------
1
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time, and the 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
1100 North Market Street, North Rodney Square, Wilmington, Delaware, 19890, or
at such other address as the Owner Trustee may designate by notice to the
Certificateholders and the Depositor, 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 Depositor).
"Definitive Trust Certificates" shall mean Trust Certificates issued
-----------------------------
in certificated, fully registered form as provided in Section 3.17 hereof.
"Depositor" shall mean Prudential Securities Secured Financing
---------
Corporation in its capacity as Depositor hereunder.
"ERISA" shall have the meaning assigned to such term in Section 3.13.
-----
"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.
"Insurer" shall mean Financial Security Assurance, Inc. its
-------
successors and assigns.
"Owner Trust Estate" shall mean all right, title and interest of the
------------------
Trust in and to the Trust 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 the Certificate Distribution Account 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 Wilmington Trust Company, a Delaware
-------------
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor Owner Trustee hereunder.
"Person" means any individual, corporation, limited liability company,
------
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Record Date" shall mean with respect to any Payment Date, the last
-----------
day of the calendar month immediately preceding such Payment Date.
"Responsible Officer" means, with respect to the Owner Trustee, any
-------------------
officer within the Corporate Trust Administration office of the Owner Trustee,
including any Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary or any other officer of the Owner Trustee customarily
performing functions similar to those performed by any of the above designated
officers 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.
2
<PAGE>
"Sale and Servicing Agreement" shall mean the Sale and Servicing
----------------------------
Agreement among the Trust, PF Funding II, LLC, the Depositor, the Seller, the
Servicer, the Backup Servicer and the Custodian, dated as of November 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.
"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.
(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.
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.
(c) 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."
(d) 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. There is hereby formed a trust to be known as
----
"PeopleFirst.com Auto Receivables Owner Trust 1999-1" (hereinafter, the
"Trust"), in which name the Owner Trustee may conduct the business of the Trust,
make and execute contracts and other instruments on behalf of the Trust and sue
and be sued.
3
<PAGE>
SECTION 2.2. Office. The office of the Trust shall be in care of the
------
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders and the
Depositor.
SECTION2.3. 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:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement, and to sell the Notes and the
Trust Certificates;
(ii) to enter into the transactions contemplated by the Sale and
Servicing Agreement;
(iii) with the proceeds of the sale of the Notes, to fund the
Pre-Funding Account, the Capitalized Interest Account, the Reserve Account
and the Yield Supplement Account and to pay the organizational, start-up
and transactional expenses of the Trust and to pay the balance to the
Transferor pursuant to the Sale and Servicing Agreement;
(iv) to assign, grant, transfer, pledge, mortgage and convey the
Owner Trust Estate (other than the Certificate Distribution Account) to the
Indenture Trustee pursuant to the Indenture for the benefit of the Insurer
and the Indenture Trustee on behalf of the Noteholders and to hold, manage
and distribute to the Certificateholders and the Transferor 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;
(v) to enter into and perform its obligations under the Basic
Documents to which it is a party;
(vi) 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
(vii) subject to compliance with the Basic Documents, 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.
(b) 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 Depositor 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 Trust Estate. The Depositor
--------------------------------------------
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges
receipt in trust from the Depositor, 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 Depositor shall pay
organizational expenses of the Trust as they may arise.
4
<PAGE>
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 Holders, subject to the
obligations of the Trust under the Basic Documents. 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
income and franchise tax purposes, the Trust shall be treated as a partnership
if the Certificates are treated as held by more than one person and a
disregarded entity if the Certificates are treated as held by a single person.
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 this intention. 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 Transferor. (a) The Transferor 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 Holders shall not have legal title to any part of the Trust
Property. The Holders shall be entitled to receive distributions with respect
to their undivided 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 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 Trust Property.
SECTION 2.9. Situs of Trust. The Trust will be located and administered
--------------
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 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 Depositor. The
-----------------------------------------------
Depositor makes the following representations and warranties on which the Owner
Trustee relies in accepting the Owner Trust Estate in trust and issuing the
Certificates and upon which the Insurer relies in issuing the Policy.
(a) Organization and Good Standing. The Depositor is duly organized
------------------------------
and validly existing as a Delaware corporation 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 is proposed to be conducted
pursuant to this Agreement and the Basic Documents.
5
<PAGE>
(b) Due Qualification. It is duly qualified to do business as a
-----------------
foreign corporation 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 Depositor has the corporate power and
-------------------
authority to execute and deliver this Agreement and to carry out its terms; the
Depositor has full power and authority to sell and assign the property to be
sold and assigned to and deposited with the Trust and the Depositor has duly
authorized such sale and assignment and deposit to the Trust by all necessary
corporate action; and the execution, delivery and performance of this Agreement
has been duly authorized by the Depositor by all necessary corporate action.
(d) 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.
(e) 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
incorporation or by-laws of the Depositor, or any material indenture, agreement
or other instrument to which the Depositor 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 Depositor's knowledge, any order, rule or regulation applicable to
the Depositor of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties.
(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, state or local income tax attributes of the Certificates.
SECTION 2.11. Federal Income Taxes.
--------------------
(a) If Certificates are treated as held by more than one person or
the Trust is recharacterized as an entity separate from its owner, each
Certificateholder acknowledges and agrees that the Trust will be treated as a
partnership solely for income tax purposes and that this Agreement does not
create a partnership for any other purpose. No election to treat the Trust other
than as a disregarded entity if the Certificates are treated as held by a single
person or as a partnership if the Certificates are treated as held by more than
one person for Federal income tax purposes or any relevant state tax purposes
shall be made by or on behalf of the Trust, or by any Certificateholder.
(b) 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:
6
<PAGE>
(i) to the extent of available net income and in accordance with
Federal income tax accounting and allocation principles, among the
Certificateholders as of the first Record Date following the end of such
month, in proportion to their ownership of principal amount of Trust
Certificates on such date, an amount of net income up to the sum of (x) the
Certificateholders' Monthly Interest Distributable Amount for such month,
(y) interest on the excess, if any, of the Certificateholders' Interest
Distributable Amount for the preceding Payment Date over the amount in
respect of interest at the Certificate Rate that is actually deposited in
the Certificate Distribution Account on such preceding Payment Date, to the
extent permitted by law, at the Certificate Rate from such preceding
Payment Date through the current Payment Date, and (iii) the portion of the
market discount on the Receivables accrued during such month that is
allocable to the excess of the initial aggregate principal amount of the
Trust Certificates over their initial aggregate issue price; and
(c) If the net income of the Trust for any month is insufficient for
the allocation described in clause (b) above, subsequent net income shall first
be allocated to make up such shortfall before being allocated as provided in
clause (b).
(d) Net losses of the Trust, if any, for any month as determined for
Federal income tax accounting and allocation purposes (and each item of income,
gain, loss, credit and deduction entering into the computation thereof) shall be
allocated among the Certificateholders as of the first Record Date following the
end of such month in proportion to their ownership of principal amount of Trust
Certificates on such Record Date until the principal balance of the Trust
Certificates is reduced to zero.
Notwithstanding anything provided in this Section 2.11, if the Certificates
------------
are treated as held solely by one person or the Trust has not been
recharacterized as an entity separate from its owner, the application of clause
(b), clause (c) and clause (d) of this section shall be disregarded.
SECTION 2.12. [Reserved]
SECTION 2.13. Covenants of the Holders. Each Holder agrees:
------------------------
(a) to be bound by the terms and conditions of the Certificates and
of this Agreement, including any supplements or amendments hereto and to perform
the obligations of a Holder 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 Insurer, the Owner Trustee and all other Holders present and future;
(b) to hereby appoint the Owner Trustee as such Holder'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 Holder 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) to notify the Owner Trustee 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, not
to, for any reason, institute proceedings for the Trust to be adjudicated a
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
7
<PAGE>
its creditors, or admit in 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.
ARTICLE III
Trust Certificates and Transfer of Interests
--------------------------------------------
SECTION 3.1. Initial Ownership. Upon the formation of the Trust by the
-----------------
contribution by the Depositor pursuant to Section 2.5 and until the issuance of
the Trust Certificates, the Depositor shall be the sole beneficiary of the
Trust.
SECTION 3.2. The Trust Certificates. The Trust Certificates shall be
----------------------
issued in denominations of $1,000 and integral multiples thereof. The Trust
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. 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 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 transfer of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Trust Certificates in an
aggregate principal amount equal to the initial Certificate Balance to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president or any vice president, its treasurer or any assistant treasurer
without further corporate action by the Depositor, 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 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. (a) 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
Certificate Registrar shall provide for the registration of Trust Certificates
and of transfers and exchanges of Trust Certificates as herein provided. The
Depositor hereby appoints the Indenture Trustee as the initial Certificate
Registrar.
(b) Upon surrender for registration of transfer of any Trust
Certificate at the office or agency maintained pursuant to Section 3.8,
accompanied by the certification appearing on the reverse of the form of the
Certificate relating to Rule 144A, executed by the Holder of such Certificate,
the Owner Trustee shall execute, authenticate and deliver, (or cause the
Certificate Registrar 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 class and aggregate face
amount dated the date of authentication by the Owner Trustee or any
authenticating agent. At the option of a Holder, Trust Certificates may be
exchanged for other Trust Certificates of the same class in authorized
denominations
8
<PAGE>
of a like aggregate amount upon surrender of the Trust Certificates to be
exchanged at the office or agency maintained pursuant to Section 3.8.
(c) 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 Exchange Act. Each Trust Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by the Certificate Registrar in accordance with its customary practice.
(d) 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 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.
(e) Transfer Restrictions.
(A) No Certificateholder may, in any transaction or series of
transactions, directly or indirectly (each of the following, a "transfer"), (i)
sell, assign or otherwise in any manner dispose of all or any part of its
interest in any Certificate issued to it, whether by act, deed, merger or
otherwise or (ii) mortgage, pledge or create a lien or security interest in such
beneficial interest unless such transfer is made to a Qualified Institutional
Buyer in accordance with Rule 144A, under the Securities Act. Each
Certificateholder (other than the initial Holder which shall be deemed to have
represented that it is an "institutional accredited investor" under Rule 501 of
the Securities Act) by acquiring any Certificate or any interest therein shall
be deemed to represent to the Issuer and the Owner Trustee that it is a
Qualified Institutional Buyer. Notwithstanding anything contained herein to the
contrary, neither the Certificate Registrar nor shall the Owner Trustee be
responsible for compliance with the Securities Act or applicable securities law.
(B) At any time during the taxable year of the Trust, there
shall be no more than 100 Holders. The Certificate Registrar shall take such
action as may be necessary to ensure that this Section 3.4(e) is satisfied,
including, without limitation, refusing to register the transfer of any
Certificate. The Certificate Registrar shall comply with all reasonable written
directions given by the Owner Trustee.
(C) Each Certificate issued hereunder shall contain the
following legend:
THIS CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH CERTAIN PROVISIONS OF
A TRUST AGREEMENT BETWEEN PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
AND WILMINGTON TRUST COMPANY (THE "TRUST AGREEMENT"). THIS CERTIFICATE HAS NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY SECURITIES LAWS, AND ISSUER HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED,
AND PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE TRUST
AGREEMENT AND APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND
TO "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), AND SOLELY WITH RESPECT TO THE INITIAL OFFERING OF THE
9
<PAGE>
CERTIFICATES, TO INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED IN RULE 501(A)
(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) UPON DELIVERY OF A REPRESENTATION
LETTER TO THE TRUSTEE.
NO EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") AND NO OTHER PLAN SUBJECT TO SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR ANY
ENTITY THE ASSETS OF WHICH CONSTITUTE OR ARE DEEMED FOR PURPOSES OF ERISA OR
SECTION 4975 OF THE CODE TO CONSTITUTE THE ASSETS OF ANY SUCH PLAN, MAY PURCHASE
THIS CERTIFICATE OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASE AND THE HOLDING OF
THIS CERTIFICATE OR SUCH INTEREST BY SUCH PLAN (OR ANY ENTITY THE ASSETS OF
WHICH CONSTITUTE "PLAN ASSETS" OF ANY SUCH PLAN) IS SUBJECT TO A STATUTORY OR
ADMINISTRATIVE EXEMPTION. ANY HOLDER HEREOF OR ANY INTEREST HEREIN THAT IS, OR
IS ACTING ON BEHALF OF OR WITH "PLAN ASSETS" OF, AN EMPLOYEE BENEFIT PLAN
SUBJECT TO ERISA OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE, AND WITH RESPECT
TO WHICH THE TRUSTEE OR THE OWNER TRUSTEE IS A "PARTY IN INTEREST" OR A
"DISQUALIFIED PERSON", BY PURCHASING THIS CERTIFICATE OR SUCH INTEREST
REPRESENTS THAT ITS PURCHASE OF THIS CERTIFICATE OR SUCH INTEREST IS SUBJECT TO
A STATUTORY OR ADMINISTRATIVE EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF
ERISA AND SECTION 4975 OF THE CODE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF THE ISSUER THAT SUCH
PURCHASER HAS NOT ACQUIRED NOR WILL IT SELL, TRADE, TRANSFER, ASSIGN,
PARTICIPATE, PLEDGE, HYPOTHECATE, CAUSE TO BE MARKETED, OR OTHERWISE DISPOSE OF
THIS CERTIFICATE (OR ANY INTEREST HEREIN) ON OR THROUGH (I) AN "ESTABLISHED
SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(B)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-
COUNTER-MARKET OR AN "INTERDEALER QUOTATION SYSTEM" THAT REGULARLY DISSEMINATES
FIRM BUY OR SELL QUOTATIONS, OR (II) A "SECONDARY MARKET (OR THE SUBSTANTIAL
EQUIVALENT THEREOF)" WITHIN THE MEANING OF CODE SECTION 7704(B)(2).
[THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.]
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 Owner Trustee and the Certificate Registrar shall receive
evidence to their satisfaction of the destruction, loss or theft of any Trust
Certificate and (b) there shall be delivered to the Certificate Registrar and
the Owner Trustee, 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 bona fide purchaser, the Owner Trustee on behalf
of the Trust shall execute and the Owner Trustee or the Owner Trustee's
authentication agent or Certificate Registrar 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 class, tenor and denomination. In
connection with the issuance of any new Trust Certificate under this Section,
the Owner Trustee or the Certificate Registrar may 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.
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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 any agent of the Owner Trustee and the Certificate
Registrar 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 Owner Trustee or the Certificate
Registrar nor any agent of the Owner Trustee or the Certificate Registrar shall
be bound by any notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
---------------------------------------------------------
The Certificate Registrar shall furnish or cause to be furnished to the Owner
Trustee, the Insurer, the Servicer or the Depositor, within 15 days after
receipt by the Certificate Registrar of a request therefor from such Person in
writing, a list, 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 25% of the
Certificate Balance apply in writing to the Certificate Registrar, 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 Certificate
Registrar 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
Depositor, the Servicer, the Insurer, the Certificate Registrar or the Owner
Trustee 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 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 Norwest Bank Minnesota, National Association,
Norwest Center, Sixth Street & Marquette Avenue, Minneapolis, Minnesota 55479,
as its office for such purposes. The Owner Trustee shall give prompt written
notice to the Depositor, the Insurer and the Certificateholders of any change in
the location of the Certificate Register or any such office or agency.
SECTION 3.9. Appointment of Certificate Paying Agent. The Certificate
---------------------------------------
Paying Agent shall make distributions to Certificateholders from the Certificate
Distribution Account pursuant to Section 5.2 and shall report the amounts of
such distributions to the Owner Trustee. The Certificate Paying Agent shall
invest amounts on deposit in the Certificate Distribution Account in accordance
with Section 5.1 hereof. Any Certificate 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 Certificate Paying Agent if the Owner Trustee
determines in its sole discretion that the Certificate Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Certificate Paying Agent shall initially be the Indenture Trustee, and any
co-paying agent chosen by the Owner Trustee, and acceptable to the Servicer.
The Certificate Paying Agent shall be permitted to resign upon 30 days' written
notice to the Owner Trustee and the Servicer. In the event that the Indenture
Trustee shall no longer be the Certificate Paying Agent, the Owner Trustee shall
appoint a successor to act as Certificate Paying Agent (which shall be a bank or
trust company). The Owner Trustee shall cause such successor Certificate Paying
Agent or any additional Certificate Paying Agent appointed by the Owner Trustee
to execute and deliver to the Owner Trustee an instrument in which such
successor Certificate Paying Agent or additional Certificate Paying Agent shall
agree with the Owner Trustee that as Certificate Paying Agent, such successor
Certificate Paying Agent or additional Certificate Paying Agent will hold all
sums, if any, held by it for
11
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payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Certificate Paying Agent shall return all unclaimed
funds to the Owner Trustee and upon removal of a Certificate Paying Agent such
Certificate Paying Agent shall also return all funds in its possession to the
Owner Trustee. The provisions of Sections 7.1, 7.3, 7.4, 8.1 and 8.2 shall apply
to the Owner Trustee also in its role as Certificate Paying Agent, for so long
as the Owner Trustee shall act as Certificate Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Certificate Paying Agent shall include any co-paying agent
unless the context requires otherwise. The Indenture Trustee, in acting as
Certificate Registrar and Certificate Paying Agent hereunder shall be entitled
to the benefit of the same protective and exculpatory provisions and the
indemnity and compensation provisions applicable to the Indenture Trustee in the
Indenture and Sale and Servicing Agreement.
SECTION 3.10. [Reserved]
SECTION 3.11. [Reserved]
SECTION 3.12. [Reserved]
SECTION 3.13. ERISA Restrictions. The 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 Internal Revenue Code of 1985, as amended, or (iii)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding a
Certificate, the Holder thereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
SECTION 3.14. [Reserved].
SECTION 3.15. [Reserved].
SECTION 3.16. [Reserved].
SECTION 3.17. Original Issuance. The Trust Certificates, upon original
-----------------
issuance, will be issued in the form of Definitive Trust Certificates to be
delivered by or on behalf of the Trust in accordance with the written
instructions of the Depositor. The Owner Trustee shall recognize the Holders of
the Definitive Trust Certificates as Certificateholders. The Trust Certificate
shall be printed, lithographed or engraved or may be reproduced in any other
manner as so reasonably acceptable to the Owner Trustee, as evidence by its
execution thereof.
SECTION 3.18. Actions of Certificateholders
-----------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent 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 Owner Trustee and, when required, to the Depositor or the
Servicer. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Agreement and
conclusive in favor of the Owner Trustee, the Depositor and the Servicer, if
made in the manner provided in this Section 3.18.
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<PAGE>
(b) The fact and date of the execution by any Certificateholder of
any such instrument or writing may be proved in any reasonable manner which the
Owner Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Owner Trustee, the Depositor or the Servicer in reliance thereon,
regardless of whether notation of such action is made upon such Certificate.
(d) The Owner Trustee may require such additional proof of any matter
referred to in this Section 3.18 as it shall deem necessary.
ARTICLE IV
Actions by Owner Trustee
------------------------
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters.
-------------------------------------------------------
(a) 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 Insurer in writing of
the proposed action and the Certificateholders shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(i) 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 Holders);
(ii) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;
(iii) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required and
such amendment materially adversely affects the interest of the
Certificateholders; or
(iv) except pursuant to Section 11.1 of the Sale and Servicing
Agreement, 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 adversely affect the
interests of the Certificateholders.
(b) The Owner Trustee shall notify the Certificateholders in writing
of any appointment of a successor Note Registrar, Certificate Paying Agent or
Certificate Registrar within five Business Days of the effective date of such
appointment.
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 Certificateholders in accordance with the Basic Documents, to (a) remove
the Servicer under the Sale and Servicing Agreement pursuant to Section 8.1
thereof following payment of the Notes in full 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
13
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Certificateholders 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, institute
proceedings for the Trust to be adjudicated a 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 the bankruptcy of the Trust, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trust or a substantial part of
the property of the Trust or cause or permit the Trust to make any assignment
for the benefit of creditors, or admit in writing the inability of the Trust to
pay its debts generally as they become due, or declare or effect a moratorium on
the debt of the Trust or take any action in furtherance of any such action
relating to the Trust without the unanimous prior approval of all
Certificateholders and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. (a) 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 follow any such direction, if given.
(b) No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to this
Agreement or any Basic Document, unless the Certificateholders are the
Instructing Party pursuant to Section 6.3 of this Agreement and unless a
Certificateholder previously shall have given to the Owner Trustee a written
notice of default and of the continuance thereof, as provided in this Agreement,
and also unless Certificateholders evidencing not less than 25% of the
Certificate Balance shall have made written request upon the Owner Trustee to
institute such action, suit or proceeding in its own name as Owner Trustee under
this Agreement and shall have offered to the Owner Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Owner Trustee, for 30 days after its
receipt of such notice, request, and offer of indemnity, shall have neglected or
refused to institute any such action, suit, or proceeding, and during such 30-
day period no request or waiver inconsistent with such written request has been
given to the Owner Trustee pursuant to and in compliance with this Section or
Section 6.3 of this Agreement; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 4.5. Majority Control. No Certificateholder shall have any right
----------------
to vote or in any manner otherwise control the operation and management of the
Trust except as expressly provided in this Agreement. Except as expressly
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of each class of Trust Certificates
evidencing not less than a majority of the Certificate Balance or, in the case
of the Class R Certificates, a majority percentage interest. Except as expressly
provided herein, any written notice of the Certificateholders delivered
14
<PAGE>
pursuant to this Agreement shall be effective if signed by Holders of each Class
of Certificates evidencing not less than a majority of the Certificate Balance
or, in the case of the Class R Certificates, a majority percentage interest at
the time of the delivery of such notice.
SECTION 4.6. Rights of Insurer. Notwithstanding anything to the
-----------------
contrary in the Basic Documents, for so long as any Notes are Outstanding under
the Indenture, without the prior written consent of the Insurer (so long as no
Insurer Default shall have occurred and be continuing), the Owner Trustee shall
not (i) remove the Servicer, (ii) 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, (iii) 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 (iv) amend the Certificate of
Trust.
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, shall establish or
cause to be established 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. The Certificate Distribution Account shall be initially
established with the Certificate Paying Agent.
(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
five (5) Business Days (or such longer period, not to exceed thirty (30)
calendar days, as to which each Rating Agency may consent) establish or cause to
be established a new Certificate Distribution Account as an Eligible Deposit
Account and shall transfer 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 Certificate Paying Agent at the Servicer's written direction, in Eligible
Investments that mature not later than one (1) Business Day prior to the Payment
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 Payment 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 Payment Date, the Certificate Paying Agent will, 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 to Certificateholders, to the extent of the funds available, amounts
deposited in the Certificate Distribution Account pursuant to Sections
5.6(b)(vii) of the Sale and Servicing Agreement on such Payment Date in the
following order of priority:
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(i) first, to the Class A Certificateholders, on a pro rata
basis, an amount equal to the Certificateholders' Principal Distributable
Amount; and
(ii) second, to the Class R Certificateholders, in accordance
with the percentage interest held, an amount equal to the remaining amounts
on deposit in the Certificate Distribution Account.
(b) On the Payment Date following the date on which amounts received
in respect of the Transferor's exercise of its option to purchase the corpus of
the Trust pursuant to Section 9.1(a) of the Sale and Servicing Agreement are
deposited in the Certificate Distribution Account, the Certificate Paying Agent
will distribute such amounts taking into account any concurrent distribution
made pursuant to Section 5.2(a):
(i) first, to the Class A Certificateholders, on a pro rata
basis, an amount equal to the Certificateholders' Principal Distributable
Amount; and
(ii) second, to the Class R Certificateholders, in accordance
with the percentage interest held, remaining amounts on deposit in the
Certificate Distribution Account.
(c) On the Payment Date following the date on which the Indenture
Trustee makes payments of money or property in respect of liquidation of the
Trust Property pursuant to Section 5.6 of the Indenture and deposits funds
received in connection with such liquidation in the Certificate Distribution
Account, the Certificate Paying Agent will distribute such funds taking into
account any concurrent distribution made pursuant to Section 5.2(a):
(i) first, to the Class A Certificateholders, on a pro rata
basis, an amount equal to the Certificateholders' Principal Distributable
Amount; and
(ii) second, to the Class R Certificateholders, in accordance
with the percentage interest held, remaining amounts on deposit in the
Certificate Distribution Account.
(d) On each Payment Date, the Certificate Paying Agent shall send to
each Certificateholder the statement provided to the Owner Trustee by the
Servicer pursuant to Section 5.8 of the Sale and Servicing Agreement on such
Payment Date.
(e) 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 Certificate Paying Agent 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 Certificate Paying Agent
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 possibility that withholding tax is payable with respect to a distribution
(such as a distribution to a non-US Certificateholder), the Certificate Paying
Agent may in it sole discretion withhold such amounts in accordance with this
clause (e). In the event that an Holder wishes to apply for a refund of any such
withholding tax, the Owner Trustee or Certificate Paying Agent shall reasonably
cooperate with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Owner Trustee or Certificate Paying
Agent for any out-of-pocket expenses incurred.
16
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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 Payment Date 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 having appropriate facilities therefor, if (i) such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Payment Date and
such Holder's Trust Certificates in the aggregate evidence a denomination of not
less than $1,000,000 or (ii) such Certificateholder is the Depositor, or an
Affiliate thereof or of the Servicer, 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 Payment 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, and 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. Subject to Article
- -----------------------------------------------------------
X of the Sale and Servicing Agreement and to Section 2.11 herein, the Owner
Trustee shall (a) maintain (or cause to be maintained) the books of the Trust on
a calendar year basis on the accrual method of accounting, (b) deliver (or cause
to be delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1, if applicable) to enable the Certificateholders to prepare their
Federal and state income tax returns, (c) file or cause to be filed such tax
returns relating to the Trust (including a partnership information return, Form
1065, if applicable) and direct the Owner Trustee 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 disregarded entity if the Certificates are treated as held
by a single person or as a partnership if the Certificates are treated as held
by more than one person 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(e) with respect to income or distributions to Certificateholders.
The Owner Trustee shall make all elections pursuant to this Section as directed
by the "tax matters partner". The Owner Trustee shall sign any tax information
returns filed pursuant to this Section 5.6 and any other returns as may be
required by law, and in doing so shall rely entirely upon, and shall have no
liability for information provided by, or calculations provided by, the "tax
matters partner". The Owner Trustee shall elect under Section 1278 of the Code
to include in income currently any market discount that accrues with respect to
the Receivables. The Owner Trustee shall make the election provided under
Section 754 of the Code only upon written request of the Holder of the Class R
Certificate.
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 any tax returns of the Trust, unless applicable law requires
a Certificateholder to sign such documents, in which case such documents shall
be signed by the Holder of the Class R Certificate.
(b) If the Trust is characterized as a partnership for U.S. Federal
income tax purposes, the Holder of the Class R Certificate shall be the "tax
matters partner" of the Trust pursuant to the Code.
17
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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 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 Depositor shall approve
as evidenced conclusively by the Owner Trustee's execution thereof, and on
behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver
the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes in the aggregate
principal amounts, of $56,000,000, $42,000,000 and $18,000,000, respectively.
In addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions 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 Instructing Party recommends with respect to the Basic
Documents so long as such activities are consistent with the terms of 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 Sale and Servicing Agreement and to
administer the Trust in the interest of the Holders, 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 to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be liable
for the default or failure of the Servicer to carry out its obligations under
the Sale and Servicing Agreement.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV, the
-----------------------
Holders of a majority of the Outstanding Amount of the Class A Certificates and
a majority percentage interest of the Class R Certificates shall have the
exclusive right to direct the actions of the Owner Trustee in the management of
the Trust, so long as such instructions are not inconsistent with the express
terms set forth herein or in any Basic Document. Such majority of
Certificateholders shall not instruct the Owner Trustee in a manner inconsistent
with this Agreement or the Basic Documents.
(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
Certificateholders 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 Certificateholders 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 ten 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 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 is
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
Certificateholders 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 ten (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 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 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 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 and (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 becoming taxable as a corporation for Federal income tax purposes. The
Certificateholders shall not direct the Owner Trustee to take action that would
violate the provisions of this Section.
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, and the Certificate Paying Agent also agree
to disburse all moneys actually received by them constituting part of the Owner
Trust Estate
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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 gross negligence, (ii) in the case of the inaccuracy 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 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;
(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 Depositor 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 Insurer,
Indenture Trustee, 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 Insurer, Indenture Trustee or the Servicer under any of the
Basic Documents or otherwise and the Owner Trustee shall have no obligation or
liability to perform the obligations of the Trust under this Agreement or the
Basic Documents that are required to be performed by the Indenture Trustee under
the Indenture or the Servicer under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or 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 gross negligence, bad
faith or willful misconduct in the performance of any such act.
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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 Depositor and to the
Holders and the Insurer (which shall have relied on such representations and
warranties in issuing the Policy), that:
(a) It is a Delaware banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(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 or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
(d) The execution, delivery and performance by the Owner Trustee of
this Agreement does not require the authorization, consent, or approval of, the
giving of notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency of the State of
Delaware or the United States of America regulating the banking or trust powers
of the Owner Trustee.
(e) This Agreement has been duly authorized, executed and delivered
by the Owner Trustee and shall constitute the legal, valid, and binding
agreement of the Owner Trustee, enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization and
other laws affecting the rights of creditors generally, and by general
principles of equity regardless of whether enforcement is pursuant to a
proceeding in equity or at law.
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 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 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 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 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
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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 opinion or advice of any such counsel,
accountants or other such persons and such opinion or advice is 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
Wilmington Trust Company 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.
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 Depositor 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 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 on 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 Depositor 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 Depositor, 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. Wilmington Trust Company, 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 Wilmington Trust Company 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
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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; (ii) result in any fee, tax or other governmental charge under the
laws of the State of Delaware becoming payable by Wilmington Trust Company (or
any successor thereto); or (iii) subject Wilmington Trust Company (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 Wilmington Trust Company (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 as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof, payable in accordance with the
provisions of the Sale and Servicing Agreement, and the Owner Trustee shall be
entitled to be reimbursed in accordance with the terms of the Sale and Servicing
Agreement 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 in connection with the
exercise and performance of its rights and its duties.
SECTION 8.2. Indemnification. The Owner Trustee and its successors,
---------------
assigns, agents and servants (collectively, the "Indemnified Parties") shall be
indemnified from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (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 Owner Trustee shall not be indemnified 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. All amounts payable to the Owner Trustee under this Section 8.2
shall be paid in accordance with the terms of the Sale and Servicing Agreement.
SECTION 8.3. Payments of 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 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 Holder.
ARTICLE IX
Termination of Trust Agreement
------------------------------
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
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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 and (ii) six (6) months after distributions of all moneys and other
property or proceeds of Owner Trust Estate in accordance with the Indenture,
Sale and Servicing Agreement and Article V of this Agreement, including the
payment to Certificateholders of all amounts required to be paid to them
pursuant to this Agreement; provided, however, that the rights to
indemnification under Section 8.2 shall survive the termination of the Trust.
The Servicer shall promptly notify the Owner Trustee of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder, shall not (x) operate
to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder'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 Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment
Date upon which the Certificateholders shall surrender their Trust Certificates
to the Certificate Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five (5) 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 Payment 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 Certificate Paying
Agent therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Trust Certificates at the office of the Certificate Paying Agent therein
specified. The Owner Trustee shall give such notice to the Certificate
Registrar (if other than the Owner Trustee) and the Certificate Paying Agent at
the time such notice is given to Certificateholders. Upon presentation and
surrender of the Trust Certificates, the Certificate Paying Agent shall cause to
be distributed to Certificateholders amounts distributable on such Payment Date
pursuant to Section 5.2.
In the event that all of the Certificateholders shall not surrender 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 out of 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 Depositor.
(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 Class R Certificateholder.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall upon the written direction of the Depositor 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.
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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 and (iv) acceptable to the Insurer in its sole discretion, so long
as an Insurer Default shall not have occurred and be continuing. 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.
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 Insurer, the Certificateholders, the
Depositor and the Servicer. Upon receiving such notice of resignation, the
Depositor or a Certificate Majority shall, with the prior written consent of the
Insurer, promptly appoint a successor Owner Trustee 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
Depositor 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 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 Insurer may petition any court of competent jurisdiction for the
appointment of a successor the 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 Depositor or a Certificate Majority, 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 Depositor or a Certificate Majority may
remove the Owner Trustee. If the Depositor or a Certificate Majority shall
remove the Owner Trustee under the authority of the immediately preceding
sentence, the Depositor or a Certificate Majority, as applicable, with the prior
written consent of the Insurer, so long as no Insurer Default has occurred and
is continuing, shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed and one copy to the Depositor, if the
Certificate Majority is acting, and one copy to the successor Owner Trustee and
payment of 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 Depositor shall provide notice of such
resignation or removal of the Owner Trustee and 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
Depositor, the Servicer, the Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and
25
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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
Depositor 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 of the successor of such Owner
Trustee to all Certificateholders, 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 Person into
----------------------------------------
which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
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
such Person 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, provided further that
the Owner Trustee shall mail notice of any such merger 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 if Notes are Outstanding, the Insurer 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 Trust, 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 or no Notes remain Outstanding, to the approval of the Insurer (which
approval shall not be unreasonably withheld) 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.
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
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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 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
-------------
SECTION 11.1. Supplements and Amendments. (a) This Agreement may be
--------------------------
amended by the Depositor and the Owner Trustee, with the prior written consent
of the Insurer (so long as any Notes are Outstanding and 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 or defect or (ii) to correct,
supplement or modify any provisions in this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended by the Depositor and the Owner
Trustee from time to time, (i) with the prior written consent of the Insurer (so
long as any Notes are Outstanding and an Insurer Default shall not have occurred
and be continuing) but without the consent of any Noteholders or
Certificateholders or, (ii) if an Insurer Default shall have occurred and be
continuing, with (x) the consent of a Note Majority, if Notes are Outstanding
and to the extent such amendment materially and adversely affects the interests
of the Noteholders, and (y) the consent of the Holders of Certificates
evidencing not less than a majority of the Certificate Balance (which consent of
any Holder of a Certificate or Note given pursuant to this Section or pursuant
to any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Certificate or Note and of any
Certificate or Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof
27
<PAGE>
whether or not notation of such consent is made upon the Certificate or Note)
with prior written notice to the Rating Agencies, 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 Insurer under the Basic Documents, 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 Amount of the Notes and the
Certificate Balance required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and Holders of all
outstanding Certificates; provided, further, that no such amendment shall affect
the rights or obligations of the Certificate Registrar or Certificate Paying
Agent without its consent
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.
It shall not be necessary for the consent of 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 Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
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.
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.
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 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 Depositor, the Certificateholders, the Servicer and, to the extent expressly
provided herein, the Indenture Trustee, the Insurer 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 first class mail or certified mail, in each case return receipt
28
<PAGE>
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to Wilmington Trust Company, at its Corporate Trust
Office, Attention: Corporate Trust Administration; if to the Insurer, addressed
to Insurer, Financial Security Assurance Inc., 350 Park Avenue, New York, NY
10022, Attention: Surveillance Department, Telex No.: (212) 688-3101,
Confirmation: (212) 826-0100, Telecopy Nos.: (212) 339-3518, (212) 339-3529 (in
each case in which notice or other communication to Financial Security refers to
an Event of Default, a claim on the Policies or with respect to which failure on
the part of Financial Security to respond shall be deemed to constitute consent
or acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head-Financial Guaranty
Group "URGENT MATERIAL ENCLOSED"); 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 personal delivery, overnight courier or by
first-class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so given 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. [Reserved]
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. 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. Except as otherwise provided in this
Agreement, no other Person shall have any right or obligation hereunder. Upon
issuance of the Policy, this Agreement shall also inure to the benefit of the
Insurer for so long as an Insurer Default shall not have occurred and be
continuing. Without limiting the generality of the foregoing, all covenants and
agreements in this Agreement which confer rights upon the Insurer shall be for
the benefit of and run directly to the Insurer and the 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 Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Policy) upon delivery of a written notice to the Owner
Trustee.
SECTION 11.9. [Reserved.]
SECTION 11.10. 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 Indenture Trustee
and each Noteholder by accepting the benefits of this Agreement, hereby
covenants and agrees that they will not at any time institute against the
Depositor, or join in any institution against the Depositor 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.
29
<PAGE>
SECTION 11.11. No Recourse. Each Certificateholder by accepting a Trust
-----------
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Seller, the Servicer, the Transferor, the Depositor,
the Owner Trustee, the Indenture Trustee, the Insurer or any Affiliate thereof
and no recourse 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 11.12. 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 11.13. 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 11.14. Agreement Creates No Partnership Except for Tax Purposes.
---------------------------------------------------------
Except as provided in Section 2.11, by acceptance of their Certificates, each
Holder and transferee of a Certificate acknowledges that it understands and
intends that if the Certificates are treated as held by two or more persons, the
arrangement created hereby is a partnership for income tax purposes and that it
intends and expects to be treated as a partner for such purposes. The
provisions of the agreement shall be interpreted and applied in a manner
consistent with such intent. Each Holder acknowledges and agrees that if the
Certificates are treated as held by two or more persons, any tax partnership
created hereby is created solely for income tax purposes and that this Agreement
does not create a partnership for any other purpose.
SECTION 11.15. 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 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.
30
<PAGE>
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.
WILMINGTON TRUST COMPANY,
Owner Trustee
By:_________________________________________
Name:
Title:
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION,
as Depositor
By:_________________________________________
Name:
Title:
PEOPLEFIRST FINANCE, LLC,
with respect to Section 11.4, as Servicer
By:_________________________________________
Name:
Title:
Acknowledged and Agreed
Indenture Trustee
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
As Certificate Paying Agent and Certificate Registrar
By:_________________________________
Name:
Title:
31
<PAGE>
EXHIBIT A
$_______ NUMBER A-
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH CERTAIN PROVISIONS OF
A TRUST AGREEMENT BETWEEN PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
AND WILMINGTON TRUST COMPANY (THE "TRUST AGREEMENT"). THIS CERTIFICATE HAS NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY SECURITIES LAWS, AND ISSUER HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED,
AND PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE TRUST
INDENTURE AND APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND
TO "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), AND SOLELY WITH RESPECT TO THE INITIAL OFFERING OF THE
CERTIFICATES, TO INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED IN RULE 501(A)
(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) UPON DELIVERY OF A REPRESENTATION
LETTER TO THE TRUSTEE.
NO EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") AND NO OTHER PLAN SUBJECT TO SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR ANY
ENTITY THE ASSETS OF WHICH CONSTITUTE OR ARE DEEMED FOR PURPOSES OF ERISA OR
SECTION 4975 OF THE CODE TO CONSTITUTE THE ASSETS OF ANY SUCH PLAN, MAY PURCHASE
THIS CERTIFICATE OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASE AND THE HOLDING OF
THIS CERTIFICATE OR SUCH INTEREST BY SUCH PLAN (OR ANY ENTITY THE ASSETS OF
WHICH CONSTITUTE "PLAN ASSETS" OF ANY SUCH PLAN) IS SUBJECT TO A STATUTORY OR
ADMINISTRATIVE EXEMPTION. ANY HOLDER HEREOF OR ANY INTEREST HEREIN THAT IS, OR
IS ACTING ON BEHALF OF OR WITH "PLAN ASSETS" OF, AN EMPLOYEE BENEFIT PLAN
SUBJECT TO ERISA OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE, AND WITH RESPECT
TO WHICH THE TRUSTEE OR THE OWNER TRUSTEE IS A "PARTY IN INTEREST" OR A
"DISQUALIFIED PERSON", BY PURCHASING THIS CERTIFICATE OR SUCH INTEREST
REPRESENTS THAT ITS PURCHASE OF THIS CERTIFICATE OR SUCH INTEREST IS SUBJECT TO
A STATUTORY OR ADMINISTRATIVE EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF
ERISA AND SECTION 4975 OF THE CODE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF THE ISSUER THAT SUCH
PURCHASER HAS NOT ACQUIRED NOR WILL IT SELL, TRADE, TRANSFER, ASSIGN,
PARTICIPATE, PLEDGE, HYPOTHECATE, CAUSE TO BE MARKETED, OR OTHERWISE DISPOSE OF
THIS CERTIFICATE (OR ANY INTEREST HEREIN) ON OR THROUGH (I) AN "ESTABLISHED
SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(B)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-
COUNTER-MARKET OR AN "INTERDEALER QUOTATION SYSTEM" THAT REGULARLY DISSEMINATES
FIRM BUY OR SELL QUOTATIONS, OR (II) A "SECONDARY MARKET (OR THE SUBSTANTIAL
EQUIVALENT THEREOF)" WITHIN THE MEANING OF CODE SECTION 7704(B)(2).
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
A-1
<PAGE>
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1
CLASS A 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
loans secured by new or used automobiles, vans or light duty trucks and
transferred to the Trust by Prudential Securities Secured Financing Corporation.
(This Trust Certificate does not represent an interest in or
obligation of PeopleFirst Finance, LLC, Wilmington Trust Company, the Owner
Trustee or any of their Affiliates, except to the extent described below.)
THIS CERTIFIES THAT is the registered owner of TWO MILLION THREE
HUNDRED SIXTY SEVEN THOUSAND THREE HUNDRED AND FORTY SIX DOLLARS AND NINETY FOUR
CENTS ($2,367,346.94) nonassessable, fully-paid, beneficial ownership interest
in certain distributions of PeopleFirst.com Auto Receivables Owner Trust 1999-1
(the "Trust") formed by Prudential Securities Secured Financing Corporation.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-
mentioned Trust Agreement.
WILMINGTON TRUST COMPANY, not in its WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as or indvidual capacity but solely as
Owner Trustee Owner Trustee
By_____________________________________ By ____________________,
Authenticating Agent
By__________________________________
A-2
<PAGE>
The Trust was created pursuant to a Trust Agreement dated as of
November 1, 1999 (the "Trust Agreement"), between the Depositor and Wilmington
Trust Company, 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 a Class A Asset Backed Certificates (together with the Class R
Asset Backed Certificates, the "Trust Certificates"). Also issued under the
Indenture dated as of November 1, 1999, among the Trust, Norwest Bank Minnesota,
National Association, as trustee and indenture collateral agent, are three
classes of Notes designated as "Class A-1 6.415% Asset Backed Notes" (the "Class
A-1 Notes"), "Class A-2 6.685% Asset Backed Notes" (the "Class A-2 Notes"), the
"Class A-3 6.835 % Asset Backed Notes (the "Class A-3 Notes" and together with
the Class A-1 Notes and the Class A-2 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 retail
installment loan contracts secured by new and used automobiles, vans or light
duty trucks (the "Receivables"), all monies due or to become due thereunder on
or after Initial Cutoff Date, 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 and all proceeds of the foregoing.
Under the Trust Agreement, there will be distributed on the fifteenth
day of each month or, if such fifteenth day is not a Business Day, the next
succeeding Business Day (the "Payment Date"), commencing in December 1999, to
the Person in whose name this Trust Certificate is registered at the close of
business on the Business Day preceding such Payment Date (the "Record Date")
such Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Payment Date. No principal will be
paid on the Trust Certificate until the Class A Notes have been paid in full.
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, Servicer, the Depositor and
Certificateholders that, for purposes of Federal income taxes, if the
Certificates are treated as held by a single person, the Trust will be
disregarded as an entity separate from its owner and if the Certificates are
treated or held by two or more persons, the Trust will be treated as a
partnership and the Certificateholders will be treated as partners in that
partnership. The Certificateholders by acceptance of a Trust Certificate, agree
to treat, and to take no action inconsistent with such treatment of, the Trust
Certificates for such tax purposes.
Each Certificateholder, by its acceptance of a Trust Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Trust, the Transferor or the Depositor, or join in any institution
against the Trust, the Transferor or the Depositor 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 or on behalf of 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
A-3
<PAGE>
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 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.
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.
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
Dated: By:________________________________________
A-4
<PAGE>
(Reverse of Trust Certificate)
The Trust Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Transferor, the Depositor, the Owner
Trustee or any Affiliates of any of them 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, 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 consent of the holders of the
Notes and the Trust Certificates evidencing not less than a majority of the
outstanding Notes and the Certificate Balance. 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 Norwest Bank
Minnesota, National Association.
The Class A Certificates are issuable only as registered Trust
Certificates without coupons in denominations of $1,000 or integral multiples
thereof; except as otherwise provided in the Trust Agreement. 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. 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, nor 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
A-5
<PAGE>
held as part of the Trust. The Transferor of the Receivables 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 15% or less of the
Original Pool Balance.
The Trust Certificates may not be acquired by (a) an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title 1 of ERISA, (b) a plan described in Section 4975(e) (l) of the Code or (c)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding
this Trust Certificate, the Holder hereof shall be deemed to have represented
and warranted that it is not a Benefit Plan.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, 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 Certificate or of any
Receivable or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this 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.
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing _______________________________________________
Attorney to transfer said Trust Certificate on the books of the Trust
Certificate Registrar, with full power of substitution in the premises.
The undersigned has requested an exchange or transfer of this Certificate
in the form of an equal principal amount of Certificates evidenced by one or
more Definitive Certificates, to be delivered to the undersigned or, in the case
of a transfer of such Certificate, to such Person as the undersigned instructs
the Trustee.
In connection with such request and in respect of the Certificates
surrendered to the Trustee herewith for transfer (the "Surrendered
Certificate"), the Holder of such Surrendered Certificates hereby certifies that
the Surrendered Certificate is being transferred pursuant to and in accordance
with Rule 144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the undersigned reasonably believes is
purchasing the Surrendered Certificates for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is "qualified institutional buyer" within
the meaning of Rule 144A, in each case in a transaction meeting the requirements
of Rule 144 and the Surrendered Certificate is being transferred in compliance
with any applicable blue sky or securities laws of any state of the United
States or any other applicable jurisdiction.
This certificate and the statements contained herein are made for the
benefit of the Issuer and the Owner Trustee. The undersigned acknowledges that
the Issuer and the Owner Trustee will rely upon the undersigned's confirmation,
acknowledgements and agreements set forth herein, and the undersigned agrees to
notify the Owner Trustee promptly in writing if any of the undersigned's
representations or warranties herein ceases to be accurate and complete.
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 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
A-7
<PAGE>
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-8
<PAGE>
EXHIBIT A
________%
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH CERTAIN PROVISIONS OF
A TRUST AGREEMENT BETWEEN PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
AND WILMINGTON TRUST COMPANY (THE "TRUST AGREEMENT"). THIS CERTIFICATE HAS NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY SECURITIES LAWS, AND ISSUER HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED,
AND PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE TRUST
INDENTURE AND APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND
TO "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), AND SOLELY WITH RESPECT TO THE INITIAL OFFERING OF THE
CERTIFICATES, TO INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED IN RULE 501(A)
(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) UPON DELIVERY OF A REPRESENTATION
LETTER TO THE TRUSTEE.
NO EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") AND NO OTHER PLAN SUBJECT TO SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR ANY
ENTITY THE ASSETS OF WHICH CONSTITUTE OR ARE DEEMED FOR PURPOSES OF ERISA OR
SECTION 4975 OF THE CODE TO CONSTITUTE THE ASSETS OF ANY SUCH PLAN, MAY PURCHASE
THIS CERTIFICATE OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASE AND THE HOLDING OF
THIS CERTIFICATE OR SUCH INTEREST BY SUCH PLAN (OR ANY ENTITY THE ASSETS OF
WHICH CONSTITUTE "PLAN ASSETS" OF ANY SUCH PLAN) IS SUBJECT TO A STATUTORY OR
ADMINISTRATIVE EXEMPTION. ANY HOLDER HEREOF OR ANY INTEREST HEREIN THAT IS, OR
IS ACTING ON BEHALF OF OR WITH "PLAN ASSETS" OF, AN EMPLOYEE BENEFIT PLAN
SUBJECT TO ERISA OR A PLAN SUBJECT TO SECTION 4975 OF THE CODE, AND WITH RESPECT
TO WHICH THE TRUSTEE OR THE OWNER TRUSTEE IS A "PARTY IN INTEREST" OR A
"DISQUALIFIED PERSON", BY PURCHASING THIS CERTIFICATE OR SUCH INTEREST
REPRESENTS THAT ITS PURCHASE OF THIS CERTIFICATE OR SUCH INTEREST IS SUBJECT TO
A STATUTORY OR ADMINISTRATIVE EXEMPTION FROM THE PROHIBITED TRANSACTION RULES OF
ERISA AND SECTION 4975 OF THE CODE.
EACH PURCHASER REPRESENTS AND WARRANTS FOR THE BENEFIT OF THE ISSUER THAT SUCH
PURCHASER HAS NOT ACQUIRED NOR WILL IT SELL, TRADE, TRANSFER, ASSIGN,
PARTICIPATE, PLEDGE, HYPOTHECATE, CAUSE TO BE MARKETED, OR OTHERWISE DISPOSE OF
THIS CERTIFICATE (OR ANY INTEREST HEREIN) ON OR THROUGH (I) AN "ESTABLISHED
SECURITIES MARKET" WITHIN THE MEANING OF SECTION 7704(B)(1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, INCLUDING, WITHOUT LIMITATION, AN OVER-THE-
COUNTER-MARKET OR AN "INTERDEALER QUOTATION SYSTEM" THAT REGULARLY DISSEMINATES
FIRM BUY OR SELL QUOTATIONS, OR (II) A "SECONDARY MARKET (OR THE SUBSTANTIAL
EQUIVALENT THEREOF)" WITHIN THE MEANING OF CODE SECTION 7704(B)(2).
A-9
<PAGE>
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1
CLASS R 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
loans secured by new or used automobiles, vans or light duty trucks and
transferred to the Trust by Prudential Securities Secured Financing Corporation.
(This Trust Certificate does not represent an interest in or
obligation of PeopleFirst Finance, LLC, Wilmington Trust Company, the Owner
Trustee or any of their Affiliates, except to the extent described below.)
THIS CERTIFIES THAT is the registered owner of a beneficial ownership
interest in certain distributions of PeopleFirst.com Auto Receivables Owner
Trust 1999-1 (the "Trust") formed by Prudential Securities Secured Financing
Corporation.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-
mentioned Trust Agreement.
WILMINGTON TRUST COMPANY, not in its WILMINGTON TRUST COMPANY, not in
individual capacity but solely as or its individual capacity but solely
Owner Trustee as Owner Trustee
By__________________________________ By ____________________,
Authenticating Agent
By_________________________________
A-10
<PAGE>
The Trust was created pursuant to a Trust Agreement dated as of
November 1, 1999 (the "Trust Agreement"), between the Depositor and Wilmington
Trust Company, 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 a Class R Asset Backed Certificates (together with the Class A
Asset Backed Certificates, the "Trust Certificates"). Also issued under the
Indenture dated as of November 1, 1999, among the Trust, Norwest Bank Minnesota,
National Association, as trustee and indenture collateral agent, are three
classes of Notes designated as "Class A-1 6.415% Asset Backed Notes" (the "Class
A-1 Notes"), "Class A-2 6.685% Asset Backed Notes" (the "Class A-2 Notes"), the
"Class A-3 6.835 % Asset Backed Notes (the "Class A-3 Notes" and together with
the Class A-1 Notes and the Class A-2 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 retail
installment loan contracts secured by new and used automobiles, vans or light
duty trucks (the "Receivables"), all monies due or to become due thereunder on
or after Initial Cutoff Date, 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 and all proceeds of the foregoing.
Under the Trust Agreement, there will be distributed on the fifteenth
day of each month or, if such fifteenth day is not a Business Day, the next
succeeding Business Day (the "Payment Date"), commencing in December 1999, to
the Person in whose name this Trust Certificate is registered at the close of
business on the Business Day preceding such Payment Date (the "Record Date")
such Certificateholder's fractional undivided interest in the amount to be
distributed to Class R Certificateholders, if any on such Payment Date. No
payments will be paid on this Class R Certificate until the Class A Notes and
the Class A Certificates have been paid in full.
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 and the Class A Certificateholders
as described in the Sale and Servicing Agreement, the Indenture and the Trust
Agreement, as applicable.
It is the intent of the Seller, Servicer, the Depositor and
Certificateholders that, for purposes of Federal income taxes, if the
Certificates are treated as held by a single person, the Trust will be
disregarded as an entity separate from its owner and if the Certificates are
treated or held by two or more persons, the Trust will be treated as a
partnership and the Certificateholders will be treated as partners in that
partnership. The Certificateholders by acceptance of a Trust Certificate, agree
to treat, and to take no action inconsistent with such treatment of, the Trust
Certificates for such tax purposes.
Each Certificateholder, by its acceptance of a Trust Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Trust, the Transferor or the Depositor, or join in any institution
against the Trust, the Transferor or the Depositor 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 or on behalf of 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
A-11
<PAGE>
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 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.
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.
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER
TRUST 1999-1
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
Dated: By:______________________________________
A-12
<PAGE>
(Reverse of Trust Certificate)
The Trust Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Transferor, the Depositor, the Owner
Trustee or any Affiliates of any of them 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, 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 consent of the holders of the
Notes and the Trust Certificates evidencing not less than a majority of the
outstanding Notes and the Certificate Balance. 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 Norwest Bank
Minnesota, National Association.
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. 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, nor 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 Trust. The Transferor 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
A-13
<PAGE>
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 15% or less
of the Original Pool Balance.
The Trust Certificates may not be acquired by (a) an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title 1 of ERISA, (b) a plan described in Section 4975(e) (l) of the Code or (c)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding
this Trust Certificate, the Holder hereof shall be deemed to have represented
and warranted that it is not a Benefit Plan.
The recitals contained herein shall be taken as the statements of the
Depositor, the Transferor or the Servicer, as the case may be, 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
Certificate or of any Receivable or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this 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.
A-14
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________ Attorney to transfer said Trust
Certificate on the books of the Trust Certificate Registrar, with full power of
substitution in the premises.
The undersigned has requested an exchange or transfer of this Certificate
in the form of an equal principal amount of Certificates evidenced by one or
more Definitive Certificates, to be delivered to the undersigned or, in the case
of a transfer of such Certificate, to such Person as the undersigned instructs
the Trustee.
In connection with such request and in respect of the Certificates
surrendered to the Trustee herewith for transfer (the "Surrendered
Certificate"), the Holder of such Surrendered Certificates hereby certifies that
the Surrendered Certificate is being transferred pursuant to and in accordance
with Rule 144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the undersigned reasonably believes is
purchasing the Surrendered Certificates for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is "qualified institutional buyer" within
the meaning of Rule 144A, in each case in a transaction meeting the requirements
of Rule 144 and the Surrendered Certificate is being transferred in compliance
with any applicable blue sky or securities laws of any state of the United
States or any other applicable jurisdiction.
This certificate and the statements contained herein are made for the
benefit of the Issuer and the Owner Trustee. The undersigned acknowledges that
the Issuer and the Owner Trustee will rely upon the undersigned's confirmation,
acknowledgements and agreements set forth herein, and the undersigned agrees to
notify the Owner Trustee promptly in writing if any of the undersigned's
representations or warranties herein ceases to be accurate and complete.
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 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
A-15
<PAGE>
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-16
<PAGE>
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
THIS Certificate of Trust of PeopleFirst.com Auto Receivables Owner
Trust 1999-1 (the "Trust"), dated as of __________ __, 1999, is being duly
executed and filed by _____________________ , a _______________ and ____________
[______________] 1, an individual, as trustees, to form a business trust under
the Delaware Business Trust Act (12 Del. Code, (S) 3801 et seq.).
1. Name. The name of the business trust formed hereby is PeopleFirst.com
Auto Receivables Owner Trust 1999-1.
2. This Certificate of Trust will be effective __, 1999.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee of the Trust.
By:_______________________________________
Name:
Title:
<PAGE>
EXHIBIT 4.3
SALE AND SERVICING AGREEMENT
among
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1,
Issuer,
PF FUNDING II, LLC,
Transferor,
PEOPLEFIRST FINANCE, LLC,
Seller and Servicer,
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
Depositor
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee, Backup Servicer and Custodian
Dated as of November 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS................................................. 1
SECTION 1.1 Definitions............................................ 1
SECTION 1.2 Other Definitional Provisions.......................... 19
ARTICLE II CONVEYANCE OF RECEIVABLES................................... 20
SECTION 2.1 Conveyance of Initial Receivables...................... 20
SECTION 2.2 Conveyance of Subsequent Receivables................... 20
SECTION 2.3 Conveyance from Transferor to Depositor................ 23
SECTION 2.4 Conveyance from Depositor to Trust..................... 23
SECTION 2.5 Closing................................................ 24
ARTICLE III THE RECEIVABLES............................................. 24
SECTION 3.1 Representations and Warranties......................... 24
SECTION 3.2 Repurchase upon Breach................................. 28
SECTION 3.3 Custody of Receivables Files........................... 29
SECTION 3.4 Duties of Custodian.................................... 29
SECTION 3.5 Retention and Termination of Servicer.................. 29
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES................. 30
SECTION 4.1 Appointment and Duties of Servicer..................... 30
SECTION 4.2 Collection and Allocation of Receivable Payments....... 31
SECTION 4.3 Realization upon Receivables........................... 32
SECTION 4.4 [RESERVED]............................................. 32
SECTION 4.5 Maintenance of Security Interests in Financed Vehicles. 32
SECTION 4.6 Covenants of Servicer.................................. 33
SECTION 4.7 Purchase of Receivables upon Breach.................... 33
SECTION 4.8 Servicing Fee.......................................... 33
SECTION 4.9 Servicer's Certificate................................. 33
SECTION 4.10 Annual Statement as to Compliance; Notice of Default... 34
SECTION 4.11 Financial Statements................................... 34
SECTION 4.12 Access to Certain Documentation and Information
Regarding Receivables.................................. 35
SECTION 4.13 Servicer Expenses...................................... 35
SECTION 4.14 Appointment of Subservicer............................. 35
SECTION 4.15 Obligations under Basic Documents...................... 36
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 4.16 Reports to the Commission.............................. 36
ARTICLE V DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS AND
NOTEHOLDERS................................................. 36
SECTION 5.1 Establishment of Trust Accounts........................ 36
SECTION 5.2 Collections............................................ 39
SECTION 5.3 Application of Collections............................. 39
SECTION 5.4 Deficiency Notice...................................... 40
SECTION 5.5 Additional Deposits.................................... 40
SECTION 5.6 Distributions.......................................... 40
SECTION 5.7 Pre-Funding Account.................................... 42
SECTION 5.8 Statements to Certificateholders and Noteholders....... 42
SECTION 5.9 Net Deposits........................................... 43
SECTION 5.10 Optional Deposits by the Insurer....................... 43
ARTICLE V-A THE POLICY.................................................. 44
SECTION 5A.1 CLAIMS UNDER POLICY.................................... 44
SECTION 5A.2 PREFERENCE CLAIMS; DIRECTION OF PROCEEDINGS............ 45
SECTION 5A.3 SURRENDER OF POLICY.................................... 45
ARTICLE VI THE SELLER.................................................. 45
SECTION 6.1 Representations of the Seller.......................... 45
SECTION 6.2 Existence.............................................. 47
SECTION 6.3 Liability of Seller; Indemnities....................... 48
SECTION 6.4 Merger or Consolidation of, or Assumption of the
Obligations of, Seller................................. 48
SECTION 6.5 Limitation on Liability of Seller and Others........... 49
SECTION 6.6 Seller May Own Certificates or Notes................... 49
ARTICLE VII THE SERVICER................................................ 49
SECTION 7.1 Representations of Servicer............................ 49
SECTION 7.2 Indemnities of Servicer................................ 51
SECTION 7.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer............................... 52
SECTION 7.4 Limitation on Liability of Servicer and Others......... 52
SECTION 7.5 Servicer Not To Resign................................. 53
ARTICLE VII-A THE TRANSFEROR.............................................. 53
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 7A.1 REPRESENTATIONS OF THE TRANSFEROR...................... 53
SECTION 7A.2 EXISTENCE.............................................. 55
SECTION 7A.3 LIABILITY OF TRANSFEROR; INDEMNITIES................... 55
SECTION 7A.4 LIMITATION ON LIABILITY OF TRANSFEROR AND OTHERS....... 56
SECTION 7A.5 TRANSFEROR MAY OWN CERTIFICATES OR NOTES............... 56
ARTICLE VII-B THE DEPOSITOR............................................... 56
SECTION 7B.1 REPRESENTATIONS OF THE DEPOSITOR....................... 56
SECTION 7B.2 EXISTENCE.............................................. 58
SECTION 7B.3 LIABILITY OF DEPOSITOR; INDEMNITIES.................... 59
SECTION 7B.4 LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS........ 59
SECTION 7B.5 DEPOSITOR MAY OWN CERTIFICATES OR NOTES................ 59
ARTICLE VIII DEFAULT..................................................... 59
SECTION 8.1 Servicer Default....................................... 59
SECTION 8.2 Appointment of Successor............................... 61
SECTION 8.3 Notification to Noteholders, Certificateholders and
Backup Servicer........................................ 62
SECTION 8.4 Waiver of Past Defaults................................ 62
ARTICLE VIII-A THE BACKUP SERVICER......................................... 62
SECTION 8A.1 APPOINTMENT OF BACKUP SERVICER......................... 62
SECTION 8A.2 DUTIES OF BACKUP SERVICER.............................. 62
SECTION 8A.3 BACKUP SERVICING STANDARD.............................. 63
SECTION 8A.4 LIMITATION ON RESIGNATION OF THE BACKUP SERVICER....... 63
SECTION 8A.5 RIGHTS IN RESPECT OF THE BACKUP SERVICER............... 63
SECTION 8A.6 TERMINATION............................................ 63
SECTION 8A.7 RESIGNATION OR TERMINATION OF BACKUP SERVICER.......... 64
SECTION 8A.8 BACKUP SERVICING FEE................................... 64
SECTION 8A.9 INDEMNITY.............................................. 64
SECTION 8A.10 LIMITATION OF LIABILITY................................ 65
ARTICLE IX TERMINATION................................................. 65
SECTION 9.1 Optional Purchase of All Receivables................... 65
ARTICLE X ADMINISTRATIVE DUTIES OF THE SERVICER....................... 66
SECTION 10.2 Records................................................ 68
SECTION 10.3 Additional Information to be Furnished to the Issuer... 68
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE XI MISCELLANEOUS PROVISIONS.................................... 68
SECTION 11.1 Amendment.............................................. 68
SECTION 11.2 Protection of Title to the Trust....................... 69
SECTION 11.3 Notices................................................ 71
SECTION 11.4 Assignment............................................. 71
SECTION 11.5 Limitations on Rights of Others........................ 71
SECTION 11.6 Severability........................................... 71
SECTION 11.7 Separate Counterparts.................................. 72
SECTION 11.8 Headings............................................... 72
SECTION 11.9 Governing Law.......................................... 72
SECTION 11.10 Assignment to Indenture Trustee........................ 72
SECTION 11.11 Nonpetition Covenants.................................. 72
SECTION 11.12 Limitation of Liability of Owner Trustee and Indenture
Trustee................................................ 72
SECTION 11.13 Independence of the Servicer........................... 73
SECTION 11.14 No Joint Venture....................................... 73
SECTION 11.15 Third-Party Beneficiaries.............................. 73
SECTION 11.16 Disclaimer by Insurer.................................. 73
SECTION 11.17 Insurer as Controlling Party........................... 73
SECTION 11.18 Limited Recourse....................................... 74
</TABLE>
Exhibit A - Form of Subsequent Transfer Agreement
Exhibit B - Form of Monthly Certificateholder Statement
Exhibit C - Form of Monthly Noteholder Statement
Exhibit D - Form of Servicer's Certificate
Exhibit E - Form of Note Policy
Exhibit F - Form of Stamp
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
-iv-
<PAGE>
SALE AND SERVICING AGREEMENT dated as of November 1, 1999, among
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1, a Delaware business trust
(the "Issuer"), PF FUNDING II, LLC, a Delaware limited liability company, as
transferor (the "Transferor"), PEOPLEFIRST FINANCE, LLC, a California limited
liability company, as seller and servicer (the "Seller" and the "Servicer"),
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware corporation, as
depositor (the "Depositor"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, as Indenture Trustee, Backup Servicer and
Custodian.
WHEREAS the Transferor desires to purchase a portfolio of receivables
arising in connection with motor vehicle loans originated by the Seller;
WHEREAS the Seller is willing to sell such receivables to the Transferor;
WHEREAS the Transferor desires to purchase additional receivables during
the Pre-Funding Period (as defined herein) arising in connection with motor
vehicle loans originated by the Seller;
WHEREAS the Seller is willing to sell such additional receivables to the
Transferor;
WHEREAS the Depositor desires to obtain a transfer of such receivables from
the Transferor and the Transferor is willing to assign its interest in such
receivables to the Depositor;
WHEREAS the Issuer desires to obtain a transfer of the Depositor's interest
in such receivables and the Depositor desires to transfer its interest in such
receivables to the Issuer;
WHEREAS the Servicer is willing to service all such receivables;
WHEREAS the Backup Servicer is willing to act as backup servicer pursuant
to the terms hereof;
WHEREAS the Custodian is willing to act as custodian pursuant to the terms
hereof and the terms of the Custodial Agreement (as defined herein); and
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:
"Addition Notice" means, with respect to any transfer of Subsequent
---------------
Receivables to the Transferor pursuant to Section 2.2 of this Agreement, notice
of the Seller's election to transfer Subsequent Receivables to the Transferor,
such notice to designate the related Subsequent Transfer Date and the
approximate principal amount of Subsequent Receivables to be transferred on such
Subsequent Transfer Date.
"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
<PAGE>
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.
"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 (other than a Purchased Receivable) that became a Liquidated
Receivable during the related Collection Period and (ii) any Receivable (other
than a Liquidated Receivable) that was purchased or repurchased by any Person
pursuant to this Agreement during the related Collection 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 amount advanced
---------------
under such Receivable toward the purchase price or refinancing of the Financed
Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service, car club and warranty contracts, and
other items customarily financed as part of automobile loans.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
---------------------- ---
percentage rate of finance charges or service charges, as stated in the related
Contract.
"Available Funds" means, with respect to any Determination Date, the sum of
---------------
(i) the Collected Funds for the related Collection Period, (ii) all Purchase
Amounts deposited in the Collection Account during the related Collection
Period, (iii) the Monthly Capitalized Interest Amount with respect to the
related Payment Date, (iv) the Yield Supplement Amount, with respect to the
related Payment Date, and (v) 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 Indenture Trustee for distribution pursuant to Section 5.6 of the
Indenture.
"Average Principal Balance" means, with respect to any Collection Period,
-------------------------
the sum of the Principal Balance of the Receivables as of the close of business
on the last day of the immediately preceding Collection Period and the Principal
Balance of the Receivables as of the close of business on the last day of such
Collection Period, divided by two.
"Backup Servicer" means Norwest Bank Minnesota, National Association, as
---------------
the Backup Servicer, and each successor Backup Servicer pursuant to Section 8A.1
of the Agreement.
"Backup Servicer Duties" has the meaning assigned to such term in Section
----------------------
8A.2.
"Backup Servicing Fee" means the monthly fee payable to the Backup
--------------------
Servicer, in an amount equal to the greater of (A) the product of one-twelfth of
0.03% per annum multiplied by the Outstanding Amount on the preceding Payment
Date after giving effect to distributions on such date or (B) $500.
"Backup Servicing Standard" has the meaning assigned to that term in
-------------------------
Section 8A.3.
"Base Servicing Fee" means, with respect to any Collection Period, the fee
------------------
payable to the Servicer for services rendered during such Collection Period,
which shall be equal to one-twelfth of the Servicing Fee Rate multiplied by the
Pool Balance as of the first day of such Collection Period.
2
<PAGE>
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
---------------
Sale and Servicing Agreement, each Subsequent Transfer Agreement, the Indenture,
the Insurance Agreement, the Reserve Account Agreement, the Custodial Agreement,
the Depository Agreement, the Policy, the Premium Letter, the FSA
Indemnification Agreement, the Depositor Indemnification Agreement, the Notes,
the Certificates and the Pledge Agreement and other documents and certificates
delivered in connection therewith.
"Business Day" means any day other than a Saturday, a Sunday or other day
------------
on which commercial banks located in San Diego, California, Wilmington,
Delaware, Minneapolis, Minnesota or New York, New York are authorized or
obligated by law, executive order or governmental decree to be closed or the
principal place of business of any successor Servicer, successor Indenture
Trustee or successor Owner Trustee.
"Capitalized Interest Account" means the account designated as such,
----------------------------
established and maintained pursuant to Section 5.1 hereof.
"Capitalized Interest Account Initial Deposit" means $395,000, deposited
--------------------------------------------
into the Capitalized Interest Account on the Closing Date.
"Certificate" means a Trust Certificate (as defined in the Trust
-----------
Agreement).
"Certificate Balance" means, with respect to the Class A Certificates,
-------------------
initially, $2,367,346.94, and thereafter equals the initial Certificate Balance
reduced by all amounts allocable to principal previously distributed to
Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such term
--------------------------------
in Section 5.1(a) of the Trust Agreement.
"Certificate Pool Factor" as of the close of business on a Payment Date
-----------------------
means a seven digit decimal figure equal to the Certificate Balance as of such
Payment Date after giving effect to principal distributions on such date divided
by the initial Certificate Balance.
"Certificate Majority" means over 50% of Holders of the Certificates.
--------------------
"Certificateholder" has the meaning assigned to such term in the Trust
-----------------
Agreement.
"Certificateholders' Distributable Amount" means with respect to any
----------------------------------------
Payment Date, the sum of the Certificateholders' Monthly Principal Distributable
Amount and the Class R Certificateholders' Distributable Amount.
"Certificateholders' Monthly Principal Distributable Amount" means, with
----------------------------------------------------------
respect to any Payment Date, the Certificateholders' Percentage of the Principal
Distributable Amount.
"Certificateholders' Percentage" means (i) for each Payment Date prior to
------------------------------
the Payment Date on which the Class A-3 Notes are paid in full, 2%, (ii) on the
Payment Date on which the Class A-3 Notes are paid in full, the percentage
equivalent of a fraction, the numerator of which is the excess, if any, of (x)
the Principal Distributable Amount for such Payment Date over (y) the
outstanding principal amount of the Class A-3 Notes immediately prior to such
Payment Date, and the denominator of which is the Principal Distributable Amount
for such Payment Date, and (iii) for each Payment Date thereafter to and
including the Payment Date on which the Certificate Balance is reduced to zero,
100%.
3
<PAGE>
"Certificateholders' Principal Carryover Shortfall" means, with respect to
-------------------------------------------------
any Payment Date, the excess of the Certificateholders' Principal Distributable
Amount for the preceding Payment Date over the amount in respect of principal
that was actually deposited in the Certificate Distribution Account on such
preceding Payment Date.
"Certificateholders' Principal Distributable Amount" means, with respect to
--------------------------------------------------
any Payment Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Payment Date and the Certificateholders' Principal
Carryover Shortfall for such Payment Date; provided, however, that the
Certificateholders' Principal Distributable Amount (i) shall not exceed the
Certificate Balance and (ii) shall equal the Certificate Balance on the Final
Scheduled Payment Date for the Certificates.
"Class" means any of the Class A-1 Notes, the Class A-2 Notes, the
-----
Class A-3 Notes, the Class A Certificates or the Class R Certificates, as the
context requires.
"Class A Certificate" has the meaning assigned to such term in the Trust
-------------------
Agreement.
"Class A-1 Note" has the meaning assigned to such term in the Indenture.
--------------
"Class A-2 Note" has the meaning assigned to such term in the Indenture.
--------------
"Class A-3 Note" has the meaning assigned to such term in the Indenture.
--------------
"Class R Certificate" has the meaning assigned to such term in the Trust
-------------------
Agreement.
"Class R Certificateholders' Distributable Amount" means the amount
------------------------------------------------
available for distribution to the Class R Certificateholders pursuant to Section
5.6(b)(viii) hereof.
"Clearing Agency" means an organization registered as a "clearing agency"
---------------
pursuant to Section 17A of the Exchange Act.
"Closing Date" means November 30, 1999.
------------
"Collateral" has the meaning assigned to such term in the Indenture.
----------
"Collected Funds" means, with respect to any Determination Date, the amount
---------------
of funds in the Collection Account representing collections on the Receivables
during the related Collection Period, including all Net Liquidation Proceeds
collected during the related Collection Period.
"Collection Account" means the account designated as such, established and
------------------
maintained pursuant to Section 5.1(a) hereof.
"Collection Period" means the calendar month preceding the month in which
-----------------
each Payment Date occurs (or in the case of the Initial Payment Date, from the
Initial Cutoff Date to and including November 30, 1999).
"Computer Tape" means the computer tape or other electronic media
-------------
furnished by the Seller to the Transferor and its assigns describing certain
characteristics of the Initial Receivables as of the Initial Cutoff Date and of
Subsequent Receivables as of the related Subsequent Cutoff Date.
"Contract" means a motor vehicle loan evidenced by a note and security
--------
agreement.
4
<PAGE>
"Controlling Party" means, if no Insurer Default has occurred and is
-----------------
continuing, the Insurer, otherwise if Notes remain Outstanding, the Indenture
Trustee for the benefit of the Noteholders, or, after all unpaid principal and
interest on the Notes and all amounts owing to the Insurer have been paid in
full, the Owner Trustee for the benefit of the Certificateholders.
"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 Agreement is 1100 North Market Street, Rodney Square North,
Wilmington, Delaware 19898, Attention: Corporate Trust Administration and (ii)
with respect to the Indenture Trustee and the Indenture Collateral Agent, the
principal corporate trust office of the Indenture Trustee, which at the time of
execution of this Agreement is located at Norwest Center, Sixth Street and
Marquette Avenue, MAC N9311-161 Minneapolis, Minnesota 55479, Attention:
Corporate Trust Services/Asset Backed Administration.
"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 (i) the excess of the principal balance of such Receivable immediately
prior to such order over the principal balance of such Receivable as so reduced
and/or (ii) 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.
"Custodial Agreement" means the agreement dated as of November 1, 1999
-------------------
among the Seller, the Servicer, the Issuer, the Owner Trustee, the Indenture
Trustee and the Custodian, as amended, modified and supplemented from time to
time.
"Custodian" means Norwest Bank Minnesota, National Association, its
---------
successors in interest and any successor Custodian under the Custodial
Agreement.
"Default Rate" means, for any Determination Date, the product (expressed
------------
as a percentage) of (a) twelve and (b) a fraction, (i) the numerator of which is
the sum of (x) the aggregate Principal Balance of all Receivables that became
Defaulted Receivables during the related Collection Period and (y) the aggregate
Principal Balance of all Receivables that became Purchased Receivables during
the Collection Period and that were 31 or more days delinquent at the time of
repurchase, and (ii) the denominator of which is the Average Principal Balance
for the related Collection Period.
"Defaulted Receivable" means a Receivable with respect to which: (i) all or
--------------------
a portion of any Scheduled Payment is 90 or more days delinquent, (ii) the
Servicer has repossessed the related Financed Vehicle (and any applicable
redemption period has expired) or (iii) such Receivable is in default and the
Servicer has determined in good faith that payments thereunder are not likely to
be resumed.
"Deficiency Claim Amount" shall have the meaning set forth in Section 5.4
-----------------------
of this Agreement.
"Deficiency Claim Date" means, with respect to any Payment Date, the fourth
---------------------
Business Day immediately preceding such Payment Date.
"Deficiency Notice" shall have the meaning set forth in Section 5.4 of this
-----------------
Agreement.
"Delinquency Ratio" means, with respect to any Collection Period, the
-----------------
quotient, expressed as a percentage, of (i) the Aggregate Principal Balance of
all Receivables with respect to which one or more
5
<PAGE>
payments are 31 or more days past due at the last day of such Collection Period
and (ii) the Pool Balance as of the close of business on the last day of such
Collection Period.
"Delivery" or "Deliver" when used with respect to Trust Account Property
-------- -------
means the following and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership of any
such Trust Account Property to the Indenture Trustee or the Indenture Collateral
Agent, as applicable, free and clear of any adverse claims, consistent with
changes in applicable law or regulations or the interpretation thereof:
(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 Indenture Trustee,
indorsed to, or registered in the name of, the Indenture Trustee, or its
nominee or indorsed in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Indenture Trustee; or
(ii) delivery thereof in registered form to the Indenture Trustee;
and
(A) the certificate is indorsed to the Indenture Trustee or in
blank by effective endorsement; or
(B) the certificate is registered in the name of the Indenture
Trustee, upon original issue or registration of transfer by the
issuer thereof;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to the Indenture
Trustee; or
(ii) the issuer thereof has agreed that it will comply with
instructions originated by the Indenture Trustee without further consent by
the registered owner;
(d) with respect to any security issued by the U.S. Treasury, the Federal
Home Loan Mortgage Corporation or by the Federal National Mortgage Association
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 Trustee's securities account;
(e) with respect to a security entitlement:
(i) the Indenture Trustee, becomes the entitlement holder; or
6
<PAGE>
(ii) the securities intermediary has agreed that it will comply
with entitlement orders originated by the Indenture Trustee 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 Trustee acquires possession thereof;
(B) another person (other than a securities intermediary)
either acquires possession thereof on behalf of the Indenture
Trustee or, having previously acquired possession thereof,
acknowledges that it holds for the Indenture Trustee; or
(C) a securities intermediary acting on behalf of the Indenture
Trustee acquires possession of thereof, only if the certificate is
in registered form and has been specially indorsed to the Indenture
Trustee by an effective endorsement;
(ii) with respect to an uncertificated security:
(A) the issuer registers the Indenture Trustee 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 Trustee or, having previously become the registered
owner, acknowledges that it holds for the Indenture Trustee;
(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) "security entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Indenture Trustee
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.
7
<PAGE>
"Depositor" means Prudential Securities Secured Financing Corporation, and
---------
its successors in interest.
"Depositor Indemnification Agreement" has the meaning assigned to such term
-----------------------------------
in the Underwriting Agreement.
"Depositor Property" has the meaning assigned to such term in Section 2.3
------------------
hereof.
"Depository Agreement" means a Note Depository Agreement.
--------------------
"Determination Date" means, with respect to any Payment Date, the fifth
------------------
Business Day prior to the related Payment Date.
"Distribution Amount" means, with respect to a Payment Date, the sum of (i)
-------------------
the Available Funds for the immediately preceding Determination Date, plus (ii)
any amounts received with respect to the Deficiency Claim Amount from the
Reserve Account, an Insurer Optional Deposit or otherwise, other than from draws
under the Policy, received by the Indenture Trustee from the Insurer with
respect to such Payment Date.
"Draw Date" has the meaning assigned to such term in the Insurance
---------
Agreement.
"Eligible Deposit Account" means either (a) a segregated 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
--------------------
Indenture 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+ 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 the Insurer and (ii) whose deposits are insured by
the FDIC. If so qualified under clause (b) above, the Owner Trustee or the
Indenture Trustee may be considered an Eligible Institution.
"Eligible Investments" means book-entry securities, negotiable instruments
--------------------
or securities represented by instruments in bearer or registered form which
evidence:
(i) certain obligations of, or obligations guaranteed as to principal
and interest by, the U.S. government or any agency or instrumentality of the
U.S. government, when such obligations are backed by the full faith and credit
of the U.S., provided however, such obligation (i) must be limited to those
instruments that have a predetermined fixed-dollar amount of principal due at
maturity that cannot vary or change, (ii) if the obligation is rated, it should
not have an 'r' highlighter affixed to its rating, (iii) if the investments may
be liquidated before their maturity or are being relied on to meet a certain
yield, subject to the applicable Rating Agency restrictions are necessary, and
(iv) has an interest rate tied to a single interest rate index plus a single
fixed spread, if any, and which changes proportionately with such index;
8
<PAGE>
(j) 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 Payment Date), the commercial paper or 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;
(k) 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;
(l) investments in money market funds (including funds for which the
Indenture 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 Insurer;
(m) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(n) 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) rated
A-1+ by S&P and P-1 by Moody's; and
(o) 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 Insurer.
Any of the foregoing Eligible Investments may be purchased by or through
the Owner Trustee or the Indenture Trustee or any of its Affiliates.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"FDIC" means the Federal Deposit Insurance Corporation.
----
"Final Scheduled Payment Date" means with respect to (i) the Class A-1
----------------------------
Notes, May 15, 2002, (ii) the Class A-2 Notes, November 15, 2003 and (iii) the
Class A-3 Notes, September 15, 2005.
"Financed Vehicle" means a new or used automobile, light-duty truck or van,
----------------
securing an Obligor's indebtedness under the respective Receivable.
"FSA Indemnification Agreement" has the meaning assigned to the term
-----------------------------
"Indemnification Agreement" in the Insurance Agreement.
9
<PAGE>
"Indenture" means the Indenture dated as of November 1, 1999, among the
---------
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
"Indenture Collateral Agent" means the Person appointed pursuant to the
--------------------------
terms of the Reserve Account Agreement and acting as Collateral Agent under the
Reserve Account Agreement, its successors in interest and any successor
Collateral Agent under the Reserve Account Agreement.
"Indenture Trustee" means the Person acting as Indenture Trustee under the
-----------------
Indenture and the other Basic Documents, its successors in interest and any
successor trustee under the Indenture.
"Indenture Trustee Fee" means the monthly fee payable to the Indenture
---------------------
Trustee in an amount equal to the product of (i) 1/12 and (ii) .005 percent per
annum and (iii) the Outstanding Amount on the preceding Payment Date after
giving effect to distributions on such date.
"Initial Cutoff Date" means as to any Initial Receivable, the beginning of
-------------------
business on November 1, 1999.
"Initial Receivables" means any Receivable conveyed to the Transferor, its
-------------------
successors in interest and assigns on the Closing Date.
"Initial Yield Supplement Amount" shall mean $345,461.85.
-------------------------------
"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 or supervisory authority 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,
conservator, 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 or 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,
conservator, 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 such Person admitting its inability to pay its debts when due or the taking
of action by such Person in furtherance of any of the foregoing.
"Insurance Agreement" means the Insurance and Indemnity Agreement, dated as
-------------------
of November 1, 1999, among the Insurer, the Issuer, the Transferor, the Seller
and the Servicer.
"Insurance Agreement Event of Default" means an "Event of Default", as
------------------------------------
defined in the Insurance Agreement.
"Insurer" means Financial Security Assurance Inc., a monoline insurance
-------
company incorporated under the laws of the State of New York, its successors and
assigns.
"Insurer Default" means the occurrence and continuance of any of the
---------------
following events:
10
<PAGE>
(p) the Insurer shall have failed to make a payment required under
the Policy in accordance with its terms; or
(q) The 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 any 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
(r) 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 or receiver for the Insurer or for all or any material portion of its
property or (ii) authorizing the taking of possession by a custodian, trustee,
agent or receiver of the Insurer (or the taking of possession of all or any
material portion of the property of the Insurer).
"Insurer Optional Deposit" means, with respect to any Payment Date, an
------------------------
amount delivered by the Insurer pursuant to Section 5.10 hereof, at its sole
option, to the Indenture Trustee for deposit into the Collection Account.
"Interest Carryover Shortfall" means, with respect to any Payment Date, the
----------------------------
excess of the Noteholders' Interest Distributable Amount for the preceding
Payment Date over the amount in respect of interest that was actually deposited
in the Note Distribution Account on such preceding Payment Date, plus interest
on the amount of interest due but not paid to Noteholders on the preceding
Payment Date, to the extent permitted by law, at the Interest Rate borne by each
Class of Notes from such preceding Payment Date to but excluding the current
Payment Date.
"Interest Period" means, with respect to any Payment Date, the period from
---------------
and including the Closing Date (in the case of the first Payment Date) or from
and including the most recent Payment Date on which interest has been paid to
but excluding such Payment Date.
"Interest Rate" means (i) with respect to the Class A-1 Notes, 6.415% per
-------------
annum, (ii) the Class A-2 Notes, 6.685% per annum and (iii) the Class A-3 Notes,
6.835% per annum. The Interest Rate for each Class A Note shall be computed on
the basis of a 360 day year consisting of twelve 30 day months.
"Investment Earnings" means, with respect to any Payment Date, the
-------------------
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts and the Certificate Distribution Account.
"Issuer" means PeopleFirst.com Auto Receivables Owner 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.
"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 issued to a secured
party.
11
<PAGE>
"Liquidated Receivable" means, with respect to any Determination Date, a
---------------------
Receivable as to which, as of the last day of the related Collection Period, (i)
60 days have elapsed since the Servicer repossessed the Financed Vehicle, (ii)
the Servicer has determined in good faith that all amounts it expects to recover
have been received, (iii) all or a portion part of a Scheduled Payment is 120
days or more delinquent or (iv) the Financed Vehicle has been sold and the
proceeds received.
"Mandatory Redemption Date" means the Payment Date on or immediately
-------------------------
following the last day of the Pre-Funding Period.
"Monthly Capitalized Interest Amount" means in the case of Payment Dates
-----------------------------------
occurring on or prior to the Mandatory Redemption Date, an amount equal to the
product of (A) the product of (x) /1//\\12\\ and (y) the Weighted Average Rate
and (B) the difference between (x) the aggregate Outstanding Amount of the Notes
immediately prior to the applicable Payment Date and (y) the Pool Balance as of
the last day of the second preceding Collection Period, or in the case of the
December 1999 Payment Date, as of the Closing Date.
"Monthly Principal Distributable Amount" means, with respect to any Payment
--------------------------------------
Date, without duplication, the sum of (i) the principal portion (calculated on
the basis of the Simple Interest Method) of all Collected Funds received during
the immediately preceding Collection Period (other than Net Liquidation
Proceeds) including the principal portion of all prepayments, (ii) the Principal
Balance of all Receivables that became Liquidated Receivables during the related
Collection Period (other than Purchased Receivables), (iii) the principal
portion of the Purchase Amounts received with respect to all Receivables that
became Purchased Receivables during the related Collection Period, (iv) at the
option of the Insurer (so long as no Insurer Default shall have occurred and be
continuing), from funds received from the Insurer pursuant to Section 5.10
hereof, the Principal Balance of all the Receivables that were required to be
purchased pursuant to Sections 3.2 and 4.7, during such Collection Period but
were not purchased, (v) the aggregate amount of Cram Down Losses that shall have
occurred during the related Collection Period; and (vi) 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 Indenture Trustee for distribution
pursuant to Section 5.6 of the Indenture.
"Moody's" means Moody's Investors Services, Inc., or its successors.
-------
"Net Liquidation Losses" means, with respect to any Collection Period, (a)
----------------------
the sum of the Principal Balances (plus accrued interest through the end of such
Collection Period) of all Receivables that became Liquidated Receivables since
the Cutoff Date, minus (b) any Net Liquidation Proceeds received during such
Collection Period.
"Net Liquidation Proceeds" means as to any Liquidated Receivable, all
------------------------
amounts (including insurance proceeds) realized with respect to such Receivable
(other than amounts withdrawn from the Reserve Account, amounts paid pursuant to
Section 5.10 of this Agreement and drawings under the Policy) net of (i)
reasonable expenses incurred by the Servicer in connection with the collection
of such Receivable and the repossession and disposition of the Financed Vehicle
and (ii) amounts that are required to be refunded to the Obligor on such
Receivable; provided, however, that the Net Liquidation Proceeds with respect to
any Receivable shall in no event be less than zero.
"Net Loss Rate" means, for any Determination Date, the quotient (expressed
-------------
as a percentage) of (a) the product of (i) twelve and (ii) Net Liquidation
Losses, divided by (b) the Average Principal Balance for the related Collection
Period.
12
<PAGE>
"Norwest" means Norwest Bank Minnesota, National Association, and its
-------
successors in interest.
"Note" means any of the Notes issued pursuant to the terms of the
----
Indenture.
"Noteholder" has the meaning assigned to such term in the Indenture.
----------
"Note Depository Agreement" means the agreement, if any, among the Issuer,
-------------------------
the Indenture Trustee and The Depository Trust Company, as initial Clearing
Agency.
"Note Distribution Account" means the account designated as such,
-------------------------
established and maintained pursuant to Section 5.1(a) hereof.
"Note Majority" means the Holders of a majority in outstanding principal
-------------
amount of the Notes.
"Noteholders' Distributable Amount" means, with respect to any Payment
---------------------------------
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
-----------------------------------------
Payment Date, the excess of the Noteholders' Interest Distributable Amount for
the preceding Payment Date, over the amount in respect of interest that was
actually deposited in the Note Distribution Account on such preceding Payment
Date, plus interest on the amount of interest due but not paid to Noteholders on
the preceding Payment Date, to the extent permitted by law, at the respective
Interest Rate borne by each such Class of Notes from such preceding Payment Date
to but excluding the current Payment Date.
"Noteholders' Interest Distributable Amount" means, with respect to any
------------------------------------------
Payment Date, the sum of the Noteholders' Monthly Interest Distributable Amount
for such Payment Date and the Noteholders' Interest Carryover Shortfall for such
Payment Date.
"Noteholders' Monthly Interest Distributable Amount" means, with respect to
--------------------------------------------------
any Payment Date, the sum of the amount for each Class of Notes equal to product
of (i) the Interest Rate for such Class of Notes (ii) 1/12 and (iii) the
Outstanding Amount of the Notes of each such Class immediately preceding such
Payment Date.
"Noteholders' Monthly Principal Distributable Amount" means, with respect
---------------------------------------------------
to any Payment Date, the Noteholders' Percentage of the Principal Distributable
Amount.
"Noteholders' Percentage" means with respect to any Determination Date (i)
-----------------------
relating to a Payment Date prior to the Payment Date on which the principal
amount of the Class A-3 Notes is reduced to zero, 98%; (ii) relating to the
Payment Date on which the principal amount of the Class A-3 Notes is reduced to
zero, the percentage equivalent of a fraction, the numerator of which is the
principal amount of the Class A-3 Notes immediately prior to such Payment Date,
and the denominator of which is the Principal Distributable Amount; and (iii)
relating to any other Payment Date, 0%.
"Noteholders' Principal Carryover Shortfall" means, as of the close of any
------------------------------------------
Payment Date, the excess of the Noteholders' Monthly Principal Distributable
Amount and any outstanding Noteholders' Principal Carryover Shortfall for the
preceding Payment Date over the amount in respect of principal that was actually
deposited in the Note Distribution Account on such preceding Payment Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
-------------------------------------------
Payment Date, (other than the Final Scheduled Payment Date for any Class of
Notes), the sum of the Noteholders' Monthly Principal Distributable Amount for
such Payment Date and the Noteholders' Principal Carryover Shortfall
13
<PAGE>
for such Payment Date. The Noteholders' Principal Distributable Amount on the
Final Scheduled Payment Date for any Class of Notes will equal the sum of (i)
the Noteholders' Monthly Principal Distributable Amount for such Payment Date,
(ii) the Noteholders' Principal Carryover Shortfall for such Payment Date, and
(iii) the excess of the Outstanding Amount of such Class of Notes, if any, over
the amounts described in clauses (i) and (ii).
"Note Pool Factor" for each Class of Notes as of the close of business on a
----------------
Payment Date means a seven-digit decimal figure equal to the outstanding
principal amount of such Class of Notes as of such Payment Date after giving
effect to principal distributions on such date divided by the original
Outstanding Amount of such Class of Notes.
"Notice of Claim" has the meaning assigned to such term in Section 5A.1(b)
---------------
hereof.
"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 treasurer, assistant treasurer, secretary or assistant secretary of 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 Seller or the Servicer, which counsel shall
be acceptable to the Indenture Trustee, the Owner Trustee, the Insurer or the
Rating Agencies, as applicable.
"Original Pool Balance" means the sum, as of any date, of the Pool Balance
---------------------
as of the Initial Cutoff Date, plus the aggregate Principal Balance of the
Subsequent Receivables, if any, sold to the Trust, as of their respective
Subsequent Cutoff Dates.
"Outstanding" has the meaning assigned to such term in the Indenture.
-----------
"Outstanding Amount" means the aggregate principal amount of all Notes or
------------------
Class of Notes, as applicable, outstanding at the date of determination.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
------------------
Agreement.
"Owner Trustee" means Wilmington Trust Company, 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.
"Owner Trustee Fee" means $4,000 per annum, payable annually in advance.
-----------------
"Payment Date" means the fifteenth day of each calendar month and if such
------------
day is not a Business Day, the next succeeding Business Day, commencing in
December 1999.
"PeopleFirst" means PeopleFirst Finance, LLC, and its successors in
-----------
interest.
"Person" means any individual, corporation, limited liability company,
------
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term in the definition
-----------------
of "Delivery" above.
14
<PAGE>
"Policy" means the financial guaranty insurance policy issued by the
------
Insurer in accordance with the terms of the Insurance Agreement.
"Policy Claim Amount" has the meaning assigned to such term in Section
-------------------
5A.1(a) hereof.
"Pool Balance" means, as of any date of determination, the sum of the
------------
Principal Balances of the Receivables (excluding Purchased Receivables and
Liquidated Receivables).
"Pre-Funded Amount" means, with respect to any Payment Date, the amount on
-----------------
deposit in the Pre-Funding Account (exclusive of Pre-Funding Earnings), which
initially shall be $38,746,001.80.
"Pre-Funding Account" has the meaning specified in Section 5.1(a)(iii).
-------------------
"Pre-Funding Earnings" means any investment earnings (net of losses) on
--------------------
amounts on deposit in the Pre-Funding Account.
"Pre-Funding Period" shall mean the period from and including the Closing
------------------
Date and ending on the earliest of: (a) the last day of the Collection Period
on which the Pre-Funded Amount (after giving effect to any transfers therefrom
in connection with the transfer of Subsequent Receivables to the Trust on or
before such date) is less than $100,000, (b) the date on which an Event of
Default occurs and (c) the close of business on February 29, 2000.
"Preference Claim" has the meaning assigned to such term in Section 5A.2(b)
----------------
hereof.
"Premium Letter" has the meaning assigned to such term in the Insurance
--------------
Agreement.
"Pledge Agreement" has the meaning assigned to such term in the Insurance
----------------
Agreement.
"Principal Balance" means, with respect to any Receivable, as of any date,
-----------------
the Amount Financed minus (i) that portion of all amounts received on or prior
to such date and allocable to principal in accordance with the terms of the
Receivable and the Simple Interest Method, and (ii) any Cram Down Loss in
respect of such Receivable.
"Principal Carryover Shortfall" means, as of the close of business on any
-----------------------------
Payment Date, the excess of the Principal Distributable Amount plus any
outstanding Principal Carryover Shortfall from the preceding Payment Date over
the amount of principal deposited in the Note Distribution Account and the
Certificate Distribution Account, with respect to such current Payment Date.
"Principal Distributable Amount" means, with respect to any Payment Date,
------------------------------
the sum of the Monthly Principal Distributable Amount for such Payment Date and
the Principal Carryover Shortfall for the prior Payment Date.
"Purchase Amount" means with respect to a Receivable, the Principal Balance
---------------
and all accrued and unpaid interest on the Principal Balance of such Receivable
(including one month's interest thereon, in the month of payment, at the APR
less, so long as PeopleFirst is the Servicer, the Servicing Fee), after giving
effect to the receipt of any moneys collected (from whatever source) on such
Receivable, if any.
"Purchased Receivable" means a Receivable purchased as of the close of
--------------------
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.7 of this Agreement or repurchased by the Seller or the Transferor, as
applicable, pursuant to Section 3.2 of the Agreement.
15
<PAGE>
"Rating Agency" means each of Standard & Poor's and Moody's, and together,
-------------
the "Ratings Agencies". 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 Insurer (so long as an Insurer Default shall not have occurred
and be continuing), notice of which designation shall be given to the Indenture
Trustee, Owner Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
-----------------------
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that the Rating
Agencies shall have notified the Seller, the Servicer, the Owner Trustee,
Insurer, the Depositor, the Issuer and the Indenture Trustee in writing that
such action will not result in a reduction, qualification or withdrawal of the
then current rating of any Class of Notes.
"Realized Losses" means, with respect to any Receivable that becomes a
---------------
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation Proceeds to the extent allocable to principal.
"Receivable" means any Contract listed on Schedule A, as such Schedule
----------
shall be amended to reflect the transfer of Subsequent Receivables to the Trust
(which Schedule may be in the form of microfiche).
"Receivable Files" means the documents specified in Section 3.3.
----------------
"Record Date" means, with respect to each Payment Date, the close of
-----------
business on the Business Day preceding such Payment 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.
"Remaining Pre-Funding Amount" means, if the Pre-Funded Amount has not
----------------------------
been reduced to zero on the Mandatory Redemption Date, after giving effect to
any reductions in the Pre-Funded Amount on such date pursuant to Section
5.6(a)(ii), the amount remaining in the Pre-Funding Account at such time,
exclusive of the Pre-Funding Earnings, if any, for the related Collection
Period.
"Reserve Account" means the account designated as such, established and
---------------
maintained pursuant to the Reserve Account Agreement.
"Reserve Account Agreement" means the Master Reserve Account Agreement
-------------------------
dated as of November 1, 1999 among the Transferor, the Insurer and the Indenture
Collateral Agent.
"Reserve Account Balance" means, for any Payment Date, the amount on
-----------------------
deposit in the Reserve Account. Unless specifically stated to the contrary, the
Reserve Account Balance shall be calculated after giving effect to all deposits
and withdrawals therefrom on the prior Payment Date (or, in the case of the
first Payment Date, the Closing Date) and all interest and other income (net of
losses and investment expenses) on such amounts during the related Collection
Period.
"Reserve Account Initial Deposit" means $1,576,612.21.
-------------------------------
16
<PAGE>
"Scheduled Payment" on a Receivable means that portion of the payment
-----------------
required to be made by the Obligor during the respective Collection Period
sufficient to amortize the Principle Balance thereof under the Simple Interest
Method over the term of the Receivable and to provide interest at the APR.
"Seller" means PeopleFirst Finance, LLC, a California limited liability
------
company, as Seller under this Agreement and its successors in interest to the
extent permitted hereunder.
"Service Contract" means, with respect to a Financed Vehicle, the
----------------
agreement, if any, financed under the related Receivable that provides for the
repair of such Financed Vehicle, including any extended warranties.
"Servicer" means PeopleFirst Finance, LLC, as the servicer of the
--------
Receivables, and each successor Servicer pursuant to Section 7.3 or 8.2 of the
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 hereto.
"Servicing Fee" has the meaning specified in Section 4.8 of this Agreement.
-------------
"Servicing Fee Rate" means 0.50% per annum.
------------------
"Servicing Standard" shall have the meaning assigned to such term in
------------------
Section 4.1 hereof.
"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 portion
--------------------------
of a payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division of
-----------------
The McGraw-Hill Companies, Inc., or its successors.
"Subsequent Cutoff Date" means, with respect to a Subsequent Receivable,
----------------------
the opening of business on the first day of the month in which such Subsequent
Receivable is conveyed to the Trust pursuant to this Agreement.
"Subsequent Receivables" means the Receivables transferred to the
----------------------
Transferor and its assigns pursuant to Sections 2.2, 2.3 and 2.4 of this
Agreement and each Subsequent Transfer Agreement, which Subsequent Receivables
shall be listed on Schedule A to the related Subsequent Transfer Agreement.
"Subsequent Reserve Account Deposit" shall mean, with respect to any
----------------------------------
Subsequent Transfer Date, cash or Permitted Investments having a value equal to
2.0% of the aggregate Principal Balances as of the related Subsequent Cutoff
Date of the Subsequent Receivables conveyed to the Trust on such Subsequent
Transfer Date.
17
<PAGE>
"Subsequent Transfer Agreement" means an agreement among the Issuer, the
-----------------------------
Transferor, the Seller, the Servicer, the Depositor, the Indenture Trustee, the
Backup Servicer and the Custodian, pursuant to which the Transferor will acquire
Subsequent Receivables from the Seller and transfer such Subsequent Receivables
to the Depositor, which will transfer such Subsequent Receivables to the Issuer.
"Subsequent Transfer Date" means, with respect to Subsequent Receivables,
------------------------
any date, occurring not more frequently than once a month, during the Pre-
Funding Period on which Subsequent Receivables are to be transferred from the
Seller to the Transferor, the Transferor to the Depositor and the Depositor to
the Issuer, pursuant to this Agreement, and a Subsequent Transfer Agreement is
executed and delivered.
"Transferor" means PF Funding II, LLC, and its successors in interest.
----------
"Transferor Property" has the meaning assigned to such term in Section 2.1
-------------------
hereof.
"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 of the
--------------
Agreement.
"Trust Agreement" means the Trust Agreement dated as of November 1, 1999,
---------------
between the Depositor 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 Indenture 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 Indenture Trustee customarily performing functions similar
to those performed by any of the above designated officers 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 (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 to such term in the Trust
--------------
Agreement.
"UCC" means the Uniform Commercial Code as in effect in the State of New
---
York on the date of the Agreement.
"Underwriting Agreement" means the agreement dated as of November 17, 1999,
----------------------
among the Depositor, PeopleFirst, PeopleFirst.com Inc., the Transferor, and
Prudential Securities Incorporated, as the same may be amended and supplemented
from time to time.
"Weighted Average Rate" means, with respect to any date of determination, a
---------------------
per annum rate equal to (A) the sum of (i) the product of (x) the Outstanding
Amount of the Class A-1 Notes on such date and (y) the Class A-1 Interest Rate,
plus (ii) the product of (x) the Outstanding Amount of the Class A-2 Notes on
such date and (y) the Class A-2 Interest Rate, plus (iii) the product of (x) the
Outstanding Amount of the Class A-3 Notes on such date and (y) the Class A-3
Interest Rate divided by (B) the Outstanding Amount of the Notes on such date;
provided that if the date of determination is a Payment
18
<PAGE>
Date, then the Outstanding Amount of any class of Notes shall be determined
after giving effect to all payments made on such date.
"Yield Supplement Account" means the account designated, established and
------------------------
maintained pursuant to Section 5.1 hereof.
"Yield Supplement Account Initial Deposit" means $345,461.85.
----------------------------------------
"Yield Supplement Account Required Amount" means, on the Closing Date,
----------------------------------------
$345,461.85 and, as of the close of business on any Payment Date, an amount
equal to the sum of all projected Yield Supplement Amounts for all future
Payment Dates, assuming that future Scheduled Payments on the Receivables are
made on their scheduled due dates.
"Yield Supplement Amount" with respect to any Payment Date will be
-----------------------
determined by aggregating for all of the Receivables, one twelfth (1/12) of the
difference (if positive) between (x) the product of (i) the Principal Balance of
such Receivable multiplied by (ii) the Weighted Average Rate plus 0.535% (which
percentage represents the Servicing Fee Rate plus 0.035%) and (y) the product of
(i) the Principal Balance of such Receivable multiplied by (ii) the APR on such
Receivable.
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.
(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
19
<PAGE>
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 Initial Receivables. In consideration of the
---------------------------------
Transferor's delivery to or upon the order of the Seller on the Closing Date of
the net proceeds from the sale of the Notes and the Certificates and 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 Transferor, without recourse (subject to the obligations
set forth herein), all right, title and interest of the Seller in and to:
(a) the Initial Receivables, and all moneys received thereon after
the Initial Cutoff Date and all Net Liquidation Proceeds with respect to such
Receivables;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Initial Receivables and any other interest of the
Seller in such Financed Vehicles;
(c) any proceeds with respect to the Initial Receivables from claims
on any theft, physical damage, credit life or disability insurance policies
covering Financed Vehicles or Obligors and any proceeds from the liquidation of
the Initial Receivables;
(d) all rights under any Service Contracts on the related Financed
Vehicles;
(e) the related Receivables Files; and
(f) the proceeds of any and all of the foregoing (the items specified
in clauses (a) through (e) are referred to herein as the "Transferor Property").
In connection with such sale, the Seller agrees to record and file, at its
own expense, financing statements (and continuation statements with respect to
such financing statements when applicable) with respect to the Receivables for
the sale of accounts and chattel paper meeting the requirements of applicable
state law in such manner and in such jurisdictions as are necessary to perfect
the sale and assignment of the Receivables to the Issuer.
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 Transferor Property from the Seller to the Transferor and the beneficial
interest in and title to the Receivables and the other Transferor 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
security agreement and the Seller does hereby grant a security interest in the
property referred to in this Section 2.1 for the benefit of the Transferor.
SECTION 2.2. Conveyance of Subsequent Receivables. (a) Subject to the
------------------------------------
conditions set forth in paragraph (b) below, in consideration of the
Transferor's delivery on each related Subsequent Transfer Date to or upon the
order of the Seller of the amount described in Section 5.7(a) to be delivered to
the Seller, the Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Transferor
20
<PAGE>
without recourse (subject to the obligations set forth herein), all right, title
and interest of the Seller in and to:
(i) the Subsequent Receivables listed on Schedule A to the
related Subsequent Transfer Agreement and all monies received thereon
after the related Subsequent Transfer Date and all Net Liquidation
Proceeds with respect to such Receivables;
(ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to such Subsequent Receivables and any other
interest of the Seller in such Financed Vehicles;
(iii) any proceeds with respect to such Subsequent Receivables
from claims on any theft, physical damage, credit life or disability
insurance policies covering the related Financed Vehicles or Obligors
and any proceeds from the liquidation of such Subsequent Receivables;
(iv) all rights under any Service Contracts on the related
Financed Vehicles:
(v) the related Receivables Files;
(vi) the proceeds of any and all of the foregoing.
(b) The Seller shall transfer to the Transferor the Subsequent
Receivables and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Indenture Trustee, the
Owner Trustee, the Insurer and the Rating Agencies with an Addition
Notice not later than five (5) Business Days prior to such Subsequent
Transfer Date and shall have provided any information reasonably
requested by any of the foregoing with respect to the Subsequent
Receivables;
(ii) the Seller shall have executed and delivered to the
Transferor, which shall have delivered to the Depositor, which shall
have delivered to the Issuer a duly executed Subsequent Transfer
Agreement which shall include supplements to Schedule A, listing the
Subsequent Receivables;
(iii) the Seller shall, to the extent required by Section 5.2,
have deposited in the Collection Account all collections in respect of
the Subsequent Receivables since the related Subsequent Cutoff Date;
(iv) as of each Subsequent Transfer Date, (A) the Seller shall
not be insolvent and shall not become insolvent as a result of the
transfer of Subsequent Receivables on such Subsequent Transfer Date,
(B) the Seller shall not intend to incur or believe that it shall
incur debts that would be beyond its ability to pay as such debts
mature, (C) such transfer shall not have been made with actual intent
to hinder, delay or defraud any Person and (D) the assets of the
Seller shall not constitute unreasonably small capital to carry out
its business as conducted;
(v) the Pre-Funding Period shall not have terminated;
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(vi) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables transferred
to the Trust pursuant to this Agreement shall meet the following
criteria (based on the characteristics of the Initial Receivables on
the Initial Cutoff Date and the Subsequent Receivables on the related
Subsequent Cutoff Dates): not more than 10% of the Pool Balance based
on aggregate Principal Balance shall have Obligors whose mailing
addresses are in any one state other than California unless an Opinion
of Counsel acceptable to the Rating Agencies and the Insurer with
respect to the security interest in the related Financed Vehicles is
furnished by the Seller on or prior to such Subsequent Transfer Date;
(vii) each Subsequent Receivable shall have an APR of 6.88% or
higher and a remaining term to stated maturity of not more than 60
months;
(viii) each of the representations and warranties made by the
Seller pursuant to Section 3.1 with respect to the Subsequent
Receivables to be transferred on such Subsequent Transfer Date and
pursuant to Section 6.1 on such Subsequent Transfer Date shall be true
and correct as of the related Subsequent Transfer Date, and the Seller
shall have performed all obligations to be performed by it hereunder
on or prior to such Subsequent Transfer Date;
(ix) the Seller shall, at its own expense, on or prior to the
Subsequent Transfer Date indicate in its computer files that the
Subsequent Receivables identified in the Subsequent Transfer Agreement
have been sold by the Seller to the Transferor, assigned by the
Transferor to the Depositor and assigned by the Depositor to the
Issuer pursuant to this Agreement and pledged to the Indenture Trustee
pursuant to the Indenture;
(x) the Seller shall have taken any action required to
maintain the first perfected ownership interest of the Trust in the
Owner Trust Estate and the first perfected security interest of the
Indenture Trustee in the Collateral;
(xi) no selection procedures adverse to the interests of the
Noteholders, the Certificateholders or the Insurer shall have been
utilized in selecting the Subsequent Receivables;
(xii) the addition of any such Subsequent Receivables shall not
result in a material adverse tax consequence to the Trust, the
Noteholders or the Certificateholders;
(xiii) the Seller shall have delivered (A) to the Rating
Agencies, the Indenture Trustee and the Insurer an Opinion of Counsel
with respect to the transfer of such Subsequent Receivables
substantially in the form of the Opinion of Counsel delivered to the
Rating Agencies, the Indenture Trustee and the Insurer on the Closing
Date and (B) to the Indenture Trustee the Opinion of Counsel required
by Section 11.2(b);
(xiv) each Rating Agency shall have confirmed that the rating on
the Notes shall not be withdrawn or reduced as a result of the
transfer of such Subsequent Receivables to the Trust;
(xv) the Insurer (so long as no Insurer Default shall have
occurred and be continuing), in its absolute and sole discretion,
shall have approved the transfer of such Subsequent Receivables to the
Trust;
22
<PAGE>
(xvi) the applicable Subsequent Reserve Account Deposit shall
have been made;
(xvii) the Seller shall have delivered to the Insurer and the
Indenture Trustee an Officers' Certificate confirming the satisfaction
of each condition precedent specified in this paragraph (b); and
(xviii) no Event of Default has occurred and is continuing.
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Subsequent Receivable on the
date required as specified above, the Seller will immediately repurchase each
such Subsequent Receivable from the Transferor, at a price equal to the Purchase
Amount thereof, in the manner specified in Section 4.7.
Upon each conveyance pursuant to the terms of this Sections 2.2, 2.3 and
2.4 hereof and a Subsequent Transfer Agreement, such Subsequent Receivables
shall be deemed to be Transferor Property.
The Seller agrees to transfer to the Transferor pursuant to Section 2.2(a),
Subsequent Receivables with an Aggregate Principal Balance as of the related
Subsequent Cutoff Dates of approximately $39,536,737, subject only to the
availability thereof.
SECTION 2.3. Conveyance from Transferor to Depositor. For valuable
---------------------------------------
consideration, the transfer of which is hereby acknowledged, the Transferor does
hereby transfer, assign, set over and otherwise convey to the Depositor, all
right title and interest of the Transferor (but none of its obligations) in the
Transferor Property, this Agreement, each Subsequent Transfer Agreement, each
Subsequent Receivable and the Custodial Agreement, including all of the duties
and obligations of each party hereto and thereto (collectively, the "Depositor
Property").
It is the intention of the Transferor that the transfer and assignment
contemplated by this Section 2.3 shall constitute a sale of the Receivables and
other Depositor Property from the Transferor to the Depositor and the beneficial
interest in and title to the Receivables and the other Depositor Property shall
not be part of the Transferor's estate in the event of the filing of a
bankruptcy petition by or against the Transferor under any bankruptcy law. In
the event that, notwithstanding the intent of the Transferor, the transfer and
assignment contemplated hereby is held not to be a sale, this Agreement shall
constitute a security agreement and the Transferor does hereby grant a security
interest in the property referred to in this Section 2.3 for the benefit of the
Depositor.
The Transferor covenants that in the event that after any Subsequent
Transfer Date it receives notice or becomes aware that any of the conditions
precedent set forth in Section 2.2(b) are not satisfied with respect to any
Subsequent Receivable on the date required as specified above, the Transferor
will immediately repurchase such Subsequent Receivable from the Depositor, at a
price equal to the Purchase Amount thereof, in the manner specified in Section
4.7.
SECTION 2.4. Conveyance from Depositor to Trust. For valuable
----------------------------------
consideration, the transfer of which is hereby acknowledged, the Depositor does
hereby transfer, assign, set over and otherwise convey to the Trust, all right
title and interest of the Depositor (but none of its obligations) in the
Depositor Property, this Agreement, each Subsequent Transfer Agreement, each
Subsequent Receivable and the Custodial Agreement, including all of the duties
and obligations of each party hereto and thereto collectively, the "Trust
Property").
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<PAGE>
It is the intention of the Depositor that the transfer and assignment
contemplated by this Section 2.4 shall constitute a sale of the Receivables and
other Trust Property from the Depositor to the Trust and the beneficial interest
in and title to the Receivables and the other Trust Property shall not be part
of the Depositor's estate in the event of the filing of a bankruptcy petition by
or against the Depositor under any bankruptcy law. In the event that,
notwithstanding the intent of the Depositor, the transfer and assignment
contemplated hereby is held not to be a sale, this Agreement shall constitute a
security agreement and the Depositor does hereby grant a security interest in
the property referred to in this Section 2.4 for the benefit of the Noteholders,
Certificateholders and the Insurer.
The Seller covenants that in the event that after any Subsequent Transfer
Date it receives notice or becomes aware that any of the conditions precedent
set forth in Section 2.2(b) were not satisfied with respect to any Subsequent
Receivable on the date required as specified above, the Seller will immediately
repurchase such Subsequent Receivable, at a price equal to the Purchase Amount
thereof, in the manner specified in Section 4.7.
SECTION 2.5. Closing. The conveyance of the Receivables shall take place
-------
at the offices of Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166
on the Closing Date, simultaneously with the closing of the transactions related
to the Notes and the Certificates. Upon the acceptance by the Depositor of the
net proceeds from the sale of the Notes, the ownership of each Receivable and
the contents of the related Receivable File will be vested in the Issuer,
subject to the lien of the Indenture.
ARTICLE III
The Receivables
---------------
SECTION 3.1. Representations and Warranties. The Seller makes the following
------------------------------
representations and warranties to the Transferor, on which the Transferor, is
deemed to have relied in acquiring the Receivables and (ii) Transferor makes the
following representations and warranties upon which each of the Depositor and
the Issuer is deemed to have relied in acquiring the Receivables and upon which
the Insurer shall be deemed to rely in issuing the Policy. Such representations
and warranties speak as of the execution and delivery of this Agreement and as
of the Closing Date in the case of Initial Receivables, as of the related
Subsequent Transfer Date in the case of Subsequent Receivables, but shall
survive the sale, transfer and assignment of the Receivables to the Transferor,
the Depositor and the Trust and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Title. It is the intention of (i) the Seller that the transfer
-----
and assignment herein contemplated constitute a sale of the Receivables from the
Seller to the Transferor and that the beneficial interest in and title to such
Receivables not be part of the debtor's estate in the event of the filing of a
petition for receivership by or against the Seller under any bankruptcy law,
(ii) the Transferor that the transfer and assignment herein contemplated
constitute an assignment of the Receivables from the Transferor to the Depositor
and that the beneficial interest in and title to such Receivables not be part of
the debtor's estate in the event of the filing of a petition for receivership by
or against the Transferor under any bankruptcy law and (iii) the Depositor that
the transfer and assignment herein contemplated constitute an assignment of the
Receivables from the Depositor to the Trust and that the beneficial interest in
and title to such Receivables not be part of the debtor's estate in the event of
the filing of a petition for receivership by or against the Depositor under any
bankruptcy law. Immediately prior to the transfer and assignment herein
contemplated, (i) the Seller had good and marketable title to each Receivable,
free and clear of all Liens and, immediately upon the transfer thereof, (ii) the
Transferor shall have good and marketable title to each such Receivable, free
and clear of all Liens, and (iii) the Depositor shall have good and marketable
title to each such Receivable, free and clear of all Liens; and the transfer of
the
24
<PAGE>
Receivables to the Transferor, the Depositor and the Issuer 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 Transferor, Depositor, the
Issuer and Indenture Trustee, a first priority perfected ownership interest in
the Receivables, and to give the Transferor, Depositor and Indenture Trustee a
first priority perfected security interest therein, shall have been made.
(c) Characteristics of Receivables. Each Receivable (i) shall have been
------------------------------
originated in the United States of America by the Seller in the ordinary course
of the Seller's business in accordance with its underwriting guidelines and
shall have been fully and properly executed by the parties thereto, (ii) shall
have created or shall create a valid, subsisting and enforceable first priority
security interest in favor of the Seller in the Financed Vehicle, which security
interest has been assigned by the Seller to the Transferor which security
interest has been assigned from the Transferor to the Depositor and from the
Depositor to the Issuer, which has assigned such security interest to the
Indenture Trustee, (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
be Simple Interest Receivables and shall provide for level monthly payments
(provided that the payment in the first or last month in the life of the
Receivable may be minimally different from the level payment) that fully
amortize the Amount Financed over the original term and yield interest at the
rate per annum specified on Schedule A hereto, and has not been amended or
collections with respect to which have been waived and (v) shall be denominated
in U.S. dollars.
(d) Not more than 1.0% of Obligors with respect to the Receivables shall
have a minimum FICO score of less than 680.
(e) At least three (3) Scheduled Payments shall have been received with
respect to each Receivable.
(f) As of the Initial Cutoff Date, at least 90% of Obligors make their
Scheduled Payments by means of ACH withdrawal by or on behalf of the Servicer.
(g) Schedule of Receivables. The information set forth in Schedule A to
-----------------------
this Agreement is true and correct in all material respects as of the close of
business on the Initial Cutoff Date or, with respect to any Subsequent
Receivables, as of the close of business on the related Subsequent Cutoff Date,
and no selection procedures believed by the Seller to be adverse to the
Noteholders, the Certificateholders or the Insurer were utilized in selecting
the Receivables. The Computer Tape regarding the Receivables is true and
correct in all material respects as of the Initial Cutoff Date and will be true
and correct as of each Subsequent Cutoff Date.
(h) Compliance With Law. Each Receivable complied at the time it was
-------------------
originated or made and at the execution of this Agreement complies (or the
applicable Subsequent Transfer Agreement will comply) 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, the Soldiers' and Sailors' Civil
Relief Act of 1940, state adaptations of the National Consumer Act, the Uniform
Consumer Credit Code and other consumer credit laws and equal credit opportunity
and disclosure laws.
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<PAGE>
(i) 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.
(j) No Government Obligor. None of the Receivables are due from the United
---------------------
States of America or any State or from any agency, department, instrumentality
or political subdivision of the United States of America or any state.
(k) Security Interest in Financed Vehicle. Immediately prior to the
-------------------------------------
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 PeopleFirst as secured party or all necessary and appropriate actions
have been commenced that will result in the valid perfection of a first priority
security interest in the Financed Vehicle in favor of PeopleFirst as secured
party within 120 days of the origination of each such Receivable. Immediately
after the assignment and transfer thereof to the Trust, although the Lien
Certificate will not indicate the Trust or the 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, which
security interest is prior to all other Liens in such Financed Vehicle.
(l) Receivables in Force. 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.
(m) No Waiver or Amendment. No provision of a Receivable has been waived
----------------------
or amended except as permitted pursuant to Section 4.2 hereof. Such Receivable
has not been modified as a result of application of the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended.
(n) No Defenses. No right of rescission, setoff, counterclaim or defense
-----------
has been asserted or threatened with respect to any Receivable.
(o) No Liens. There are no Liens or claims, including Liens for work,
--------
labor, storage, 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.
(p) No Default. No Initial Receivable has a payment that is more than 30
----------
days delinquent as of the Initial Cutoff Date or, with respect to any Subsequent
Receivables, of not more than 30 days delinquent as of the related Subsequent
Cutoff Date and, except as permitted in this paragraph, no default, breach,
violation or event (in any such case) permitting acceleration under the terms of
any Receivable has occurred; and 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 Initial Cutoff Date with respect to the Initial Receivables or
the Subsequent Cutoff Date with respect to the Subsequent Receivables; and the
Seller has not waived and shall not waive any of the foregoing.
(q) No Bankruptcies. No Obligor on any Receivable was the subject of a
---------------
bankruptcy proceeding commenced following the execution of the related Contract.
26
<PAGE>
(r) No Repossessions. As of the Initial Cutoff Date, no Financed Vehicle
----------------
securing any Receivable is in repossession status and, as of the related
Subsequent Cutoff Date, no Financed Vehicle securing any Subsequent Receivable
will be in repossession status.
(s) Adverse Selection. No selection procedures adverse to the Noteholders,
-----------------
the Certificateholders or the Insurer were utilized in selecting the Receivables
from those owned by the Seller which met the selection criteria contained in
this Agreement.
(t) Chattel Paper. Each Receivable constitutes "chattel paper" as defined
-------------
in the UCC.
(u) Insurance. The Obligor with respect to each Receivable agreed in the
---------
related Contract to obtain insurance covering the Financed Vehicle insuring
against loss and damage due to fire, theft, transportation, collision and other
risks generally covered by comprehensive and collision insurance coverage (i) in
an amount at least equal to the lesser of (x) its maximum insurable value or (y)
the Principal Balance due from the Obligor under such Receivable and (ii) naming
PeopleFirst as loss payee.
(v) Lawful Assignment. No Receivable was originated as of the Initial
-----------------
Cutoff Date or, with respect to any Subsequent Receivables, as of the related
Subsequent Cutoff Date, or, is subject to the laws of, any jurisdiction under
which the sale, transfer and assignment of such Receivable under this Agreement
is unlawful, void or voidable. The Seller has not entered into any agreement
with any Obligor or other Person that prohibits, restricts or conditions the
assignment of any portion of the Receivables.
(w) One Original. There is only one original executed copy of each
------------
Receivable.
(x) Location of Receivable Files. The Receivable Files shall be 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.
(y) Computer Records. As of the Closing Date, the accounting and computer
----------------
records relating to the Initial Receivables of the Seller have been marked to
show the absolute ownership by the Owner Trustee on behalf of the Trust of the
Initial Receivables, and, as of any Subsequent Transfer Date the accounting and
computer records relating to the Subsequent Receivables will be marked to show
the absolute ownership by the Owner Trustee on behalf of the Trust of the
Subsequent Receivables.
(z) Taxes. There are no state or local taxing jurisdictions which have
-----
asserted that nonresident holders of certificates in, or notes issued by, an
entity 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 or
the Obligors or the assets securing the Receivables held by the Trust, or the
issuer of a financial guaranty insurance policy.
(aa) Maturity of Receivables. Each Receivable has a final maturity date
-----------------------
not later than nine (9) months before August 31, 2005; each Receivable has an
original term to stated maturity of not more than 60 months; the weighted
average original term of the Initial Receivables is approximately 55.74 months;
the weighted average remaining term of the Initial Receivables is approximately
48.72 months as of the Initial Cutoff Date.
(bb) Financing. Approximately 61.54% of the aggregate Principal Balance of
---------
the Initial Receivables, constituting approximately 2,520 of the Initial
Receivables as of the Cutoff Date, represent new vehicles; approximately 17.53%
of the aggregate Principal Balance of the Initial Receivables, constituting
approximately 1,015 Receivables as of the Initial Cutoff Date, represent used
vehicles; approximately 13.38% of the aggregate Principal Balance of the Initial
Receivables, constituting
27
<PAGE>
approximately 763 of the Initial Receivables as of the Initial Cutoff Date,
represent refinances of existing loans; and approximately 7.55% of the aggregate
Principal Balance of the Initial Receivables, constituting approximately 4,742
of the Initial Receivables as of the Initial Cutoff Date, represent lease
buyouts; all of the aggregate Principal Balance of the Initial Receivables as of
the Initial Cutoff Date represent Simple Interest Receivables. The aggregate
Principal Balance of the Initial Receivables, as of the Initial Cutoff Date, is
$78,830,610.41.
(cc) APR. The weighted average Annual Percentage Rate of the Receivables
---
as of the Cutoff Date is approximately 7.204%. Each Initial Receivable has an
APR equal to or greater than 6.99%.
(dd) Number. As of the Initial Cutoff Date, there are 4,742 Receivables.
------
(ee) Balance. Each Initial Receivable has a remaining principal balance of
-------
not less than $3,432.25 and not more than $71,580.54; as of the Initial Cutoff
Date, the average Principal Balance of the Receivables is $16,623.92.
(ff) Security. Each Receivable is secured by a new or used automobile or
--------
light-duty truck.
(gg) Advance Payments. Each Receivable had not been paid more than three
----------------
months in advance as of the close of business on the Cutoff Date.
(hh) No Force Placed Insurance. As of the close of business on the Initial
-------------------------
Cutoff Date with respect to Initial Receivables and each Subsequent Cutoff Date
with respect to Subsequent Receivables, each Receivable was secured by a
Financed Vehicle that was not insured by a force placed insurance policy or any
vendor's single interest and non-filing insurance policy.
(ii) Yield Supplement Amounts. An amount equal to the sum of all projected
------------------------
Yield Supplement Amounts for all future Payment Dates with respect to each
Receivable, assuming that future payments on such Receivable are made on their
scheduled due dates, has been deposited to the Yield Supplement Account on or
prior to the Closing Date.
SECTION 3.2. Repurchase upon Breach. (a) The Seller, the Servicer, the
----------------------
Insurer or the Indenture Trustee, as the case may be, shall inform the other
parties to this Agreement and the Insurer promptly, in writing, upon the
discovery of any breach of the Seller's representations and warranties made
pursuant to Section 3.1 hereof. As of the last day of the second (or, if the
Seller so elects, the first) month following the discovery by the Seller or
receipt by the Seller of notice from any of the Servicer, the Insurer or the
Indenture Trustee of such breach, unless such breach is cured by such date, the
Seller shall repurchase from the Trust any Receivable in which the interests of
the Noteholders, the Certificateholders or the 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 a such
Receivable, the Seller shall remit to the Indenture Trustee for deposit 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 Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders or the Insurer with respect to a breach of representations
and warranties made pursuant to Section 3.1 hereof shall be the repurchase of
Receivables pursuant to this Section. Subject to the conditions contained
herein, neither the Owner Trustee, the Issuer nor the Indenture Trustee shall
have
28
<PAGE>
a duty to conduct any affirmative investigation as to the occurrence of any
conditions requiring the repurchase of any Receivable pursuant to this Section.
(b) Pursuant to (i) Section 2.3 hereof, the Transferor conveyed to the
Depositor and (ii) Section 2.4 hereof, the Depositor conveyed to the Trust, all
of the such party's right, title and interest in its rights and benefits, but
none of its obligations or burdens, under this Agreement including the Seller's
and the Transferor's representations and warranties and the cure or repurchase
obligations of the Seller hereunder. Each of the Seller and the Transferor
hereby represents and warrants to the Trust that such assignment is valid,
enforceable and effective to permit the Trust to enforce such obligations of the
Seller hereunder.
SECTION 3.3. Custody of Receivables Files. To assure uniform quality in
----------------------------
servicing the Receivables and to reduce administrative costs, the Transferor,
Depositor, Indenture Trustee and Owner Trustee hereby appoint the Custodian, and
the Custodian hereby accepts such appointment, to act exclusively as the agent
for the Indenture Trustee, on behalf of the Noteholders, and the Insurer until
the Notes are paid in full and thereafter, on behalf of the Owner Trustee, on
behalf of the Certificateholders as custodian of the following documents or
instruments which shall be delivered to the Custodian, as of the Initial Cutoff
Date (in the case of Initial Receivables) and as of each Subsequent Transfer
Date (in the case of Subsequent Receivables transferred on such Subsequent
Transfer Date) as pledgee of the Issuer with respect to each Receivable:
(a) the original loan agreement, promissory note, security agreement or
other evidence of the Obligor's indebtedness to repay such Receivable;
(b) an electronic file containing 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 PeopleFirst in the Financed Vehicle (it being understood
that the original certificates of title generally are not delivered to the
Seller for 120 days but that promptly upon delivery they shall be delivered to
the Custodian); 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 Custodian. The duties and obligations of the
-------------------
Custodian are set forth in full in the Custodial Agreement.
SECTION 3.5. Retention and Termination of Servicer. The Servicer hereby
-------------------------------------
covenants and agrees to act as such under this Agreement for an initial term,
commencing on the Closing Date and ending on March 31, 2000, which term shall be
extendible by the Insurer (provided no Insurer Default has occurred and is
continuing) for successive quarterly terms ending on each successive June 30,
September 30, December 31 and March 31 (or, pursuant to revocable written
standing instructions from time to time to the Servicer and the Indenture
Trustee for any specific number of terms greater than one), until the Notes are
paid in full. Each such notice (including each notice pursuant to standing
instructions, which shall be deemed delivered at the end of successive quarterly
terms for so long as such instructions are in effect) (a "Servicer Extension
Notice") shall be delivered by the Insurer to the Indenture Trustee and the
Servicer. The Servicer hereby agrees that, as of the date hereof and upon its
receipt of any such Servicer Extension Notice, the Servicer shall become bound,
for the initial term beginning on the Closing Date and for the duration of the
term covered by Servicer Extension Notice, to continue as Servicer subject to
and in accordance with the other provisions of this Agreement. Until such time
as an Insurer Default shall
29
<PAGE>
have occurred and be continuing, the Indenture Trustee agrees that if as of the
fifteenth day prior to the last day of any term of the Servicer, the Indenture
Trustee shall not have received any Servicer Extension Notice from the Insurer,
the Indenture Trustee shall, within five (5) days after, give written notice of
such non-receipt to the Insurer and the Servicer and the Servicer's term shall
not be extended unless a Servicer Extension Notice is received on or before the
last day of such term. Notwithstanding the foregoing, in the event an Insurer
Default has occurred and is continuing, the Servicer Extension Notice shall be
deemed to have been delivered as of the last day of the current term of the
Servicer and extended until the next quarterly period.
ARTICLE IV
Administration and Servicing of Receivables
-------------------------------------------
SECTION 4.1. Appointment and Duties of Servicer. (a) The managing,
----------------------------------
servicing, administering and making collections on the Contracts shall be
conducted by the Person so designated from time to time as Servicer in
accordance with this Agreement. PeopleFirst is hereby initially designated as,
and hereby agrees to perform, the duties and obligations of the Servicer
pursuant to the terms hereof and the other Basic Documents. Subject to the
resignation of PeopleFirst as Servicer pursuant to Section 7.5 or the
termination of PeopleFirst as Servicer pursuant to Section 8.1 and, in either
case, the assumption by the Backup Servicer, or the designation of a successor
Servicer hereunder as the case may be, of the Servicer's duties and
responsibilities in accordance with Section 8A.7, PeopleFirst shall continue to
manage, service, administer and collect on the Receivables pursuant to this
Agreement, unless and until expressly agreed otherwise by the Seller, the Issuer
and the Controlling Party. The Servicer, as agent for the Issuer and the
Insurer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Purchased Receivables) in
accordance with all applicable federal, state or local laws and regulations and
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, and in any event with no less degree of skill and care
than would be exercised by a prudent servicer of motor vehicle loans (the
"Servicing Standard"), except that the Servicer shall not be obligated, and does
not currently intend, to (i) obtain force-placed insurance 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 to Obligors, accounting for
collections and furnishing monthly and annual statements to the Owner Trustee,
Indenture Trustee and the Insurer with respect to distributions, reporting tax
information, if any, to Obligors and delivering Receivable Files to the
Custodian. Subject to the provisions of Section 4.2, 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 Indenture Trustee, the 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 without recourse to the Trust, 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 Trust
(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 or the Indenture 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 Owner Trustee,
the Certificateholders, Indenture Trustee or the Noteholders. The Owner Trustee
and the 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
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and/or the Insurer by the Servicer) to enable the Servicer to carry out its
servicing and administrative duties hereunder.
(b) PeopleFirst hereby agrees that upon the designation of a
successor Servicer hereunder or the assumption by the Backup Servicer of the
Servicer's duties and responsibilities in accordance with Section 8A.7,
PeopleFirst will terminate its activities as Servicer hereunder in accordance
with Section 8.1 and, in any case, in a manner which the Indenture Trustee
reasonably determines will facilitate the transition of the performance of such
activities to such successor Servicer or the Backup Servicer, as the case may
be, and PeopleFirst shall cooperate with and assist such successor Servicer or
the Backup Servicer, as the case may be.
SECTION 4.2. Collection and Allocation of Receivable Payments. (a) The
------------------------------------------------
Servicer shall 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 is consistent with the Servicing Standard. The
Servicer shall allocate collections between principal and interest in accordance
with its customary servicing procedures.
(b) The Servicer may at any time agree to a modification, amendment
or extension of a Receivable in order to (i) change the Obligor's regular due
date to a date within the Collection Period in which such due date occurs, (ii)
reamortize the scheduled payments on the Receivable following a partial
prepayment of principal and (iii) grant extensions of a Receivable, provided
that the Servicer shall not be permitted to extend the monthly payments on a
Receivable more than two times in any twelve-month period, and provided further
that the aggregate period of all extensions on a Receivable shall not exceed six
months. 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.
(c) The Servicer may grant payment extensions or deferrals on, or
other modifications or amendments to, a Receivable (in addition to those
modifications permitted by Section 4.2(a)) in accordance with its customary
procedures if the Servicer believes in good faith that such extension, deferral,
modification or amendment is necessary to avoid a default on such Receivable,
will maximize the amount to be received by the Trust with respect to such
Receivable, and is otherwise in the best interests of the Trust; provided
--------
however, that:
- -------
(i) In no event may a Receivable be extended beyond the
Collection Period immediately preceding the Final Scheduled
Distribution Date;
(ii) So long as an Insurer Default shall not have occurred and
be continuing, the Servicer shall not amend or modify a Receivable
(except as provided in Section 4.2(b)) without the consent of the
Insurer;
(iii) So long as an Insurer Default shall not have occurred and
be continuing, the Aggregate Principal Balance of Receivables which
have been extended during any Collection Period (A) shall not exceed
1.0% of the Aggregate Principal Balance of Receivables during such
Collection Period (computed as of the Accounting Date immediately
prior to the first date of the related Collection Period) and (B)
shall not exceed 1.0% of the average of the Aggregate Principal
Balance of Receivables for such Collection Period and the three prior
Collection Periods (computed as of the Determination Date immediately
prior to the first day of the related Collection Period);
(iv) So long as an Insurer Default shall not have occurred and
be continuing, the Aggregate Principal Balance of Receivables for
which payment deferrals have been
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granted during any Collection Period (A) shall not exceed 1.0% of the
Aggregate Principal Balance of Receivables during such Collection
Period (computed as of the Accounting Date immediately prior to the
first day of the related Collection Period) and (B) shall not exceed
1.0% of the average of the Aggregate Principal Balance of Receivables
for such Collection Period and the three prior Collection Periods
(computed as of the Determination Date immediately prior to the first
day of the related Collection Period);
(v) No such extension, modification or amendment shall be
granted if such action, when aggregated with all previous extensions,
modifications and amendments of Receivables, would have the effect of
causing any Notes to be deemed to have been exchanged for other Notes
within the meaning of Section 1001 of the Internal Revenue Code of
1986, as amended, or any proposed, temporary or final Treasury
Regulations issued thereunder; and
(vi) If an Insurer Default shall have occurred and be
continuing, the Servicer may not extend or modify any Receivable
(other than as permitted by Section 4.2(b)).
(d) Notwithstanding anything in this Agreement to the contrary, the
Servicer may refinance any Receivable by accepting a new promissory note from
the related Obligor and depositing the full outstanding Principal Balance of
such Receivable into the Collection Account. The receivable created by the
refinancing shall not be property of the Issuer.
SECTION 4.3. Realization upon Receivables. The Servicer shall, in
----------------------------
accordance with the Servicing Standard and in a manner consistent with its
customary servicing procedures, 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, the Owner Trustee
shall, upon written request of the Servicer, execute or shall cause to be
executed 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, consistent with the
Servicing Standard, which practices and procedures may include the sale of the
related Financed Vehicles at a public or private sale, the submission of claims
under an insurance policy and other actions by the Servicer to realize upon a
Receivable. 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. [RESERVED]
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles. (a)
------------------------------------------------------
The Servicer shall, in accordance with the Servicing Standard and its customary
procedures, take such steps as are necessary to maintain perfection of the first
priority 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 Trustee in the event of the relocation of a Financed
Vehicle or for any other reason.
(b) Upon the occurrence of an Insurance Agreement Event of Default,
and subject to the other provisions of this Agreement, the Controlling Party may
instruct the Indenture Trustee and the Servicer to take or cause to be taken,
upon the occurrence of a Servicer Default, the Owner Trustee and
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the Servicer shall take or cause to be taken such action as may, in the opinion
of counsel to the Controlling Party, be necessary to perfect or reperfect the
security interests in the Financed Vehicles securing the Receivables in the name
of the Indenture Trustee by amending the title documents of such Financed
Vehicles or by such other reasonable means as may, in the opinion of counsel to
the Controlling Party, 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 the Servicing Standard and its
customary procedures or in connection with repossession or except as may be
required by an insurer in order to receive proceeds from insurance covering such
Financed Vehicle, nor shall the Servicer impair the rights of the Issuer, the
Indenture Trustee, the Owner Trustee, the Certificateholders, the Insurer or the
Noteholders in such Receivables, nor shall the Servicer amend or otherwise
modify a Receivable (including the grant of any extension thereunder), except as
provided in Section 4.2 hereof.
SECTION 4.7. Purchase of Receivables upon Breach. The Seller, the
-----------------------------------
Servicer, the Owner Trustee, or the Insurer, as the case may be, shall inform
the other parties and the Indenture Trustee promptly, in writing, upon the
discovery of any breach of the Servicer's covenants pursuant to Section 4.2(b),
4.5 or 4.6, or of any breach of the Servicer's representations and warranties
made pursuant to Section 7.1; provided, however, that the failure to give any
-------- -------
such notice shall not affect the obligation of the Servicer under this Section
4.7. As of the last day of the first month following the discovery by the
Servicer or receipt by the Servicer of notice from any of the Seller, the
Servicer, the Owner Trustee, Insurer or the Indenture Trustee of such breach,
unless such breach is cured by such date, the Servicer shall (i) purchase any
Receivable in which the interests of the Insurer, the Noteholders or the
Certificateholders are materially and adversely affected by such breach as of
such date. The "first month" shall mean the calendar month following 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 Indenture Trustee, the Insurer, the Noteholders or the
Certificateholders with respect to a breach pursuant to Section 4.2(b), 4.5 or
4.6, or to a breach of representations and warranties pursuant to Section 7.1,
shall be limited to the purchase of Receivables in accordance with this Section
4.7. The Indenture 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.
SECTION 4.8. Servicing Fee. The Servicing Fee for a Payment Date shall
-------------
equal the sum of the Base Servicing Fee, all Investment Earnings on the
Collection Account plus any reimbursement pursuant to Section 5.2. The Servicer
also shall be entitled to retain from collections the Base Servicing Fee as
provided herein. The Servicer, in its discretion at its election, may defer
receipt of all or any portion of the Servicing Fee for any Collection Period to
and until a later Collection Period for any reason, including in order to avoid
a shortfall in any payments due on any Notes or Certificates. 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. No later than 12:00 noon New York
----------------------
City time on each Determination Date, the Servicer shall deliver to the Owner
Trustee, the Indenture Trustee, the Insurer, the Backup Servicer, the Indenture
Collateral Agent and each Rating Agency, a Servicer's Certificate containing,
among other things, (i) all information necessary to enable the Indenture
Trustee to make any withdrawal and deposit required by Section 5.6, to give any
notice required by Section 5.4 and make the distributions required by Section
5.6 and 5.7; (ii) all information necessary to enable the Indenture
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Trustee to send the statements required by Section 5.8 to the Owner Trustee, the
Noteholders, each Rating Agency and the Insurer; (iii) a listing of all
Purchased Receivables for the related Collection Period; (iv) all information
necessary to enable the Indenture Trustee to reconcile all deposits to, and
withdrawals from, the Collection Account for the related Collection Period and
Payment Date, including the accounting required by Section 5.9; (v) the
Delinquency Ratio, the Cumulative Default Rate and the Cumulative Net Loss Rate
for such Determination Date; (vi) whether any Insurance Agreement Event of
Default has occurred as of such Determination Date; (vii) whether any Insurance
Agreement Event of Default that may have occurred as of a prior Determination
Date is cured as of such Determination Date; (viii) whether to the knowledge of
the Servicer an Insurer Default has occurred; and (ix) if the Servicer has
granted payment extensions on, or other modifications or amendments to, any
Receivables during the related Collection Period, the number of such Receivables
extended, modified or amended, the Aggregate Principal Balance of such
Receivables and the Principal Balance of such Receivables expressed as a
percentage of the outstanding Aggregate Principal Balance as of the related
Determination Date. Receivables purchased by the Servicer, the Seller and each
receivable which became a Liquidated Receivable or which was paid in full during
the related Collection Period shall be identified by account number (as set
forth in the Schedule of Receivables on Schedule A hereof). A copy of such
certificate may be obtained by any Noteholder or by any Certificateholder by a
request in writing to the Indenture Trustee or the Owner Trustee, respectively,
addressed to the applicable Corporate Trust Office. The Indenture Trustee shall
not be under any obligation to confirm or reconcile the information provided
pursuant to this Section 4.9.
If a Servicer's Certificate contains a manifest error, the Insurer's
written notice to the Servicer, the Owner Trustee, and the Indenture 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 Indenture Trustee, the Owner Trustee, the
Backup Servicer, and the Insurer, on or before April 30 of each year beginning
April 30, 2000, an Officer's Certificate, dated as of the preceding December 31,
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) 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
Indenture 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 Indenture Trustee addressed
to the Corporate Trust Office.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, the Indenture Collateral Agent, the Insurer and
the Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than five (5) Business Days thereafter, an Officer's Certificate
specifying any event which with the giving of notice or lapse of time, or both,
would become a Servicer Default under Section 8.1.
SECTION 4.11. Financial Statements. (a) The Servicer shall cause a firm of
--------------------
nationally recognized independent certified public accountants, which may also
render other services to the Servicer or the Seller, to deliver to the Seller,
the Backup Servicer, the Indenture Trustee, the Owner Trustee and the Insurer on
or before April 30 of each year beginning April 30, 2000, an agreed-upon
procedures report addressed to the Servicer, the Seller, the Owner Trustee, the
Indenture Trustee, the 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
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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 calendar year 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. In the event such accounting firm requires the Backup
Servicer to agree to the procedures to be reported on by such accounting firm in
any report delivered pursuant to this Section 4.11, the Servicer shall direct
the Backup Servicer in writing to so agree. It is understood and agreed that
the Backup Servicer will deliver such letter of agreement in conclusive reliance
upon the direction of the Servicer, and that the Backup Servicer will not make
any independent inquiry or investigation as to, and shall have no obligation or
liability with respect to, the sufficiency, validity or correctness of such
procedures.
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.
(b) The Servicer shall deliver to the Owner Trustee, the Backup
Servicer, the Indenture Trustee and the Insurer on or before the 45/th/ day
following the end of each calendar quarter the unaudited balance sheet of the
Servicer as of the end of the most recent calendar quarter and the related
unaudited statements of income and retained earnings of the Servicer for such
calendar quarter and for the period equal to the portion of the calendar year
ending with such calendar quarter.
SECTION 4.12. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
Receivables. The Servicer shall provide to representatives of the Indenture
- -----------
Trustee, the Owner Trustee, the Insurer, and the Backup Servicer reasonable
access to the Receivable Files and if there is a single Holder of the Notes or
if there is a single Holder of the Certificates, each such Holder. 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,
--------------------------
with the consent of the Insurer (unless an Insurer Default shall have occurred
and be continuing), appoint a subservicer to perform all or any portion of its
obligations as Servicer hereunder; provided, however, that the Rating Agency
Condition shall have been satisfied in connection therewith; provided further,
that the Servicer shall remain obligated and be liable to the Transferor, the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee, the
Certificateholders, the Insurer and the Noteholders for the servicing and
administering of the Receivables in accordance with the provisions hereof
without diminution of 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 Insurer's consent shall not be required for appointment of
subservicers or agents in connection with repossession of any Financed Vehicle.
The fees and expenses of the subservicer shall be as agreed between the Servicer
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and its subservicer from time to time and none of the Transferor, the Depositor,
the Issuer, the Indenture Trustee, the Owner Trustee, the Certificateholders,
the Insurer or the Noteholders shall have any responsibility therefor. Any such
subservicer shall perform its duties with the same standard of care applicable
to the Servicer pursuant to Section 4.1 of this Agreement.
SECTION 4.15. Obligations under Basic Documents. The Servicer shall perform
---------------------------------
all of its obligations under the Basic Documents.
SECTION 4.16. Reports to the Commission. The Servicer shall, on behalf of
-------------------------
the Trust, cooperate with Depositor in connection with the filing with the
Commission any periodic reports required to be filed under the provisions of the
Exchange Act, and the rules and the regulations of the Commission thereunder.
ARTICLE V
Distributions; Statements to Certificateholders and Noteholders
---------------------------------------------------------------
SECTION 5.1. Establishment of Trust Accounts.
-------------------------------
(a) (i) On or prior to the Closing Date, the Servicer, for the
benefit of the Indenture Trustee on behalf of the Noteholders, the
Owner Trustee on behalf of the Certificateholders, and the Insurer,
shall establish and maintain in the name of the Indenture Trustee an
Eligible Deposit Account (the "Collection Account"), bearing a
designation clearly indicating that the funds deposited therein are
held for the benefit of the Indenture Trustee on behalf of the
Noteholders, the Owner Trustee on behalf of the Certificateholders and
the Insurer. Investment Earnings on funds in the Collection Account
shall be paid to the Servicer. The Collection Account shall initially
be established with the Indenture Trustee.
(ii) On or prior to the Closing Date, the Reserve Account shall
be established in accordance with the terms of the Reserve Account
Agreement. On the Closing Date, the Transferor will deposit the
Reserve Account Initial Deposit into the Reserve Account from the net
proceeds of the sale of the Initial Receivables. On each Subsequent
Transfer Date, the Servicer shall instruct the Indenture Trustee to
withdraw from the Pre-Funding Account and deposit to the Reserve
Account an amount equal to the applicable Subsequent Reserve Account
Deposit as provided in Section 5.6(a) hereof.
(iii) On or prior to the Closing Date, the Issuer shall cause the
Servicer, for the benefit of the Indenture Trustee on behalf of the
Noteholders and the Insurer, to establish and maintain in the name of
the Indenture Trustee an Eligible Deposit Account (the "Yield
Supplement Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Indenture
Trustee on behalf of the Noteholders and the Insurer. Investment
Earnings on funds in the Yield Supplement Account shall be retained in
the Yield Supplement Account, subject to Section 5.6 of the Agreement.
The Yield Supplement Account shall be initially established with the
Indenture Trustee. On the Closing Date, the Transferor will deposit
the Yield Supplement Account Initial Deposit into the Yield Supplement
Account from the net proceeds of the sale of the Initial Receivables.
To the extent, on any Payment Date, the amount on deposit in the Yield
Supplement Account (after giving effect to any withdrawals to be made
on such Payment Date, but exclusive of net income) is greater than the
Yield Supplement Account Required Amount for such Payment Date, then
in such event, the
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Servicer shall instruct the Indenture Trustee in writing to deposit
such excess amount into the Reserve Account.
(iv) On or prior to the Closing Date, the Servicer, for the
benefit of the Indenture Trustee on behalf of the Noteholders, shall
establish and maintain in the name of the Indenture Trustee 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 Indenture Trustee on behalf of the
Noteholders and the Insurer. The Note Distribution Account shall
initially be established with the Indenture Trustee.
(v) On or prior to the Closing Date, the Servicer, for the
benefit of the Indenture Trustee on behalf of the Noteholders, the
Owner Trustee on behalf of the Certificateholders, and the Insurer,
shall establish and maintain in the name of the Indenture Trustee an
Eligible Deposit Account (the "Pre-Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are
held for the benefit of the Indenture Trustee on behalf of the
Noteholders, the Owner Trustee on behalf of the Certificateholders and
the Insurer. Investment Earnings in the Pre-Funding Account shall be
paid to the Seller in accordance with Section 5.1(a)(ii) hereof.
(vi) With respect to amounts on deposit in the Pre-Funding
Account, in order to assure that sufficient amounts to make required
distributions of interest to Noteholders will be available during the
Pre-Funding Period, the Issuer shall instruct the Servicer to
establish and maintain an Eligible Deposit Account (the "Capitalized
Interest Account") with the Indenture Trustee, bearing a designation
clearly indicating that the funds deposited therein are held in trust
for the benefit of the Noteholders and the Insurer. On or prior to the
Closing Date, the Transferor shall deposit an amount equal to the
Capitalized Interest Account Initial Deposit into the Capitalized
Interest Account. On the Payment Dates occurring prior to the
Mandatory Redemption Date, the Indenture Trustee shall withdraw from
the Capitalized Interest Account the Monthly Capitalized Interest
Amount for such Payment Date as further provided in Section 5.6. Any
amounts remaining in the Capitalized Interest Account on the Mandatory
Redemption Date after taking into account such transfer shall be
distributed by the Indenture Trustee to the Transferor. Upon any such
distributions to the Transferor, the Noteholders, the
Certificateholders and the Insurer will have no further rights in, or
claims to, such amounts.
(b) Funds on deposit in the Collection Account, the Pre-Funding
Account, the Note Distribution Account and the Yield Supplement Account (the
"Trust Accounts") and the Certificate Distribution Account shall be invested by
the Indenture Trustee (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 the Indenture Trustee shall not be liable for any
loss arising from such investment in Eligible Investments. If the Servicer does
not provide the Indenture Trustee, with written direction as to the Eligible
Investments, the funds in the Trust Accounts and Certificate Distribution
Account shall be invested in the investments specified in clause (1) of the
definition of Eligible Investments. All such Eligible Investments shall be held
by or on behalf of the Indenture Trustee, for the benefit of the Noteholders
and/or the Certificateholders, as applicable. Other than as permitted by the
Rating Agencies and the Insurer, funds on deposit in the Collection Account, the
Pre-Funding Account, the Capitalized Interest 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 following Payment
Date. Funds deposited in a Trust Account or the
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Certificate Distribution Account on the day immediately preceding a Payment Date
upon the maturity of any Eligible Investments are not required to be invested
overnight.
(c) (i) The Indenture Trustee 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 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 Trustee. If, at
any time, any of the Trust Accounts or the Certificate Distribution Account
ceases to be an Eligible Deposit Account, the Indenture Trustee (or the Servicer
on its behalf) shall within ten (10) Business Days (or such longer period as to
which each Rating Agency and the 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 Indenture Trustee, the Servicer
shall notify the Indenture 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
Trustee, and with respect to the Certificate Distribution Account, the
Owner Trustee 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 the Eligible Deposit Accounts subject to
the penultimate sentence of Section 5.1(c)(i); and, except as
otherwise provided herein, each such Eligible Deposit Account
shall be subject to the exclusive custody and control of the
Indenture Trustee with respect to the Trust Accounts and the
Owner Trustee (and Certificate Paying Agent) with respect to the
Certificate Distribution Account, and the Indenture Trustee or
the Owner Trustee (and Certificate Paying Agent), as applicable,
shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in
accordance with paragraph (a) of the definition of "Delivery" and
shall be held, pending maturity or disposition, solely by the
Indenture Trustee or a securities intermediary (as such term is
defined in Section 8-102(a)(14) of the UCC) acting for the
Indenture Trustee;
(C) any Trust Account Property that is a "certificated
security" under Article 8 of the UCC shall be delivered to the
Indenture Trustee in accordance with paragraph (b) of the
definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a securities
intermediary (as such term is defined in Section 8-102(a)(14) of
the UCC) acting for the Indenture Trustee;
(D) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations shall be delivered in accordance
with paragraph (d) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property in the name of the Indenture Trustee or a
securities intermediary (as
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such term is defined in Section 8-102(a)(14) of the UCC) acting
for the Indenture Trustee's;
(E) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (D) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture
Trustee's (or its nominee's) ownership of such security; and
(F) any Trust Account Property held through a securities
intermediary (as such term is defined in Section 8-102(a)(14) of
the UCC) shall be held in a securities account (as such term is
defined in Section 8-501(a) of the UCC) that is established by
such securities intermediary in the name of the Indenture Trustee
for which the Indenture Trustee is the sole entitlement holder
(as defined in Section 8-102(a)(7) of the UCC).
SECTION 5.2. Collections. (a) The Servicer shall remit within two (2)
-----------
Business Days of receipt thereof to the Collection Account all payments by or on
behalf of the Obligors with respect to the Receivables (other than Purchased
Receivables) and all Liquidation Proceeds, both as collected during the
Collection Period less any payments owed thereon to the Servicer. 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 Collection 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 Payment Date pursuant to Section 5.6(b)(ii)
upon certification by the Servicer of such amounts and the provision of such
information to the Indenture Trustee and the Insurer as may be necessary in the
opinion of the Insurer to verify the accuracy of such certification. In the
event that the Insurer has not received evidence satisfactory to it of the
Servicer's entitlement to reimbursement pursuant to Section 5.2(b), the Insurer
(unless an Insurer Default shall have occurred and be continuing) shall give the
Indenture Trustee notice to such effect following receipt of which the Indenture
Trustee shall not make a distribution to the Servicer in respect of such amount
pursuant to Section 5.6, or if the Servicer prior thereto has been reimbursed
pursuant to Section 5.6 or Section 5.9, the Indenture Trustee shall withhold
such amounts from amounts otherwise distributable to the Servicer on the next
succeeding Payment Date.
(c) If at any time the percentage of Obligors using the automated
payment option, which percentage shall be the equivalent of a fraction, the
numerator of which is the aggregate Principal Balance of such Obligors'
Receivables calculated as of the last day of the immediately preceding
Collection Period and the denominator of which is the Aggregate Principal
Balance calculated as of the last day of the immediately preceding Collection
Period, is below 75%, then the Servicer shall cause all payments by or on behalf
of the Obligors that are not using the automated payment option to be deposited
into a lockbox account established at a depository institution acceptable to
Insurer.
SECTION 5.3. Application of Collections. All collections for the
--------------------------
Collection Period shall be applied by the Servicer as follows:
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With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied first to interest and
then to principal in accordance with the Simple Interest Method.
SECTION 5.4. Deficiency Notice. (a) In the event that the Servicer's
-----------------
Certificate with respect to 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 Payment Date pursuant to clauses (i)
through (v) of Section 5.6(b) (such deficiency being a "Deficiency Claim
Amount"), then on the Deficiency Claim Date immediately preceding such Payment
Date, the Indenture Trustee shall deliver to the Indenture Collateral Agent, the
Insurer, the Owner Trustee, the Servicer and the Backup Servicer, by hand
delivery, telex or facsimile transmission, a written notice (a "Deficiency
Notice"), specifying the Deficiency Claim Amount for such Payment Date.
(b) Any Deficiency Notice shall be delivered by 10:00 am, New York
City time, on the related Deficiency Claim Date. The amounts distributed to the
Indenture Trustee pursuant to a Deficiency Notice shall be deposited by the
Indenture Trustee into the Collection Account pursuant to Section 5.5.
SECTION 5.5. Additional Deposits. The Servicer and the Seller, as
-------------------
applicable, shall deposit or cause to be deposited in the Collection Account on
the Determination 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 Indenture Trustee shall remit to the Note Distribution
Account any amounts delivered to the Indenture Trustee pursuant to a Notice of
Claim and Section 5.10 hereof. All such deposits with respect to a Collection
Period shall be made in immediately available funds no later than 10:00 a.m. New
York City time, on the Business Day immediately preceding the Payment Date
related to such Collection Period.
SECTION 5.6. Distributions.
-------------
(a) No later than 12:00 noon New York City time on each Payment Date,
the Indenture 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 Payment Date:
(i) during the Pre-Funding Period, from the Capitalized
Interest Account (a) to the Collection Account, in immediately
available funds, the Monthly Capitalized Interest Amount for such
Payment Date and (b) to the Seller, in immediately available funds,
all Investment Earnings on funds in the Capitalized Interest Account
with respect to the Collection Period related to such Payment Date or,
if such Payment Date is the Mandatory Redemption Date, all remaining
funds in the Capitalized Interest Account after distribution of
interest on the Notes on such date;
(ii) during the Pre-Funding Period from the Pre-Funding Account
(a) if such Payment Date is the Mandatory Redemption Date, to the Note
Distribution Account, in immediately available funds, the Pre-Funded
Amount (exclusive of Pre-Funding Earnings) after giving effect to the
purchase of Subsequent Receivables, if any, on the Mandatory
Redemption Date, and (b) to the Seller, in immediately available
funds, all Pre-Funding Earnings with respect to the Collection Period
related to such Payment Date or, if such Payment Date is the Mandatory
Redemption Date, all remaining funds in the Pre-Funding Account after
giving effect to the purchase of Subsequent Receivables, if any, on
the Mandatory Redemption Date;
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(iii) to the Collection Account from the Yield Supplement
Account, the Yield Supplement Amount;
(iv) if, the transfers pursuant to subsection (ii) and (iii)
above are insufficient for distributions pursuant to subsections
5.6(b)(i) through 5.6(b)(v), pursuant to the Reserve Account
Agreement, to the Collection Account, the Deficiency Claim Amount, in
accordance with Section 5.4 hereof;
(b) On each Payment Date, the Indenture 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 Collection Period, 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
and to the extent not retained by the Servicer;
(ii) from the Distribution Amount, pro rata, (i) to the
--- ----
Indenture Trustee, the Indenture Trustee Fee, to the Backup Servicer,
the Backup Servicer Fee and expenses (provided that all expenses
incurred by the Backup Servicer in connection with its assumption of
the role of Servicer shall not exceed $35,000 in the aggregate, at any
time when the Notes are Outstanding); and (ii) to the Owner Trustee,
the Owner Trustee fee in accordance with the agreement between the
Servicer and the Owner Trustee;
(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 Noteholders' Principal Distributable Amount;
(v) from the Distribution Amount, to the Insurer, to the
extent of any amounts owing to the Insurer under the Insurance
Agreement and not paid;
(vi) from the Available Funds, to the Reserve Account, all
Available Funds remaining after distributions pursuant to clauses (i)
through (v) above;
(vii) from amounts, if any, released from the Reserve Account
on such Payment Date pursuant to the terms of the Reserve Account
Agreement for deposit in the Certificate Distribution Account (A) the
Certificateholders' Monthly Principal Distributable Amount, and
second, (B) the remaining amount, for distribution to the Class R
Certificateholders.
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, amounts deposited in the Note Distribution
Account and the Certificate Distribution Account shall be paid to the
Noteholders and the Certificateholders in accordance with the provisions of
Section 5.6 of the Indenture.
(c) In the event that the Collection Account is maintained with an
institution other than the Indenture Trustee, the Servicer shall instruct and
cause such institution to make all deposits and distributions pursuant to
Section 5.6(b).
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SECTION 5.7. Pre-Funding Account. (a) On the Closing Date, the Transferor
-------------------
will deposit, on behalf of the Seller, in the Pre-Funding Account $38,746,001.80
from the proceeds of the sale of the Receivables. On each Subsequent Transfer
Date, the Servicer shall instruct the Indenture Trustee to withdraw from the
Pre-Funding Account an amount equal to 98% of the Principal Balance of the
Subsequent Receivables transferred to the Issuer on such Subsequent Transfer
Date and to distribute such amount to or upon the order of the Seller upon
satisfaction of the conditions set forth in this Agreement with respect to such
transfer net of the Subsequent Reserve Account Deposit and the Servicer shall
instruct the Indenture Trustee to deposit to the Reserve Account, the
Subsequent Reserve Account Deposit.
(b) If the Pre-Funded Amount has not been reduced to zero on the date
on which the Pre-Funding Period ends after giving effect to any reductions in
the Pre-Funded Amount on such date, the Servicer shall instruct the Indenture
Trustee to withdraw from the Pre-Funding Account on the Mandatory Redemption
Date, the Pre-Funded Amount and deposit such amount in the Note Distribution
Account in accordance with Section 5.6(a)(ii).
SECTION 5.8. Statements to Certificateholders and Noteholders. On or prior
------------------------------------------------
to each Determination Date, the Servicer shall provide to the Indenture Trustee
(with a copy to the Insurer and the Rating Agencies) for the Indenture Trustee
to forward to each Noteholder of record, and to the Owner Trustee (or
Certificate Paying Agent) for the Owner Trustee to forward to each
Certificateholder of record, statements substantially in the form of Exhibit B
and Exhibit C, respectively, setting forth at least the following information
with respect to distributions on the related Payment 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 and to the Certificate Balance of the Class A
Certificates;
(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
Deficiency Notice;
(iv) the amount of such distribution payable pursuant to a Notice
of Claim, specifying, in addition to the foregoing, any remaining
amount available to be draw under the Policy;
(v) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(vi) the aggregate outstanding principal amount of each Class of
the Notes, the Note Pool Factor for each such Class, the Certificate
Balance and the Certificate Pool Factor after giving effect to
payments allocated to principal reported under (i) above;
(vii) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period and/or due but unpaid with
respect to such Collection Period or prior Collection Periods, as the
case may be;
(viii) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, and the
Certificateholders' Principal Carryover Shortfall;
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(ix) the amount of the aggregate Realized Losses, if any, for the
second preceding Collection Period;
(x) the aggregate Purchase Amounts for Receivables, if any, that
were repurchased in such period;
(xi) for Payment Dates during the Pre-Funding Period (if any),
the remaining Pre-Funded Amount and the amount remaining in the
Capitalized Interest Account;
(xii) for the final Subsequent Transfer Date, the amount of any
remaining Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Receivables and is passed through as principal
to Noteholders;
(xiii) the amounts which were collected by the Servicer;
(xiv) the aggregate amount which was received by the Trust from
the Servicer;
(xv) any reimbursements to the Insurer; and
(xvi) delinquency information relating to Receivables which are
30, 60 or 90 days delinquent.
Each amount set forth pursuant to paragraph (i), (ii), (iii), (iv), (viii),
(xi) and (xii) above shall be expressed as a dollar amount per $1,000 of the
initial principal balance of the Notes (or Class thereof) or the initial
Certificate Balance, as applicable.
SECTION 5.9. Net Deposits. As an administrative convenience, unless a
------------
Servicer Default has occurred and is continuing, the Servicer is required to
remit collections within two (2) 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 Collection Period net of
distributions to be made to the Servicer with respect to such Collection Period;
provided, however, that if an error is made by the Servicer in calculating the
- -------- -------
amount to be deposited or retained by it, with the result that an amount less
than required is deposited into the Collection Account, the Servicer shall make
a payment of the deficiency to the Collection Account immediately upon becoming
aware or receiving notice from the Indenture Trustee, the Servicer, the Insurer
or any Noteholders of such error. The Servicer, however, will account to the
Owner Trustee, the Indenture 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 Insurer. The Insurer shall at any
--------------------------------
time, and from time to time, with respect to a Payment Date, have the option
(but shall not be required, except in accordance with the terms of the Policy)
to deliver amounts from its own funds to the Indenture 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
Issuer with respect to such Payment Date, or (ii) to include such amount to the
extent that without such amount a draw would be required to be made on the
Policy.
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ARTICLE V-A
The Policy
----------
SECTION 5A.1 Claims Under Policy.
-------------------
(a) In the event that the Indenture Trustee has delivered a
Deficiency Notice with respect to any Determination Date, if the Policy Claim
Amount for the related Payment Date is greater than zero, the Indenture Trustee
shall furnish to the Insurer (with a copy to the Servicer) no later than 12:00
noon New York City time on the related Draw Date a completed Notice of Claim in
the amount of the Policy Claim Amount. Amounts paid by the Insurer under the
Policy shall be deposited by the Indenture Trustee into the Note Distribution
Account on the Business Day immediately preceding the Payment Date for payment
to Noteholders on the related Payment Date. The "Policy Claim Amount" for any
Payment Date shall equal the lesser of (i) the sum of the Noteholders' Interest
Distributable Amount and the Noteholders' Principal Distributable Amount for
such Payment Date and (ii) the excess, if any, of the amount required to be
distributed pursuant to clauses (i) through (iv) of Section 5.6(b) over the
Distribution Amount for such Payment Date.
(b) Any notice delivered by the Indenture Trustee to the Insurer
pursuant to subsection 5A.1(a) shall specify the Policy Claim Amount claimed
under the Policy and shall constitute a "Notice of Claim" under the Policy. In
accordance with the provisions of the Policy, the Insurer is required to pay to
the Indenture Trustee the Policy Claim Amount properly claimed thereunder by
12:00 noon, New York City time, on the earlier of (i) the third Business Day
following receipt on a Business Day of the Notice of Claim, and (ii) the
Business Day preceding the applicable Payment Date. Any payment made by the
Insurer under the Policy shall be applied solely to the payment of the Notes,
and for no other purpose.
(c) The Indenture Trustee shall (i) receive as attorney-in-fact of
each Noteholder any Policy Claim Amount from the Insurer and (ii) deposit the
same in the Collection Account for disbursement to the Noteholders as set forth
in the Indenture. Any and all Policy Claim Amounts disbursed by the Indenture
Trustee from claims made under the Policy shall not be considered payment by the
Issuer with respect to such Notes, and shall not discharge the obligations of
the Issuer with respect thereto. The 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
Insurer, the Indenture Trustee shall assign to the 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 Insurer and the 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 Policy. To evidence
such subrogation, the Note Registrar shall note the Insurer's rights as subrogee
upon the register of Noteholders upon receipt from the Insurer of proof of
payment by the Insurer of any Noteholders' Interest Distributable Amount or
Noteholders' Principal Distributable Amount.
(d) The Indenture Trustee shall be entitled to enforce on behalf of
the Noteholders the obligations of the Insurer under the Policy. Notwithstanding
any other provision of this Agreement or any Basic Document, the Noteholders are
not entitled to make a claim directly under the Policy or institute proceedings
directly against the Insurer.
(e) The Indenture Trustee shall keep a complete and accurate record
of all funds on deposit in the Collection Account and the Note Distribution
Account and the allocation of such funds to
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payments of interest on and principal paid in respect of any Note. The Insurer
shall have the right to inspect such records at reasonable times upon one (1)
Business Day's prior notice to the Indenture Trustee.
SECTION 5A.2 Preference Claims; Direction of Proceedings.
-------------------------------------------
(a) In the event that the Indenture Trustee has received a certified
copy of an order of the appropriate court that any Noteholders' Interest
Distributable Amount or Noteholders' Principal Distributable Amount paid on a
Note has been avoided in whole or in part as a preference payment under
applicable bankruptcy law, the Indenture Trustee shall so notify the Insurer,
shall comply with the provisions of the Policy to obtain payment by the Insurer
of such avoided payment, and shall, at the time it provides notice to the
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 Policy. Pursuant to the terms of the
Policy, the Insurer will make such payment on behalf of the Noteholder to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order (as defined in the Policy) and not to the Indenture Trustee or any
Noteholder directly (unless a Noteholder has previously paid such payment to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy, in which
case the Insurer will make such payment to the Indenture Trustee for
distribution to such Noteholder upon proof of such payment satisfactory to the
Insurer).
(b) The Indenture Trustee shall promptly notify the Insurer of any
proceeding or the institution of any action (of which a responsible officer of
the Indenture 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
Indenture Trustee hereby agree that so long as an Insurer Default shall not have
occurred and be continuing, the 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, supercede as or performance bond pending any such appeal at the expense
of the Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set forth
in Section 5A.1(c), the Insurer shall be subrogated to, and each Noteholder and
the Indenture Trustee hereby delegate and assign, to the fullest extent
permitted by law, the rights of the Indenture 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 action with
respect to any court order issued in connection with any such Preference Claim.
SECTION 5A.3 Surrender of Policy. The Indenture Trustee shall surrender
-------------------
the Policy to the Insurer for cancellation upon the expiration of such Policy in
accordance with the terms thereof.
ARTICLE VI
The Seller
----------
SECTION 6.1. Representations of the Seller. The Seller makes the following
-----------------------------
representations on which each of the Transferor, the Depositor and the Issuer
are deemed to have relied in acquiring its interest in the Receivables. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date, in the case of Initial Receivables, and as of the
applicable Subsequent Transfer Date in the case of Subsequent Receivables, and
shall survive the sale of the Receivables to the Transferor, the transfer
thereof to the Depositor, the transfer by the Depositor to the Issuer and pledge
thereof to the Indenture Trustee pursuant to the Indenture.
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(a) Organization and Good Standing. The Seller is duly organized and
------------------------------
validly existing as a limited liability company in good standing under the laws
of the State of California with the limited liability company 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 foreign 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 this Agreement and 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 Transferor, and the Seller has
duly authorized such sale and assignment to the Transferor by all necessary
limited liability company action, and the execution, delivery and performance of
each of the Basic Documents to which the Seller is a party and of each
Subsequent Transfer Agreement has been duly authorized by the Seller by all
necessary limited liability company action.
(d) Binding Obligation; Valid Sale. This Agreement effects a valid
------------------------------
sale, transfer, and assignment of the Receivables, enforceable against creditors
of and purchasers from the Seller. This Agreement, each Subsequent Transfer
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 each of the Basic Documents and by each Subsequent
Transfer Agreement to which the Seller is a party 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 operating 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 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 to which the Seller is a party, 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,
this Agreement, the Basic Documents to which the Seller is a party, or the Notes
or the Certificates or (iv) that might adversely affect the federal, state and
local income tax attributes of the Issuer, the Notes or the Certificates or
seeking to impose any excise, franchise, transfer or similar tax
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upon the Notes, the Certificates or the sale and assignment of the Receivables
and the other Transferor Property hereunder.
(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, any Subsequent Transfer 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, any Subsequent
Transfer 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, or the Noteholders.
(h) Chief Executive Office. The chief executive office of the Seller
----------------------
is at 401 West A Street, Suite 1000, San Diego, California, 92101.
(i) Upon the transfer of each Receivable to the Transferor and other
items of Trust Property delivered by the Seller to the Transferor under this
Agreement or any Subsequent Transfer Agreement, the Transferor will have good
title to such Receivable and such other items of Transferor Property, free and
clear of any lien, charge, mortgage, encumbrance or rights of others (other than
liens that will be simultaneously released).
SECTION 6.2. 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 organization
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, any Subsequent Transfer
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 Transferor as a legal
entity separate and apart from the Seller and its other Affiliates, including as
follows:
(i) the Transferor shall maintain corporate records and books
of account separate from those of the Seller and its other Affiliates;
(ii) except as otherwise provided in this Agreement, the
Transferor shall not commingle its assets and funds with those of the
Seller or its other Affiliates;
(iii) the Transferor shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the
Transferor's limited liability company actions required by law to be
authorized by the Board of Directors, shall keep minutes of such
meetings and of meetings of its members and observe all other
customary limited liability company formalities (and any successor
Transferor not a corporation shall observe similar procedures in
accordance with its governing documents and applicable law);
(iv) the Transferor shall at all times hold itself out to the
public under its own name as a legal entity separate and distinct from
the Seller and its other Affiliates; and
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(v) all transactions and dealings between the Transferor and
the Seller and its other Affiliates will be conducted on an arm's-
length basis.
SECTION 6.3. Liability of Seller; Indemnities. (a) The Seller shall be
--------------------------------
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(b) The Seller shall indemnify, defend and hold harmless the
Transferor, the Depositor, the Backup Servicer, the Custodian, the Insurer, the
Owner Trustee, the Issuer, the Indenture 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
the Owner Trustee or the Indenture Trustee and except any taxes to which the
Owner Trustee or the Indenture 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.
(c) The Seller shall indemnify, defend and hold harmless the
Depositor, the Backup Servicer, the Custodian, the Transferor, the Issuer, the
Indenture Trustee, the Owner Trustee, the Indenture Collateral Agent, the
Insurer, the Certificateholders 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 by reason of reckless disregard of its obligations and duties under this
Agreement or (ii) the Seller's, the Transferor's or the Issuer's violation of
Federal or state securities laws in connection with the offering and sale of the
Notes and the Certificates or (iii) the failure of any Receivable conveyed to
the Transferor hereunder to comply with all requirements of applicable law and
for breach of its representations and warranties contained herein or failure to
perform in all material respects its obligations and duties contained herein.
(d) The Seller shall indemnify, defend and hold harmless the Owner
Trustee, the Indenture Trustee, the Insurer and the Indenture Collateral Agent
and their respective 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
misfeasance, bad faith or negligence (except for errors in judgment) of the
Insurer or the Indenture Trustee or the Indenture Collateral Agent, as the case
may be or, in the case of the Owner Trustee, if such cost, expense, loss, claim,
damage or liability arises or results from any of the matters described in the
third sentence of Section 7.1 of the Trust Agreement.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee, the Indenture Trustee, the Backup Servicer, the Custodian
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, 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
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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) the Seller shall have received the written consent of the
Controlling Party 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 or an
Insurance Agreement Event of Default, and no event which, after notice or lapse
of time, or both, would become a Servicer Default or Insurance Agreement Event
of Default shall have occurred and be continuing, (iii) the Seller shall have
delivered to the Owner Trustee, the Indenture Trustee, the Rating Agencies and
the 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
Indenture Trustee and the 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 Transferor, the
Depositor, the Issuer, the Owner Trustee and the Indenture 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 director 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.
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
Policy. The Seller shall notify the Owner Trustee, the Indenture Trustee and
the Insurer promptly after it or any of its Affiliates become the owner of a
Certificate or a Note.
ARTICLE VII
The Servicer
------------
SECTION 7.1. Representations of Servicer. The Servicer makes the following
---------------------------
representations on which the Insurer shall be deemed to have relied in executing
and delivering the Policy and on which each of the Transferor, the Depositor and
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, in the case of the Initial Receivables, and as of the
applicable Subsequent Transfer Date, in the case of the Subsequent Receivables,
and shall survive the sale of the Receivables from the Seller to
49
<PAGE>
the Transferor, the Transferor to the Depositor and the Depositor to the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly organized
------------------------------
and validly existing as a limited liability company in good standing under the
laws of the state of its formation, with the limited liability company 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.
(b) Due Qualification. The Servicer 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. The Servicer has the 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 the Servicer by all necessary 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 the
Servicer 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, the Insurer, the Noteholders or the Certificateholders.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
------------------
binding obligation of the Servicer, 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 Basic Documents and the fulfillment of the terms
hereof and thereof 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 organizational documents of the Servicer, or any indenture, agreement
or other instrument to which the Servicer 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 the Servicer's knowledge, any order, rule or regulation
applicable to the Servicer of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending against the Servicer, or, to its best knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement or any of the Basic
Documents to which the Servicer is a party or the Notes or the Certificates,
(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 to
which the Servicer is a party, (iii) seeking any determination or ruling that
might materially and
50
<PAGE>
adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of this Agreement or any of the Basic Documents
to which the Servicer is a party or the Notes or the Certificates or (iv)
relating to the Servicer and which might adversely affect the federal income tax
or ERISA attributes of the Issuer or the Notes or the Certificates or seeking to
impose any excise, franchise, transfer or similar tax upon the Notes or the
Certificates or the sale and assignment of the Receivables hereunder.
(g) Fidelity Bond. The Servicer maintains a fidelity bond in such
-------------
form and amount as is customary for finance companies acting as custodian of
funds and documents in respect of motor vehicle loans.
(h) Year 2000 Program. The Servicer has taken, all steps necessary
-----------------
and appropriate to prevent any problems in its computer and information systems
arising from or in connection with the information processing challenges
associated with the Year 2000. The Servicer's computer and other systems used in
servicing the Receivables are currently capable of operating in a manner so that
on or after January 1, 2000, the Servicer (i) can service the Receivables in
accordance with the terms hereof and (ii) operate its business in the same
manner as it is operating on the date hereof. The Servicer will provide to the
Insurer and the Indenture Trustee such information and reports as the Insurer or
the Indenture Trustee may request from time to time with respect to such steps
as have or will be taken with respect thereto.
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
Transferor, the Depositor, the Backup Servicer, the Custodian, the Owner
Trustee, the Indenture Trustee, the Issuer, the Indenture Collateral Agent, the
Insurer, the Noteholders, the Certificateholders and the Seller from and against
any and all costs, expenses, losses, damages, claims, 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
Transferor, the Depositor, the Backup Servicer, the Custodian, the Owner
Trustee, the Indenture Trustee, the Seller, the Issuer, the Indenture Collateral
Agent, the Insurer, their respective officers, directors, agents and employees
and the Noteholders and the Certificateholders from and against any and all
costs, expenses, losses, claims, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or liability arose out of, or was
imposed upon any such Person through, (i) the negligence, misfeasance or bad
faith of the Servicer in the performance of its duties under this Agreement or
(ii) by reason of disregard of its obligations and duties under this Agreement.
(d) The Servicer shall indemnify, defend and hold harmless the
Transferor, the Depositor, the Backup Servicer, the Custodian, the Owner
Trustee, the Indenture Trustee, the Insurer and the Indenture Collateral Agent
and their respective 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 contained and in the Trust Agreement, except to the extent that
such costs, expense, loss, claim, damage or liability shall be due to the
willful misfeasance, bad faith or negligence (except for errors in judgment) of
the Transferor, the Depositor, the Backup Servicer, or in the case of the Owner
Trustee, if such cost, expense, loss, claim, damage or liability arises or
results from any of the matters described in the third sentence of Section 7.1
of the Trust Agreement, the Indenture Trustee, the Insurer or the Indenture
Collateral Agent, as the case may be.
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<PAGE>
For purposes of this Section, in the event of the termination of the rights
and obligations of PeopleFirst (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 Indenture Trustee)
pursuant to Section 8.2.
Indemnification under this Section shall survive the resignation or removal
of the Backup Servicer, the Custodian, Owner Trustee, the Indenture Trustee or
the Indenture Collateral Agent, and the termination of this Agreement or 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, Servicer. Any Person (a) into which the Servicer may be merged or
- ------------
consolidated, (b) which may result from any merger, conversion or consolidation
to which the Servicer shall be a party or (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 or
limited liability company 50% or more of the voting interest of which is owned,
directly or indirectly, by PeopleFirst, which Person executed an agreement of
assumption to perform every obligation of the Servicer hereunder shall be the
successor to the Servicer under the Agreement without further act on the part of
any of the parties to the Agreement; provided, however, that (i) the Servicer
shall have received the written consent of the Controlling Party prior to
entering into any such transaction; (ii) immediately after giving effect to such
transaction, no Servicer Default or Insurance Agreement Event of Default and no
event which, after notice or lapse of time, or both, would become a Servicer
Default or Insurance Agreement Event of Default shall have occurred and be
continuing, (iii) the Servicer shall have delivered to the Owner Trustee, the
Indenture Trustee, the Rating Agencies and the 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 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 Indenture Trustee, the Rating Agencies and
the 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 Indenture Trustee 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. Notwithstanding anything herein to the contrary,
compliance with clause (i) shall not apply if the Backup Servicer becomes the
Servicer.
SECTION 7.4. Limitation on Liability of 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
misfeasance, bad faith or negligence 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.
52
<PAGE>
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 the Certificateholders under the Trust Agreement of 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 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
Controlling Party does not elect to 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 Issuer,
the Indenture Trustee and the Controlling Party 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 Indenture Trustee and the 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 the resigning servicer in accordance with Section 8.2 of this
Agreement.
ARTICLE VII-A
The Transferor
--------------
SECTION 7A.1 Representations of the Transferor. The Transferor makes the
---------------------------------
following representations to the Depositor and the Issuer on which the Depositor
and the Issuer are deemed to have relied in acquiring the Receivables and the
Insurer is deemed to have relied in issuing the Policy. The representations
speak as of the execution and delivery of this Agreement and as of the Closing
Date, in the case of Initial Receivables, and as of the applicable Subsequent
Transfer Date in the case of Subsequent Receivables, and shall survive the sale
of the Receivables to the Depositor and the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Transferor is duly organized
------------------------------
and validly existing as a limited liability company in good standing under the
laws of the State of Delaware 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 Transferor is duly qualified to do
-----------------
business as a foreign 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 Transferor. The Transferor has the
-------------------------------------
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement and each of the Basic Documents to which the
Transferor is a party; the Transferor has full power and authority to sell and
assign the property to be sold and assigned to the Depositor and deposited with
the Issuer, and the Transferor has duly authorized such sale and assignment to
the Issuer by all necessary limited liability company action, and the execution,
delivery and performance of each of the Basic Documents to which
53
<PAGE>
the Transferor is a party and of each Subsequent Transfer Agreement has been
duly authorized by the Transferor by all necessary limited liability company
action.
(d) Binding Obligation; Valid Transfer. This Agreement effects a
----------------------------------
valid transfer, and assignment of the Receivables, enforceable against creditors
of and purchasers from the Transferor. This Agreement, each Subsequent Transfer
Agreement and each of the Basic Documents to which the Transferor is a party
constitute legal, valid and binding obligations of the Transferor, 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 each of the Basic Documents and by each Subsequent
Transfer Agreement to which the Transferor is a party 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 operating agreement of the Transferor, or any indenture,
agreement or other instrument to which the Transferor 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 its knowledge, any order, rule or regulation applicable to the
Transferor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Transferor or its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending against the Transferor or, to its best knowledge, threatened against the
Transferor, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Transferor or its
properties: (i) asserting the invalidity of this Agreement or any of the Basic
Documents to which the Transferor is a party, 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 to which the Transferor is a party, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Transferor of its obligations under, or
the validity or enforceability of, this Agreement, the Basic Documents to which
the Transferor is a party, or the Notes or the Certificates or (iv) that might
adversely affect the federal, state or local income tax attributes of the
Issuer, the Notes or the Certificates or seeking to impose any excise,
franchise, transfer or similar tax upon the Notes, the Certificates or the sale
and assignment of the Receivables and other Depositor Property hereunder.
(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 Transferor in connection with the execution
and delivery by the Transferor of this Agreement, any Subsequent Transfer
Agreement or any of the Basic Documents to which it is a party and the
performance by the Transferor of the transactions contemplated by this
Agreement, any Subsequent Transfer 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, or the Noteholders.
(h) Chief Executive Office. The chief executive office of the
----------------------
Transferor is at 401 West A Street, Suite 1000, San Diego, California, 92101.
(i) Upon the transfer of each Receivable to the Depositor and other
items of Depositor Property delivered by the Transferor to the Depositor under
this Agreement or any Subsequent Transfer
54
<PAGE>
Agreement, the Depositor will have good title to such Receivable and such other
items of Depositor Property, free and clear of any lien, charge, mortgage,
encumbrance or rights of others (other than liens that will be simultaneously
released).
SECTION 7A.2 Existence.
---------
(a) During the term of this Agreement, the Transferor 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 organization 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, any Subsequent Transfer 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 Transferor shall observe
the applicable legal requirements for the recognition of the Transferor as a
legal entity separate and apart from its Affiliates, including as follows:
(i) the Transferor shall maintain limited liability company
records and books of account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the
Transferor shall not commingle its assets and funds with those of its
Affiliates;
(iii) the Transferor shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the
Transferor's limited liability company actions required by law to be
authorized by the Board of Directors, shall keep minutes of such
meetings and of meetings of its stockholder(s) and observe all other
customary corporate formalities (and any successor Transferor not a
corporation shall observe similar procedures in accordance with its
governing documents and applicable law);
(iv) the Transferor shall at all times hold itself out to the
public under the Transferor's own name as a legal entity separate and
distinct from its Affiliates; and
(v) all transactions and dealings between the Transferor and
its Affiliates will be conducted on an arm's-length basis.
SECTION 7A.3 Liability of Transferor; Indemnities.
------------------------------------
(a) The Transferor shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Transferor under this
Agreement.
(b) The Transferor shall indemnify, defend and hold harmless the
Depositor, the Backup Servicer, the Issuer, the Insurer, the Owner Trustee, the
Custodian, the Indenture Trustee, the Indenture Collateral Agent, the
Certificateholders and the Noteholders 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 the Owner Trustee or the Indenture Trustee and
except any taxes to which the Owner Trustee or the Indenture 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.
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(c) The Transferor shall indemnify, defend and hold harmless the
Depositor, the Backup Servicer, the Issuer, the Insurer, the Owner Trustee, the
Custodian, the Indenture Trustee, the Indenture Collateral Agent, the
Certificateholders and the Noteholders from and against any loss, liability or
expense incurred by reason of (i) the Transferor's willful misfeasance, bad
faith or negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this Agreement
or (ii) the failure of any Receivable conveyed to the Depositor hereunder to
comply with all requirements of applicable law and for breach of its
representations and warranties contained herein or failure to perform in all
material respects its obligations and duties contained herein.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee, the Indenture Trustee, the Custodian, the Backup Servicer
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 provided however,
-------- -------
that the liability of the Transferor for payments under this Section 7A.3 shall
be subject to the availability of funds therefor. If the Transferor 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
Transferor, without interest.
SECTION 7A.4 Limitation on Liability of Transferor and Others. The
------------------------------------------------
Transferor and any director or officer or employee or agent of the Transferor
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 Transferor 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.
SECTION 7A.5 Transferor May Own Certificates or Notes. The Transferor
----------------------------------------
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 Transferor or an Affiliate thereof, except as expressly
provided herein or in any Basic Document. Notes or Certificates so owned by the
Transferor 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 Transferor 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 Policy. The Transferor shall notify the Owner
Trustee, the Indenture Trustee and the Insurer promptly after it or any of its
Affiliates become the owner of a Certificate or a Note.
ARTICLE VII-B
The Depositor
-------------
SECTION 7B.1 Representations of the Depositor. The Depositor makes the
--------------------------------
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables and on which the Insurer is deemed to have relied in
issued in the Policy. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, in the case of Initial
Receivables, and as of the applicable Subsequent Transfer Date in the case of
Subsequent Receivables, and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Depositor is duly organized
------------------------------
and validly existing as a corporation in good standing under the laws of the
State of Delaware with the power and authority to own its properties and to
conduct its business as such properties are currently owned and such
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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 Depositor is duly qualified to do business
-----------------
as a foreign 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 Depositor. The Depositor has the power
------------------------------------
and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement and each of the Basic Documents to which the
Depositor is a party; the Depositor has full power and authority to sell and
assign the property to be sold and assigned to and deposited with the Issuer,
and the Depositor has duly authorized such sale and assignment to the Issuer by
all necessary corporate action, and the execution, delivery and performance of
each of the Basic Documents to which the Depositor is a party and of each
Subsequent Transfer Agreement has been duly authorized by the Depositor by all
necessary corporate action.
(d) Binding Obligation; Valid Transfer. This Agreement effects a
----------------------------------
valid transfer, and assignment of the Receivables, enforceable against creditors
of and purchasers from the Depositor. This Agreement, each Subsequent Transfer
Agreement and each of the Basic Documents to which the Depositor is a party
constitute legal, valid and binding obligations of the Depositor, 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 each of the Basic Documents and by each Subsequent
Transfer Agreement to which the Depositor is a party 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 incorporation or by-laws of the Depositor,
or any indenture, agreement or other instrument to which the Depositor 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 its knowledge, any order, rule or regulation
applicable to the Depositor of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending against the Depositor or, to its best knowledge, threatened against the
Depositor, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor 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 Depositor of its obligations under, or
the validity or enforceability of, this Agreement, the Basic Documents, or the
Notes or the Certificates or (iv) that might adversely affect the federal, state
or local income tax attributes of the Issuer, the Notes or the Certificates or
seeking to impose any excise, franchise, transfer or similar tax upon the Notes,
the Certificates or the sale and assignment of the Receivables and other Trust
Property hereunder.
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(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 Depositor in connection with the execution
and delivery by the Depositor of this Agreement, any Subsequent Transfer
Agreement or any of the Basic Documents to which it is a party and the
performance by the Depositor of the transactions contemplated by this Agreement,
any Subsequent Transfer 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, or the Noteholders.
(h) Chief Executive Office. The chief executive office of the
----------------------
Depositor is at One New York Plaza, New York, New York, 10292.
(i) Upon the transfer of each Receivable or interests therein to the
Issuer and other items of Trust Property delivered by the Depositor to the
Issuer under this Agreement or any Subsequent Transfer Agreement, the Issuer
will have good title to such Receivable or interests therein and such other
items of Trust Property, free and clear of any lien, charge, mortgage,
encumbrance or rights of others (other than liens that will be simultaneously
released) granted by the Depositor.
SECTION 7B.2 Existence.
---------
(a) During the term of this Agreement, the Depositor will keep in
full force and effect its existence, rights and franchises as a corporation
under the laws of the jurisdiction of its organization 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, any Subsequent Transfer 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 Depositor shall observe
the applicable legal requirements for the recognition of the Depositor as a
legal entity separate and apart from its Affiliates, including as follows:
(i) the Depositor shall maintain corporate records and books of
account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement and except
as expressly permitted by any other agreement to which it is a party,
the Depositor shall not commingle its assets and funds with those of
its Affiliates;
(iii) the Depositor shall hold such appropriate meetings of its
Board of Directors as are necessary to authorize all the Depositor's
corporate actions required by law to be authorized by the Board of
Directors, shall keep minutes of such meetings and of meetings of its
stockholder(s) and observe all other customary corporate formalities
(and any successor Depositor not a corporation shall observe similar
procedures in accordance with its governing documents and applicable
law);
(iv) the Depositor shall at all times hold itself out to the
public under the Depositor's own name as a legal entity separate and
distinct from its Affiliates; and
(v) all transactions and dealings between the Depositor and its
Affiliates will be conducted on an arm's-length basis.
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SECTION 7B.3 Liability of Depositor; Indemnities.
-----------------------------------
(a) The Depositor shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Depositor under this
Agreement.
(b) The Depositor shall indemnify, defend and hold harmless the
Backup Servicer, the Servicer, the Insurer, the Owner Trustee, the Custodian,
the Issuer, the Indenture Trustee, the Indenture Collateral Agent, the
Noteholders and the Certificateholders from and against any loss, liability or
expense incurred by reason of (i) the Depositor's willful misfeasance, bad faith
or negligence in the performance of its duties under this Agreement, or (ii) by
reason of reckless disregard of its obligations and duties under this Agreement
or (iii) for breach of its representations and warranties contained herein or
failure to perform in all material respects its obligations and duties contained
herein.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee, the Custodian, the Indenture 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 Depositor 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 Depositor, without
interest.
SECTION 7B.4 Limitation on Liability of Depositor and Others. The
-----------------------------------------------
Depositor and any director or officer or employee or agent of the Depositor 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 Depositor 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.
SECTION 7B.5 Depositor May Own Certificates or Notes. The Depositor 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 Depositor or an Affiliate thereof, except as expressly
provided herein or in any Basic Document. Notes or Certificates so owned by the
Depositor 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 Depositor 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 Policy. The Depositor shall notify the Owner
Trustee, the Indenture Trustee and the Insurer promptly after it or any of its
Affiliates become the owner of a Certificate or a Note.
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 Indenture Trustee any deposit or payment proceeds or payment required to be
so made, which failure continues unremedied for a period of one Business Day
after the written notice of such failure is received by the
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Servicer from the Insurer, the Owner Trustee or the Indenture Trustee or after
discovery of such failure by the Servicer; or
(b) The breach of any representation or warranty or covenant of the
Servicer or failure by the Servicer duly to observe or to perform in any
material respect any 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 breach or failure shall (i) materially and adversely
affect the rights of the Insurer, Certificateholders or the Noteholders and (ii)
continue unremedied for a period of 30 days after the date on which written
notice of such breach or failure, requiring the same to be remedied, shall have
been given (A) to the Servicer by the Indenture Trustee or the Controlling Party
or (B) to the Servicer, the Insurer, the Owner Trustee and the Indenture Trustee
by the Holders of Notes evidencing not less than 25% of the outstanding
principal amount of the Notes or Holders of Certificates evidencing not less
than 25% of the outstanding Certificate Balance, as applicable (or for such
longer period, not in excess of 60 days, as may be reasonably necessary to
remedy such default; provided that such default is capable of remedy within 60
days and the Servicer delivers an Officers' Certificate to the Insurer, the
Owner Trustee and the Indenture 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;
(d) Failure to deliver a Servicer's Certificate within 3 days of the
related Determination Date;
(e) Failure to deliver the annual statement of compliance required to
be delivered pursuant to Section 4.10 hereof within 30 days of the date on which
such statement is required to be delivered.
(f) Unless an Insurer Default shall have occurred and be continuing,
an Insurance Agreement Event of Default described in Section 5.1 of the
Insurance Agreement shall have occurred.
(g) Unless an Insurer Default shall have occurred and be continuing,
failure of the Insurer to deliver a Servicer Extension Notice pursuant to
Section 3.5 hereof.
then, and in each and every case, the Controlling Party or holders of Notes
representing not less than 25% of the voting rights thereof (or, if the Notes
have been paid in full and the Indenture has been discharged in accordance with
its terms, by holders of Certificates evidencing not less than 25% of the voting
interest thereof) in any case by notice given in writing to the Servicer (and to
the Indenture Trustee if given by the Insurer or, as applicable, the Noteholders
or the Certificateholders) may terminate all of the rights and obligations of
the 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 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, the Receivables, the autodebit account payments,
the other Trust Property or otherwise, automatically shall pass to, be vested in
and become obligations and responsibilities of the Backup Servicer (or such
other successor Servicer appointed by the Controlling Party); provided, however,
that the successor Servicer 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 successor Servicer becomes the Servicer or any claim of a third
party based on any alleged action or inaction of the prior Servicer. The
successor Servicer 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
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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 Issuer or Indenture 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 successor Servicer, the Indenture
Trustee, the Insurer (so long as no Insurer Default shall have occurred and be
continuing) and the Owner Trustee reasonable access to the terminated Servicer's
premises at the terminated Servicer's 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, the Controlling Party, the Backup
Servicer and the Indenture 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 Backup Servicer shall assume the obligations of Servicer
hereunder and shall accept its appointment by a written assumption in form
acceptable to the Controlling Party. Notwithstanding the above, the Indenture
Trustee with the prior written consent of the Controlling Party, or the
Controlling Party shall, if the Indenture 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 automotive
receivables as the successor to the Servicer under the Agreement.
(b) Upon appointment, the successor Servicer (including the Backup
Servicer 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, 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. In addition, the successor Servicer shall have (i) no obligation to
perform any repurchase or advancing obligations, if any, of the Servicer, (ii)
no obligation to pay any taxes required to be paid by the Servicer, (iii) no
obligation to pay any of the fees and expenses of any other party involved in
this transaction and (iv) no liability or obligation with respect to any
Servicer indemnification obligations of any prior Servicer including the
original Servicer. The Successor Servicer as Servicer shall have control over
and the right to direct any autodebit account payments. Furthermore,
notwithstanding anything contained in this Agreement to the contrary, the
successor Servicer as Servicer is authorized to accept and rely on all of the
accounting, records and work of the prior Servicer relating to the Receivables
(collectively, "Predecessor Servicer Work Product") without any audit or other
examination thereof, and the successor Servicer as Servicer shall have no duty,
responsibility, obligation or liability for the acts and omissions of any prior
Servicer. If any error, inaccuracy or omission (collectively, "Errors") exist in
any Predecessor Servicer Work Product received by the successor Servicer from
the prior Servicer and such Errors should cause or materially contribute to the
successor Servicer as Servicer making or continuing any Errors (collectively,
"Continued Errors"), the successor Servicer as Servicer shall have no duty,
responsibility, obligation or liability for such Continued Errors; provided,
--------
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however, that the successor Servicer agrees to perform its duties as successor
- -------
Servicer in accordance with the standard of care set forth in Section 4.1. In
the event that the successor Servicer as Servicer becomes aware of Errors or
Continued Errors, the successor Servicer shall use its best efforts to
reconstruct and reconcile such data as is commercially reasonable to correct
such Errors and Continued Errors and to prevent future Continued Errors. The
successor Servicer as Servicer shall be entitled to recover from the Trust its
costs thereby expended.
SECTION 8.3. Notification to Noteholders, Certificateholders and Backup
----------------------------------------------------------
Servicer. Upon any Servicer Default or 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 Indenture
Trustee shall give prompt written notice thereof to Noteholders, the Insurer and
to the Rating Agencies.
SECTION 8.4. Waiver of Past Defaults. So long as no Insurer Default shall
-----------------------
have occurred and be continuing, the Insurer (or, if an Insurer Default shall
have occurred and be continuing, the Controlling Party) 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 VIII-A
THE BACKUP SERVICER
-------------------
SECTION 8A.1 Appointment of Backup Servicer. On or before each
------------------------------
Determination Date, the Servicer shall deliver to the Indenture Trustee and the
Backup Servicer a computer tape in a format acceptable to the Indenture Trustee
and the Backup Servicer containing the information with respect to the
Receivables for the preceding Collection Period necessary for the preparation of
the Servicer's Certificate relating to such Collection Period (the "Backup
Servicer Tape"). The duties of the Backup Servicer set forth in Section 8A.2
(the "Backup Servicer Duties") shall be conducted by the Person so designated
from time to time as Backup Servicer in accordance with this Agreement. Norwest
is hereby initially designated as, and hereby agrees to perform, the duties and
obligations of the Backup Servicer pursuant to the terms hereof and each other
Basic Document to which the Backup Servicer is a party. Subject to the
resignation of Norwest as Backup Servicer pursuant to Section 8A.4 or the
termination of Norwest as Backup Servicer pursuant to Section 8A.6 and, in
either case, the designation of a successor Backup Servicer hereunder, Norwest
shall continue to perform the Backup Servicer Duties, unless and until expressly
agreed otherwise by the Issuer, the Servicer, the Indenture Trustee and the
Insurer.
SECTION 8A.2 Duties of Backup Servicer. The Backup Servicer, for the
-------------------------
benefit of the Issuer, the Insurer and the Noteholders, shall perform the
following duties:
(a) use the Backup Servicer Tape to verify the following information:
(w) the aggregate Principal Balance of each Receivable, (x) a list of
Receivables that are (I) 1-30; (II) 31-60, (III) 61-90, (IV) 90-120 days or (V)
121+ delinquent in any scheduled payment, (y) the amount of principal and
interest payments on the Receivables received during the Collection Period, and
(z) the Default Rate and the Delinquency Ratio for the Collection Period;
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(b) in the event that the Backup Servicer discovers a discrepancy or
discrepancies, with respect to such independent reconciliation described above,
the Backup Servicer shall (x) notify the Issuer, the Seller, the Depositor, the
Insurer, the Servicer and the Indenture Trustee of such discrepancy or
discrepancies, and (y) attempt to reconcile such discrepancy or discrepancies
with the Servicer; and
(c) such other duties as may be agreed to in writing by the Issuer,
the Seller, the Depositor, the Backup Servicer and the Insurer from time to
time.
SECTION 8A.3 Backup Servicing Standard. The Backup Servicer, for the
-------------------------
benefit of the Issuer, the Indenture Trustee, the Insurer, the Noteholders and
the Certificateholders, shall perform the Backup Servicer Duties in accordance
with all applicable federal, state or local laws and regulations and with the
degree of skill, care and diligence of prudent lenders in the industry for the
servicing of comparable assets, but in no event, with less skill, care and
diligence that the Backup Servicer exercises with respect to all comparable
assets that it services for itself or others (such standards, the "Backup
Servicing Standard"). Other than the duties specifically set forth in this
Agreement, the Backup Servicer shall have no obligations hereunder, including,
without limitation to supervise, verify, monitor, or administer the performance
of the Servicer. The duties and obligations of the Backup Servicer shall be
determined solely by the express provisions of this Agreement and no implied
covenants or obligations shall be read into this Agreement against the Backup
Servicer.
SECTION 8A.4 Limitation on Resignation of the Backup Servicer. The Backup
------------------------------------------------
Servicer shall not resign from the obligations and duties hereby imposed on it
except (a) by mutual agreement among the Backup Servicer, the Issuer, the
Indenture Trustee and the Insurer or (b) upon determination that its duties
hereunder are no longer permissible under applicable law. Any determination
under clause (b) above permitting the resignation of the Backup Servicer shall
be evidenced by an opinion of counsel (which counsel shall be acceptable to the
Issuer, the Indenture Trustee and the Insurer) to such effect delivered to the
Issuer, the Depositor, the Indenture Trustee and the Insurer. No such
resignation shall become effective until a successor backup servicer shall have
assumed the Backup Servicer's responsibilities, duties, liabilities and
obligations hereunder. Any such successor backup servicer must be an established
servicer of consumer automobile loans and must be approved in writing by the
Issuer, the Depositor, Indenture Trustee and Insurer.
SECTION 8A.5 Rights in Respect of the Backup Servicer. The Backup Servicer
----------------------------------------
shall afford the Indenture Trustee, the Issuer, the Depositor, and the Insurer,
upon two (2) Business Days prior notice, during normal business hours access to
all records maintained by the Backup Servicer in respect of its rights and
obligations hereunder and access to officers of the Backup Servicer responsible
for such obligations. Upon request, the Backup Servicer shall furnish the
Indenture Trustee, the Issuer, the Depositor, and the Insurer such information
as the Backup Servicer possesses regarding the transactions contemplated hereby
and any circumstance that could reasonably be expected to affect the Backup
Servicer's ability to perform its obligations hereunder. The Indenture Trustee,
the Issuer and the Insurer shall not have any responsibility or liability for
any action or failure to act by the Backup Servicer, and are not obligated to
supervise the performance of the Backup Servicer under this Agreement or
otherwise.
SECTION 8A.6 Termination.
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(a) Upon 30 days' written notice, the Controlling Party may terminate
all the rights and obligations of the Backup Servicer under this Agreement as to
any or all of the Receivables or Backup Servicer Duties.
(b) In the event that (a) notice of termination of this Agreement, or
of termination of the rights and obligations of the Backup Servicer hereunder,
is given, or (b) the Backup Servicer resigns in
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accordance with Section 8A.4, the Backup Servicer covenants that all funds and
any item comprising a Receivable File in its possession relating to the affected
Receivables (collectively, the "Backup Contract Records") shall, at the option
of the Controlling Party, immediately upon receipt of notice of termination or
the resignation of the Backup Servicer, be submitted to the control of the
Indenture Trustee.
(c) Notwithstanding any termination of this Agreement, or of all or a
portion of the rights and obligations of the Backup Servicer hereunder, the
Backup Servicer shall not be relieved of liability for all amounts due, or
responsibilities owed the Issuer, the Indenture Trustee, the Insurer, the
Noteholders or the Certificateholders in respect of its obligations hereunder
while it served as the Backup Servicer. The Backup Servicer forthwith upon such
termination or resignation shall (a) use its best efforts to effect the orderly
and efficient transfer of Backup Servicer Duties to a new backup servicer or
other designee selected by the Controlling Party, and (b) arrange for the
physical transfer and delivery to the Controlling Party or to a new backup
servicer or other designee selected by the Controlling Party of all Contract
Receivable Records and copies thereof in its possession. Any successor servicer
hereunder shall meet the requirements and be selected in accordance with the
procedures specified in Section 8A.4. Notwithstanding any termination of this
Agreement, or any termination of all the rights and obligations of the Backup
Servicer hereunder as to all or any number of Receivables, or any resignation of
the Backup Servicer, in any case pursuant to any provision of this Agreement,
the Backup Servicer shall be entitled to receive all amounts accrued and owing
to it under this Agreement from the Borrower in accordance with Section 8A.8
hereof.
SECTION 8A.7 Resignation or Termination of Backup Servicer. Upon the
---------------------------------------------
termination of the Servicer in accordance with Article VIII or the resignation
of the Servicer in accordance with Section 7.5, the Backup Servicer shall either
(i) assume all of the responsibilities, duties, liabilities and obligations the
Servicer hereunder, without further action by any Person, or (ii) designate a
successor Servicer who shall (x) assume all of the responsibilities, duties,
liabilities and obligations the Servicer hereunder, without further action by
any Person, and (y) be acceptable to the Controlling Party in its sole
discretion. Any such assumption or appointment by the Backup Servicer pursuant
to this Section 8A.7 shall occur as soon as reasonably practical (but, in any
event, no later than 30 days) after the Indenture Trustee provides notice to the
Backup Servicer of any such resignation or termination of the Servicer. Neither
the Backup Servicer nor any successor Backup Servicer shall have (i) any
liability with respect to any obligation which was required to be performed by
the terminated Backup Servicer prior to the date that the successor Backup
Servicer or the Backup Servicer became the Servicer or any claim of a third
party based on any alleged action or inaction of the terminated Backup Servicer
and (ii) any obligation to pay any of the fees and expense of any other party
involved in this transaction.
SECTION 8A.8 Backup Servicing Fee. At any time the Backup Servicer or
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one of its Affiliates is not the Servicer hereunder, the Backup Servicer shall
be paid the Backup Servicer Fee for the performance of its obligations as Backup
Servicer hereunder and under the Basic Documents.
SECTION 8A.9 Indemnity. The Backup Servicer its officers, directors,
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agents and employees shall be indemnified and held harmless in accordance with
the terms of the separate agreement between the Servicer and the Backup
Servicer, against any and all claims, losses, liabilities, damages or expenses
(including, but not limited to, attorney's fees, court costs and costs of
investigation) of any kind or nature whatsoever arising out of or in connection
with this Agreement that may be imposed upon, incurred by or asserted against
the Backup Servicer, except in each case to the extent arising from the Backup
Servicer's misfeasance, bad faith or negligence. The provisions of this Section
8A.9 shall survive the resignation or removal of the Backup Servicer and the
termination of this Agreement.
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SECTION 8A.10 Limitation of Liability.
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(a) In the absence of bad faith, negligence or misconduct on the part
of the Backup Servicer, the Backup Servicer shall not be liable to the Issuer,
the Indenture Trustee, the Seller, the Indenture Collateral Agent, the Insurer
or any other Person with respect to any action taken or not taken by it in the
performance of its obligations under this Agreement. The obligations of the
Backup Servicer shall be determined solely by the express provisions of this
Agreement. No representation, warranty, covenant, agreement, obligation or duty
of the Backup Servicer shall be implied with respect to this Agreement or the
Backup Servicer's services hereunder.
(b) The Backup Servicer may rely, and shall be protected in acting or
refraining to act, upon and need not verify the accuracy of, any written
instruction, notice, order, request, direction, certificate, opinion or other
instrument or document believed by the Backup Servicer to be genuine and to have
been signed and presented by the proper party or parties, which, with respect to
the Issuer, Indenture Trustee, Indenture Collateral Agent or Insurer, shall mean
signature and presentation by Authorized Representatives (as such term is
defined in the Custodial Agreement) whether such presentation is by personal
delivery, express delivery or facsimile.
(c) The Backup Servicer may consult with counsel selected by it with
regard to legal questions arising out of or in connection with this Agreement,
and the advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, omitted or suffered
by the Backup Servicer in reasonable reliance, in good faith, and in accordance
therewith.
(d) Except as expressly provided for herein, the provisions of this
Agreement shall not require the Backup Servicer to expend or risk its own funds
or otherwise incur financial liability in the performance of its duties under
this Agreement if it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity is not reasonably assured to it.
(e) The Backup Servicer shall not be responsible or liable for, and
makes no representation or warranty with respect, the validity, adequacy or
perfection of any lien upon, or security interest in any Receivables or
Custodian's Receivable Files (as such term is defined in the Custodial
Agreement) purported to be granted at any time to the Indenture Trustee.
ARTICLE IX
Termination
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SECTION 9.1. Optional Purchase of All Receivables. (a) On the last day of
------------------------------------
any Collection Period as of which the Pool Balance shall be less than or equal
to 15% of the Original Pool Balance, the Transferor 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 Insurer if such
purchase would result in a claim on either Policy or would result in any amount
owing to the 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, if any, and interest then due and payable on the Notes and the
Certificates. To exercise such option, the Servicer shall deposit pursuant to
Section 5.5 in the Collection Account an amount equal to the amount set forth in
the preceding sentence.
(b) Notice of any termination of the Trust pursuant to subsection (a)
of this Section 9.1 shall be given by the Servicer to the Owner Trustee, Issuer
and the Indenture Trustee, the Insurer and the Rating Agencies as soon as
practicable after the Servicer has received notice thereof.
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FOLLOWING THE SATISFACTION AND DISCHARGE OF THE INDENTURE AND THE PAYMENT
IN FULL OF THE PRINCIPAL OF AND INTEREST ON THE NOTES AND ALL AMOUNTS DUE TO THE
INSURER UNDER THE INSURANCE AGREEMENT, THE CERTIFICATEHOLDERS WILL SUCCEED TO
THE RIGHTS OF THE NOTEHOLDERS AND THE INSURER HEREUNDER AND THE OWNER TRUSTEE
WILL SUCCEED TO THE RIGHTS OF, AND ASSUME THE OBLIGATIONS (OTHER THAN ANY
SERVICING OBLIGATION) OF, THE INDENTURE TRUSTEE PURSUANT TO THIS AGREEMENT.
ARTICLE X
Administrative Duties of the Servicer
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SECTION 10.1. (a) Duties with respect to the Indenture, the Trust Agreement
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and Depository Agreement. The Servicer shall perform all its duties and the
- ------------------------
duties of the Issuer under the Indenture, the Trust Agreement and the Depository
Agreement. In addition, the Servicer shall consult with the Owner Trustee as
the Servicer deems appropriate regarding the duties of the Issuer under the
Indenture, the Trust Agreement and the Depository Agreement. The Servicer shall
monitor the performance of the Issuer and shall advise Owner Trustee when action
is necessary to comply with the Issuer's duties under the Indenture, the Trust
Agreement and the Depository Agreement. 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, the Trust Agreement and the Depository Agreement. 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, the Trust Agreement
and the Depository Agreement, 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, 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 2.11 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 a Certificateholder as contemplated in Section 5.2(f) 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.
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(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 the Owner Trustee and the
Depositor 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 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 the Owner Trustee
-----------
shall file, on behalf of the Depositor, 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 and 1066. All tax returns
will be signed by the Transferor.
(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 Indenture Trustee of the proposed action and the Owner Trustee
and, with respect to items (A), (B), (C) and (D) below, the Indenture 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 Indenture Trustees
pursuant to the Indenture or the appointment of Successor
Servicers or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee of its
obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(e) Exceptions. Notwithstanding anything to the contrary in this
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Agreement, except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall
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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
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account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer
and the Insurer at any time during normal business hours.
SECTION 10.3. Additional Information to be Furnished to the Issuer. The
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Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
ARTICLE XI
Miscellaneous Provisions
------------------------
SECTION 11.1. Amendment. This Agreement may not be amended except that this
---------
Agreement may be amended from time to time by the Seller, the Transferor, the
Depositor, the Servicer the Backup Servicer, the Issuer, the Indenture Trustee
and the Custodian, with the prior written consent of the Insurer (so long as no
Insurer Default has occurred and is continuing), but without the consent of any
of the Noteholders or 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, as evidenced by an Opinion of Counsel delivered to the Owner
Trustee, Insurer, the Rating Agencies and the Indenture Trustee, adversely
affect in any material respect the interests of any Noteholder or
Certificateholder.
This Agreement may also be amended from time to time by the Seller, the
Transferor, the Depositor, the Servicer, the Backup Servicer, the Indenture
Trustee and the Custodian, with (i) the consent of the Insurer, if the Insurer
is the Controlling Party, but without the consent of any Noteholders or
Certificateholders, or (ii) if the Insurer is no longer the Controlling Party,
with the consent of a Note Majority and the consent of the holders of
Certificates evidencing not less than a majority of the aggregate outstanding
principal amount of the Certificates, 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 Certificate Balance, 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 Holders (as defined in the Trust Agreement) of all the outstanding
Certificates, of each class affected thereby provided further, that if an
Insurer Default has occurred and is continuing, such action shall not materially
adversely affect the interest of the Insurer.
Promptly after the execution of any such amendment or consent, 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 Noteholders or Certificateholders 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 for in this Agreement) and of
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evidencing the authorization of any action by Noteholders or Certificateholders
shall be subject to such reasonable requirements as the Indenture Trustee or the
Owner Trustee, as may prescribe.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture 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 the Opinion of Counsel referred to in Section
11.2(b) has been delivered. The Owner Trustee and the Indenture Trustee may,
but shall not be obligated to, enter into any such amendment which affects the
Issuer's, the Owner Trustee's or the Indenture Trustee's, as applicable, own
rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2. Protection of Title to the Trust. (a) The Seller, the
--------------------------------
Transferor and the Depositor 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
Trustee in the Receivables and in the proceeds thereof. The Seller, the
Transferor and the Depositor shall deliver (or cause to be delivered) to the
Insurer, the Owner Trustee and the Indenture Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing.
(b) None of the Seller, the Transferor and the Depositor or the
Servicer shall change its name, identity or organizational 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 Insurer, Owner Trustee and the Indenture Trustee at least five (5) 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, the
Transferor and the Depositor, as the case may be, shall deliver an Opinion of
Counsel to the Insurer and the Indenture Trustee, in form and substance
reasonably satisfactory to the Insurer, 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 Transferor, the
Depositor, the Issuer and the Indenture Trustee, as the case may be, in the
Receivables and the other Transferor Property, other Depositor Property and
other Trust Property, as the case may be, 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, the Servicer, the Transferor and the
Depositor shall have an obligation to give the Insurer, the Owner Trustee, the
Backup Servicer and the Indenture 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.
(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 Indenture Trustee in such Receivable and that such Receivable is owned by
the Issuer and has
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been pledged to the Indenture Trustee. Indication of the Issuer's and the
Indenture 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 Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee, the Backup
Servicer, and the 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 Indenture Trustee to perform any such acts.
(h) Upon request, the Servicer shall furnish to the Insurer, the
Owner Trustee, the Backup Servicer, the Depositor, or to the Indenture Trustee,
within five (5) Business Days, a list of all Receivables (by contract number and
name of Obligor) then held as part of the Trust Property, 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 Property.
(i) The Servicer shall deliver to the Insurer, the Depositor, Owner
Trustee and the Indenture Trustee:
(1) promptly after the execution and delivery of the
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
Indenture Trustee, 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 Indenture 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) within 90 days after the beginning of each calendar
year beginning with the first calendar year beginning more than three
months after the Cutoff Date, an Opinion of Counsel, dated as of a
date during such 90-day period, stating that, in the opinion of such
counsel, 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 Indenture
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.
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 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.
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SECTION 11.3. Notices. All demands, notices and communications upon or to
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the Seller, the Servicer, the Owner Trustee, the Indenture 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 and the Servicer, to
PeopleFirst Finance LLC, 401 West A Street, Suite 1000, San Diego, California,
92101 Attention: W. Randolph Ellspermann, (b) in the case of the Issuer or the
Owner Trustee, at the Corporate Trust Office of the Owner Trustee, (c) in the
case of PF Funding II LLC, c/o PeopleFirst Finance LLC, 401 West A Street, Suite
1000, San Diego, California, 92101, Attention: W. Randolph Ellspermann, (d) in
the case of the Depositor, to Prudential Securities Secured Financing
Corporation, One New York Plaza, 14/th/ Floor, New York, New York, 10292,
Attention: Asset-Backed Group, (e) in the case of the Indenture Trustee, the
Indenture Collateral Agent, the Backup Servicer or the Custodian, at the
Corporate Trust Office, (f) in the case of the Insurer, to Financial Security
Assurance Inc., 350 Park Avenue, New York, New York 10022; Attention: Senior
Vice President, Surveillance (in each case in which notice or other
communication to the Insurer refers to a Servicer Default, a claim on the
Policy, a Deficiency Notice pursuant to Section 5.4 of this Agreement or with
respect to which failure on the part of the Insurer to respond shall be deemed
to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of each of the General
Counsel and the Head Financial Guaranty Group and shall be marked to indicate
"URGENT MATERIAL ENCLOSED"); (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 (h) in the case of Standard & Poor's, to Standard & Poor's Structured
Finance Ratings, 55 Water Street, 41st Floor, New York, New York 10041-0003,
Attention: Asset Backed Surveillance Department. Upon the written request of
the Owner Trustee, the Indenture 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
Indenture Trustee shall be under no liability for providing the list of
Noteholders to the Owner Trustee as described in the immediately preceding
sentence. Any 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 the 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
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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 Depositor, the Indenture Trustee
and the 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 and the Holders of Certificates evidencing not less than 66%
of the Certificate Balance).
SECTION 11.5. Limitations on Rights of Others. The provisions of this
-------------------------------
Agreement are solely for the benefit of the parties hereto, the 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 Trustee 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.
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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, INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATION LAW, BUT OTHERWISE 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 Indenture Trustee. Each of the Seller, the
-------------------------------
Transferor and the Depositor hereby acknowledge and consent to any mortgage,
pledge, assignment and grant of a security interest expressly as contemplated by
this Agreement and by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders 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 Indenture Trustee.
SECTION 11.11. Nonpetition Covenants. (a) Notwithstanding any prior
---------------------
termination of this Agreement, none of the Backup Servicer, the Custodian, the
Servicer, the Seller, the Transferor (with respect to the Issuer) or the
Depositor shall, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Transferor or the Issuer,
acquiesce, petition or otherwise invoke or cause any of the Transferor or 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 any of the Transferor or 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, none of
the Backup Servicer, the Custodian, the Transferor, the Seller or the Servicer
shall, prior to the date that is one year and one day after the termination of
this Agreement with respect to the Depositor, acquiesce to, petition or
otherwise invoke or cause the Depositor to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Depositor under any federal or state bankruptcy, insolvency or similar law,
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator,
or other similar official of the Depositor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Depositor.
SECTION 11.12. Limitation of Liability of Owner Trustee and Indenture
------------------------------------------------------
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
- -------
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company 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.
72
<PAGE>
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Norwest, not in its individual capacity but
solely as Indenture Trustee, Backup Servicer and Custodian, and in no event
shall Norwest 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.
(c) It is expressly understood and agreed by the parties hereto that
(a) this Sale and Servicing Agreement is executed and delivered by Wilmington
Trust Company, not individually or personally but solely as Owner Trustee of
PeopleFirst.com Auto Receivables Owner Trust 1999-1, in the exercise of the
powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Sale and Servicing Agreement or any other
related documents.
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 or the Owner Trustee, the
Servicer shall have no authority to act for or represent the Issuer 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 any of the Issuer, the Depositor, the
Transferor 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 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 so long as no Insurer Default shall have occurred and be continuing.
Except as expressly stated otherwise herein or in the Basic Documents, any right
of the Insurer to direct, appoint, consent to, approve of, or take any action
under this Agreement, shall be a right exercised by the Insurer in its sole and
absolute discretion.
SECTION 11.16. Disclaimer by Insurer. The Insurer may disclaim any of its
---------------------
rights and powers under this Agreement (but not its duties and obligations under
the Policies) upon delivery of a written notice to the Owner Trustee and the
Indenture Trustee.
SECTION 11.17. Insurer as Controlling Party. Each Noteholder by purchase of
----------------------------
Notes and Certificateholder by purchase of a Certificate acknowledges that the
Indenture Trustee on behalf of the Noteholders, and the Owner Trustee on behalf
of the Certificateholders, as partial consideration for issuance of the Policy,
has agreed that the Insurer shall have certain rights hereunder for so long as
no Insurer Default shall have occurred and be continuing. Any provision giving
the Insurer the right to
73
<PAGE>
direct, appoint or consent to, approve of, or take any action under this
Agreement shall be inoperative during the prior of such Insurer Default and
shall instead vest in the Servicer, or in the event that Notes remain
Outstanding, the Indenture Trustee at the direction of a Note Majority or in the
event that no Notes remain Outstanding, the Owner Trustee, at the direction of a
Certificate Majority, as applicable.
SECTION 11.18. Limited Recourse. Notwithstanding anything to the contrary
----------------
contained in this Agreement, the obligations of each of the Depositor, the
Transferor and Issuer under this Agreement are solely the limited liability
company obligations of the Depositor, Transferor or the trust obligations of
Issuer, as applicable, and shall be payable by the Depositor, Transferor or
Issuer, as applicable, solely as provided in this Section 11.18 Each of the
Depositor, Transferor and the Issuer shall only be required to pay (a) any fees,
expenses, indemnities or other liabilities that it may incur under this
Agreement to the extent it has funds available therefor on the date of such
determination and (b) any expenses, indemnities or other liabilities that it may
incur under this Agreement only to the extent it receives funds designated for
such purposes or to the extent it has funds available therefor. In addition, no
amount owing by any of the Depositor, the Transferor or Issuer hereunder (other
than principal and interest in respect of the Notes) in excess of the
liabilities that it is required to pay in accordance with the preceding sentence
shall constitute a "claim" (as defined in Section101(5) of the Bankruptcy Code)
against it. No recourse shall be had for the payment of any amount owing
hereunder or for the payment of any fee hereunder or any other obligation of, or
claim against, the Depositor, Transferor or the Issuer arising out of or based
upon this Agreement, against any member, employee, officer, agent, director or
authorized person of the Depositor, Transferor or affiliate thereof or any
stockholder, employee, officer, director, incorporator or Affiliate thereof;
provided, however, that the foregoing shall not relieve any such person or
- -------- -------
entity of any liability they might otherwise have as a result of fraudulent
actions or omissions taken by them. The obligation of the parties under this
Section 11.18 shall survive termination of this Agreement.
74
<PAGE>
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.
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
By Wilmington Trust Company,
not in its individual capacity but solely as Owner
Trustee on behalf of the Issuer,
By________________________________________________
Name:
Title:
PEOPLEFIRST FINANCE, LLC,
Seller and Servicer,
By________________________________________________
Name:
Title:
PF FUNDING II, LLC,
as Transferor,
By________________________________________________
Name:
Title:
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION,
as Depositor,
By________________________________________________
Name:
Title:
<PAGE>
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Backup Servicer,
By______________________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Custodian,
By______________________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as
Indenture Trustee,
By______________________________________
Name:
Title:
<PAGE>
EXHIBIT A
SUBSEQUENT TRANSFER AGREEMENT
TRANSFER No. [___] OF SUBSEQUENT RECEIVABLES dated as of , [________],
among PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1, a Delaware business
trust (the "Issuer"), PF FUNDING II, LLC, a Delaware limited liability company,
as transferor (the "Transferor") PEOPLEFIRST FINANCE, LLC, a California limited
liability company and as seller and servicer (the "Seller" and the "Servicer"),
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware corporation, as
depositor (the "Depositor"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee, Backup Servicer and Custodian.
W I T N E S E T H:
WHEREAS the Issuer, the Transferor, the Seller, the Servicer, the
Depositor, the Indenture Trustee, the Backup Servicer and the Custodian are
parties to the Sale and Servicing Agreement, dated as of November 1, 1999 (as
amended or supplemented, the "Sale and Servicing Agreement");
WHEREAS pursuant to the Sale and Servicing Agreement, the Seller wishes to
convey the Subsequent Receivables to the Transferor; and
WHEREAS, the Transferor is willing to accept such conveyance subject to the
terms and conditions hereof,
WHEREAS pursuant to the Sale and Servicing Agreement, the Transferor wishes
to convey the Receivables to the Depositor,
WHEREAS the Depositor is willing to accept such conveyance subject to the
terms and conditions hereof;
WHEREAS pursuant to the Sale and Servicing Agreement, the Depositor wishes
to convey the Receivables to the Trust, and
WHEREAS the Trust is willing to accept such conveyance subject to the
terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller and the Servicer hereby agree as
follows:
1. Defined Terms. Capitalized terms used herein shall have the
-------------
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, ____________, _______.
"Subsequent Transfer Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, __________, ____.
2. Schedule of Receivables. Annexed hereto is a supplement to
-----------------------
Schedule A to the Sale and Servicing Agreement listing the Receivables that
constitute the Subsequent Receivables to be conveyed pursuant to this Agreement
on the Subsequent Transfer Date.
A-1
<PAGE>
3. Conveyance of Subsequent Receivables to Transferor. In
--------------------------------------------------
consideration of the Transferor's delivery to or upon the order of the Seller of
$ , the Seller does hereby sell, transfer, assign, set over and otherwise convey
to the Transferor, without recourse (except as expressly provided in the Sale
and Servicing Agreement), all right, title and interest of the Seller in and to:
(a) the Subsequent Receivables, and all moneys due thereon, on
or after the related Subsequent Cutoff Date and all Net
Liquidation Proceeds with respect to such Receivables;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent Receivables and any
other interest of the Seller in such Financed Vehicles;
(c) any proceeds with respect to the Subsequent Receivables from
claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors;
(d) all rights under any Service Contracts on the related
Financed Vehicles;
(e) the related Receivables Files;
(f) the proceeds of any and all of the foregoing.
4. Conveyance of Subsequent Receivables to Depositor. For good and
-------------------------------------------------
valuable consideration, the Transferor does hereby transfer, assign, set over
and otherwise convey to the Depositor, without recourse, (except as expressly
provided in the Sale and Servicing Agreement), all right, title and interest of
the Transferor in and to:
(a) the Subsequent Receivables, and all moneys due thereon, on
or after the related Subsequent Cutoff Date and all Net
Liquidation Proceeds with respect to such Receivables;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent Receivables and any
other interest of the Seller in such Financed Vehicles;
(c) any proceeds with respect to the Subsequent Receivables from
claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors;
(d) all rights under any Service Contracts on the related
Financed Vehicles;
(e) the related Receivables Files;
(f) its rights and benefits, but none of its obligations or
burdens, under the Subsequent Transfer Agreement, including
the delivery requirements, representations and warranties
and the cure and repurchase obligations of the Seller under
the Sale and Servicing Agreement, on or after the Subsequent
Cutoff Date; and
(g) the proceeds of any and all of the foregoing.
A-2
<PAGE>
5. Conveyance of Subsequent Receivables to Trust. For good and
---------------------------------------------
valuable consideration, the Depositor does hereby transfer, assign, set over and
otherwise convey to the Trust, without recourse, (except as expressly provided
in the Sale and Servicing Agreement), all right, title and interest of the
Depositor in and to:
(a) the Subsequent Receivables, and all moneys due thereon, on
or after the related Subsequent Cutoff Date and all Net
Liquidation Proceeds with respect to such Receivables;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent Receivables and any
other interest of the Seller in such Financed Vehicles;
(c) any proceeds with respect to the Subsequent Receivables from
claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors;
(d) all rights under any Service Contracts on the related
Financed Vehicles;
(e) the related Receivables Files;
(f) its rights and benefits, but none of its obligations or
burdens, under the Subsequent Transfer Agreement, including
the delivery requirements, representations and warranties
and the cure and repurchase obligations of the Seller and
the Transferor under the Sale and Servicing Agreement, on or
after the Subsequent Cutoff Date; and the proceeds of any
and all of the foregoing.
(g) the proceeds of any and all of the foregoing.
6. Representations and Warranties of the Seller. The Seller hereby
--------------------------------------------
represents and warrants to the Transferor and the Depositor as of the date of
this Agreement and as of the Subsequent Transfer Date that:
(a) Legal, Valid and Binding Obligation. This Agreement
-----------------------------------
constitutes a legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or
equity).
(b) Organization and Good Standing. The Seller is duly organized
------------------------------
and validly existing as a limited liability company in good
standing under the laws of the State of California, 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.
A-3
<PAGE>
(c) 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 or
the conduct of its business shall require such
qualifications.
(d) 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 Issuer and the Seller and shall have duly
authorized such sale and assignment to the Issuer 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.
(e) Binding Obligation. This Agreement constitutes a legal,
------------------
valid and binding obligation of the Seller enforceable in
accordance with its terms.
(f) 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) 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 shall be 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.
(g) 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: (i) asserting the invalidity of
this Agreement, the Indenture or any of the other 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, the Indenture or any of the other Basic
Documents, (iii) 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, the Indenture, any of the
other Basic Documents, the Notes or the Certificates or (iv)
which might adversely affect the Federal or state income tax
attributes of the Notes or the Certificates.
(h) Principal Balance. The aggregate Principal Balance of the
-----------------
Receivables listed on the supplement to Schedule A annexed
hereto and conveyed to
A-4
<PAGE>
the Transferor pursuant to this Agreement as of the
Subsequent Cutoff Date is $[___________].
7. Representations and Warranties of the Depositor. The Depositor
------------------------------------------------
hereby represents and warrants to the Depositor as of the date of this Agreement
and as of the Subsequent Transfer Date that:
(a) Legal, Valid and Binding Obligation. This Agreement
-----------------------------------
constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance
with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or
equity).
(b) Organization and Good Standing. The Depositor is duly
------------------------------
organized and validly existing as a corporation in good
standing under the laws of the State of Delaware, 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.
(c) Due Qualification. The Depositor is duly qualified to do
-----------------
business as a corporation 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.
(d) Power and Authority. The Depositor has the power and
-------------------
authority to execute and deliver this Agreement and to carry
out its terms; the Depositor 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 and shall have duly
authorized such sale and assignment to the Issuer 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.
(e) Binding Obligation. This Agreement constitutes a legal,
------------------
valid and binding obligation of the Depositor enforceable in
accordance with its terms.
(f) 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) a default under, the
certificate of formation or the limited liability company
agreement of the Depositor, or any indenture, agreement or
other instrument to which the Depositor is a party or by
which it shall be 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
A-5
<PAGE>
of the Depositor's knowledge, any order, rule or regulation
applicable to the Depositor 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.
(g) No Proceedings. To the Depositor'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 Depositor or its properties: (i) asserting the
invalidity of this Agreement, the Indenture or any of the
other 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, the Indenture or any of the
other Basic Documents, (iii) seeking any determination or
ruling that might materially and adversely affect the
performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement, the
Indenture, any of the other Basic Documents, the Notes or
the Certificates or (iv) which might adversely affect the
Federal or state income tax attributes of the Notes or the
Certificates.
(h) Principal Balance. The aggregate Principal Balance of the
-----------------
Receivables listed on the supplement to Schedule A annexed
hereto and conveyed to the Depositor pursuant to this
Agreement as of the Subsequent Cutoff Date is $[________].
8. Representations and Warranties of the Transferor. The Transferor
------------------------------------------------
hereby represents and warrants to the Depositor as of the date of this Agreement
and as of the Subsequent Transfer Date that:
(a) Legal, Valid and Binding Obligation. This Agreement
-----------------------------------
constitutes a legal, valid and binding obligation of the
Transferor, enforceable against the Transferor in accordance
with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or
equity).
(b) Organization and Good Standing. The Transferor is duly
------------------------------
organized and validly existing as a limited liability
company in good standing under the laws of the State of
Delaware, 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.
(c) Due Qualification. The Transferor 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 or
the conduct of its business shall require such
qualifications.
A-6
<PAGE>
(d) Power and Authority. The Transferor has the power and
-------------------
authority to execute and deliver this Agreement and to carry
out its terms; the Transferor 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 and shall have
duly authorized such sale and assignment to the Issuer 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.
(e) Binding Obligation. This Agreement constitutes a legal,
------------------
valid and binding obligation of the Transferor enforceable
in accordance with its terms.
(f) 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) a default under, the
certificate of formation or the limited liability company
agreement of the Transferor, or any indenture, agreement or
other instrument to which the Transferor is a party or by
which it shall be 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 Transferor 's
knowledge, any order, rule or regulation applicable to the
Transferor 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.
(g) No Proceedings. To the Transferor'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 Transferor or its properties: (i) asserting the
invalidity of this Agreement, the Indenture or any of the
other 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, the Indenture or any of the
other Basic Documents, (iii) seeking any determination or
ruling that might materially and adversely affect the
performance by the Transferor of its obligations under, or
the validity or enforceability of, this Agreement, the
Indenture, any of the other Basic Documents, the Notes or
the Certificates or (iv) which might adversely affect the
Federal or state income tax attributes of the Notes or the
Certificates.
(h) Principal Balance. The aggregate Principal Balance of the
Receivables listed on the supplement to Schedule A annexed
hereto and conveyed to the Depositor pursuant to this
Agreement as of the Subsequent Cutoff Date is $[________] .
9. Conditions Precedent. The obligation of the Transferor, Depositor
--------------------
and Trust to acquire the Receivables hereunder is subject to the satisfaction,
on or prior to the Subsequent Transfer Date, of the following conditions
precedent:
A-7
<PAGE>
(a) Representations and Warranties. Each of the representations
------------------------------
and warranties made by the Seller, the Transferor and
Depositor in this Agreement and in the Sale and Servicing
Agreement (provided, however, that the representations and
warranties set forth in Section 3.1 of the Sale and
Servicing Agreement shall apply solely to the applicable
Subsequent Receivables) shall be true and correct as of the
date of this Agreement and as of the Subsequent Transfer
Date.
(b) Sale and Servicing Agreement Conditions. Each of the
---------------------------------------
conditions set forth in Section 2.2(b) to the Sale and
Servicing Agreement shall have been satisfied.
(c) Additional Information. The Seller shall have delivered to
----------------------
the Transferor such information as was reasonably requested
by the Transferor to satisfy itself as to (i) the accuracy
of the representations and warranties set forth in Section 4
of this Agreement and in Section 3.1 of the Sale and
Servicing Agreement and (ii) the satisfaction of the
conditions set forth in this Section 9.
10. Ratification of Agreement. As supplemented by this Agreement, the
-------------------------
Sale and Servicing Agreement is in all respects ratified and confirmed and the
Sale and Servicing Agreement as so supplemented by this Agreement shall be read,
taken and construed as one and the same instrument.
11. Counterparts. This Agreement may be executed in two or more
------------
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
12. It is expressly understood and agreed by the parties hereto that
(a) this Subsequent Transfer Agreement is executed and delivered by Wilmington
Trust Company, not individually or personally but solely as Owner Trustee of
PeopleFirst.com Auto Receivables Owner Trust 1999-1, in the exercise of the
powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Subsequent Transfer Agreement or any other
related documents.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING TITLE 14 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, 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.
A-8
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Seller and the Servicer have caused
this Agreement to be duly executed and delivered by their respective duly
authorized officers as of the day and the year first above written.
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
by WILMINGTON TRUST COMPANY not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust,
by: ___________________________________
Name:
Title:
PF FUNDING II, LLC,
Transferor,
by: ___________________________________
Name:
Title:
PEOPLEFIRST FINANCE, LLC
Seller and Servicer,
by: ___________________________________
Name:
Title:
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION,
Depositor,
by: ____________________________________
Name:
Title:
A-9
<PAGE>
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
Backup Servicer
by: ____________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
Custodian
by: ____________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Indenture Trustee
by: ____________________________
Name:
Title:
A-10
<PAGE>
EXHIBIT B
FORM OF MONTHLY CERTIFICATEHOLDER STATEMENT
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
CLASS A CERTIFICATES
CLASS R CERTIFICATES
Payment Date:
Collection Period:
Under the Sale and Servicing Agreement dated as of November 1, 1999 among
PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1, a Delaware business trust
(the "Issuer"), PF FUNDING II, LLC, a Delaware limited liability company, as
transferor (the "Transferor") PEOPLEFIRST FINANCE, LLC, a California limited
liability company and as seller and servicer (the "Seller" and the "Servicer"),
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, as depositor (the
"Depositor) and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Backup Servicer
and Custodian, the Servicer is required to prepare certain information each
month regarding current distributions to Certificateholders and the performance
of the Trust during the previous month. The information that is required to be
prepared with respect to the Payment Date and Collection 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 Certificate, and certain other
information is presented based upon the aggregate amounts for the Trust as a
whole.
A. Information Regarding the Current Monthly Distribution.
14. Certificates.
------------
<TABLE>
<S> <C>
(a) The aggregate amount of the distribution to the
Certificateholders....................................................... $________
(b) The amount of the distribution set forth in paragraph A.1.(a) above in
respect of interest on the Certificates.................................. $________
(c) The amount of the distribution set forth in paragraph A.1.(a) above in
respect of principal of the Certificates................................. $________
(d) The amount of the distribution set forth in paragraph A.1.(a) above
per $1,000 interest in the Certificates.................................. $________
(e) The amount of the distribution set forth in paragraph A.1.(b) above
per $1,000 interest in the Certificates.................................. $________
(f) The amount of the distribution set forth in paragraph A.1.(c) above
per $1,000 interest in the Certificates.................................. $________
(g) The aMount of the distribution set forth in paragraph A.1.(d) above
per $1,000 interest in the Certificates.................................. $________
</TABLE>
B-1
<PAGE>
B. Information Regarding the Performance of the Trust.
1. Pool Balance and Certificate Principal Balance.
<TABLE>
<S> <C>
(a) The Pool Balance at the close of business on the last day of the
Collection Period...................................................... $________
(b) The Certificate Principal Balance after giving effect to payments
allocated to principal as set forth in Paragraph A.1(c)................ $________
(c) The Certificate Pool Factor after giving affect to the payments set
forth in paragraph A.1(c).............................................. $________
(d) The amount of aggregate Realized Losses for the second preceding
Collection Period...................................................... $________
(e) The aggregate Purchase Amount for all Receivables that were
repurchased in the Collection Period................................... $________
</TABLE>
2. Servicing Fee.
-------------
<TABLE>
<S> <C>
(a) The aggregate amount of the Servicing Fee paid to the Servicer with
respect to the preceding Collection Period............................. $________
</TABLE>
3. Payment Shortfalls.
------------------
<TABLE>
<S> <C>
(a) The amount of the Certificates' Interest Carryover Shortfall after
giving effect to the payments set forth in paragraph A.1(b)
above.................................................................. $________
(b) The amount of the Certificateholders' Interest Carryover Shortfall
set forth in paragraph B.3.(a) above per $1,000 interest with respect
to the Certificate:.................................................... $________
(c) The amount of the Certificates' Principal Carryover Shortfall after
giving effect to the payments set forth in paragraph A.1(b) above..... $________
(d) The amount of the Certificateholders' Principal Carryover Shortfall
set forth in paragraph B.3.(a) above per $1,000 interest with respect
to the Certificate:.................................................... $________
</TABLE>
4. Transfer of Subsequent Receivables.
----------------------------------
<TABLE>
<S> <C>
(a) Aggregate amount on deposit in the Pre-Funding Account on such
Payment Date after giving effect to all withdrawals therefrom on such
Payment Date........................................................... $________
</TABLE>
B-2
<PAGE>
<TABLE>
<S> <C>
(b) Aggregate amount on deposit in the Capitalized Interest Account on
such distribution date after giving effect to all withdrawals
therefrom on such Payment Date......................................... $_______
(c) Aggregate amount on deposit in the Pre-Funding Account on the final
Subsequent Transfer Date after giving effect to all withdrawals
therefrom on such Payment Date......................................... $_______
(d) The amount set forth in paragraph B.4(a) per $1,000 interest in the
Certificates:.......................................................... $_______
(e) The amount set forth in paragraph B.4(b) to be distributed to
Certificateholders per $1,000 interest in the Certificates:............ $_______
(f) The amount set forth in paragraph B.4(c) to be distributed to
Certificateholders per $1,000 interest in the Certificates:............ $_______
5. (a) The aggregate amount of collections by the Servicer during
the preceding Collection Period........................................ $_______
(b) The aggregate amount which was received by the Trust from the
Servicer............................................................... $_______
(c) The aggregate amount of reimbursements to the Security
Insurer................................................................ $_______
(d) The number of Receivables that are delinquent for over:
30 days................................................................ $_______
60 days................................................................ $_______
90 days................................................................ $_______
</TABLE>
B-3
<PAGE>
EXHIBIT C
FORM OF MONTHLY NOTEHOLDER STATEMENT
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
Class A-1 6.415% Asset Backed Notes
Class A-2 6.685% Asset Backed Notes
Class A-3 6.835% Asset Backed Notes
Payment Date:
Collection Period:
Under the Sale and Servicing Agreement dated as of November 1, 1999
among PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1, a Delaware business
trust (the "Issuer"), PF FUNDING II, LLC, a Delaware limited liability company,
as transferor (the "Transferor") PEOPLEFIRST FINANCE, LLC, a California limited
liability company and as seller and servicer (the "Seller" and the "Servicer"),
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, as depositor (the
"Depositor) and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Backup Servicer
and Custodian, 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 Payment Date and Collection 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.
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............................. $________
the Class A-3 Notes............................. $________
(b) The amount of the distribution set forth in paragraph
A.1.(a) above in respect of interest on:
the Class A-1 Notes............................. $________
the Class A-2 Notes............................. $________
the Class A-3 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............................. $________
the Class A-3 Notes............................. $________
C-1
<PAGE>
(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..................................... $_______
the Class A-3 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..................................... $_______
the Class A-3 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..................................... $_______
the Class A-3 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..................................... $_______
the Class A-3 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..................................... $_______
the Class A-3 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
Collection
Period.................................................. $_______
(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..................................... $______
the Class A-3 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..................................... $_______
C-2
<PAGE>
the Class A-2 Notes................................... $________
the Class A-3 Notes................................... $________
(d) The amount of aggregate Realized Losses for the second preceding
Collection Period..................................... $________
(e) The aggregate Purchase Amount for all Receivables that were
repurchased in the Collection Period.................. $________
2. Servicing Fee.
-------------
The aggregate amount of the Servicing Fee paid to the Servicer with
respect to the preceding Collection 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................................... $________
the Class A-2 Notes................................... $________
(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................................... $________
the Class A-2 Notes................................... $________
(c) The amount of the Noteholders' Principal 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................................... $________
the Class A-2 Notes................................... $________
(d) The amount of the Noteholders' Principal 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................................... $________
the Class A-2 Notes................................... $________
4. Transfer of Subsequent Receivables.
----------------------------------
(a) Aggregate amount on deposit in the Pre-Funding Account on such
Payment Date after giving effect to all withdrawals therefrom on
such Payment Date..................................... $________
C-3
<PAGE>
(b) Aggregate amount on deposit in the Capitalized Interest Account
on such distribution date after giving effect to all withdrawals
therefrom on such Payment Date......................... $________
(c) Aggregate amount on deposit in the Pre- Funding Account on the
final Subsequent Transfer Date after giving effect to all
withdrawals therefrom on such Payment Date............. $________
(d) the amount set forth in paragraph B.4(a) per $1,000 interest in:
the Class A-1 Notes.................................... $________
the Class A-2 Notes.................................... $________
the Class A-2 Notes.................................... $________
(e) the amount set forth in paragraph B.4(b) to be distributed to
Noteholders per $1,000 interest in:
the Class A-1 Notes.................................... $________
the Class A-2 Notes.................................... $________
the Class A-2 Notes.................................... $________
(f) the amount set forth in paragraph B.4(c) to be distributed to
Noteholders per $1,000 interest in:
the Class A-1 Notes.................................... $________
the Class A-2 Notes.................................... $________
the Class A-2 Notes.................................... $________
5. (a) The aggregate amount of collections by the Servicer during the
preceding Collection Period............................ $________
(b) The aggregate amount which was received by the Trust from the
Servicer............................................... $________
(c) The aggregate amount of reimbursements to the Security
Insurer................................................ $________
(d) The number of Receivables that are delinquent for over:
30 days................................................ $________
60 days................................................ $________
90 days................................................ $________
C-4
<PAGE>
EXHIBIT D
Form of Servicer's Certificate
[Omitted]
D-1
<PAGE>
EXHIBIT E
Form of Policy
[SEE EXHIBIT 99.1]
E-1
<PAGE>
EXHIBIT F
Form of Stamp
THIS CONTRACT/NOTE IS SUBJECT TO A SECURITY INTEREST GRANTED TO NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, AS TRUSTEE, FOR WHICH UCC-1 FINANCING
STATEMENTS HAVE BEEN FILED WITH THE SECRETARY OF STATE OF DELAWARE. AS THE LIEN
WILL BE RELEASED ONLY BY FILINGS IN SUCH OFFICES, PURCHASE DOCUMENTS MUST REFER
TO SUCH FILINGS TO DETERMINE WHETHER THE LIEN HAS BEEN RELEASED.
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1
CLASS A-1 6.415% Asset Backed Notes
CLASS A-2 6.685% Asset Backed Notes
CLASS A-3 6.835% Asset Backed Notes
________________________________
INDENTURE
Dated as of November 1, 1999
______________________________
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee, and Indenture Collateral Agent
A-1
<PAGE>
SCHEDULE A
Schedule of Receivables
A-1
<PAGE>
SCHEDULE B
Location of Receivables
B-1
<PAGE>
EXHIBIT 4.4
CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT, dated as of November 1, 1999 (as amended or otherwise
modified from time to time, this "Agreement"), among PF FUNDING II, LLC, as
Transferor, PEOPLEFIRST FINANCE, LLC, as Seller and Servicer, PEOPLEFIRST.COM
AUTO RECEIVABLES OWNER TRUST 1999-1, as Issuer, WILMINGTON TRUST COMPANY, as
Owner Trustee and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Indenture
Trustee and Custodian (the "Indenture Trustee" and the "Custodian").
A. Pursuant to the terms of the Sale and Servicing Agreement dated as of
November 1, 1999 among PeopleFirst.com Auto Receivables Owner Trust 1999-1, as
Issuer (the "Issuer"), PF Funding II, LLC, as Transferor, PeopleFirst Finance,
LLC, as Seller and Servicer, Prudential Securities Secured Financing
Corporation, as Depositor, and Norwest Bank Minnesota, National Association, as
Indenture Trustee, Backup Servicer and Custodian (the "Sale and Servicing
Agreement") and each Subsequent Transfer Agreement among the Issuer, the
Transferor, the Seller, the Servicer, the Depositor, the Indenture Trustee, the
Backup Servicer and the Custodian, the Seller will assign to the Transferor all
of its right, title and interest in the Initial Receivables and each Subsequent
Receivable, as applicable.
B. Pursuant to the terms of the Sale and Servicing Agreement and each
Subsequent Transfer Agreement (i) the Transferor will assign all of its right,
title and interest in the Initial Receivables and each Subsequent Receivable to
the Depositor and (ii) the Depositor will assign all of its right, title and
interest in the Initial Receivables and each Subsequent Receivable to the
Issuer.
C. Pursuant to the Indenture dated as of November 1, 1999 between the
Issuer and the Indenture Trustee, the Issuer will pledge to the Indenture
Trustee all of its right, title and interest in the Initial Receivables and each
Subsequent Receivable.
D. The Custodian is a financial institution regulated by the Office of
the Comptroller of the Currency; and
E. Pursuant to terms of the Sale and Servicing Agreement, the Servicer
intends to deliver to the Custodian certain documents specified in this
Agreement (collectively, the "Collateral"), and the Servicer desires the
Custodian take possession of the Collateral as the custodian for, and bailee of,
(i) the Indenture Trustee for the benefit of the Noteholders and the Insurer,
or, (ii) after all unpaid principal and interest on the Notes and all amounts
owing to the Insurer have been paid in full, the Owner Trustee for the benefit
of the Certificateholders, in accordance with the terms and conditions of this
Agreement in order to perfect the security interest of Indenture Trustee or the
Owner Trustee, as applicable; and
The parties, intending to be legally bound, hereby agree as follows:
1. Definitions. Terms not defined in this Agreement shall have the
-----------
respective meanings assigned to them in the Sale and Servicing Agreement or the
Indenture. The following terms shall have the following meanings when used in
this Agreement:
"Authorized Representatives" shall have the meaning set forth in Section
--------------------------
19.
"Certification" has the meaning set forth in Section 3.
-------------
"Collateral" has the meaning set forth in the Recitals hereto.
----------
<PAGE>
"Custodian's Receivable Files" means, with respect to a Financed Vehicle,
----------------------------
those documents listed in Section 2 of this Agreement that are delivered to the
Custodian and all documents subsequently delivered to the Custodian pursuant to
the last sentence of Section 2.
"Cut-Off Date" means the Initial Cutoff Date and any Subsequent Cutoff
------------
Date, as applicable.
"Deficiency" means a failure of a document to correspond to the information
----------
on the Schedule of Receivables or the absence of a required document from a
Custodian's Receivable File pursuant to Section 2.
"Insurance Policy" means with respect to a Contract and Financed Vehicle,
----------------
any insurance policy required to be maintained by the Obligor that covers
physical damage to and theft of the Financed Vehicle or any liability arising
out of the use of such Financed Vehicle.
"Sale and Servicing Agreement" has the meaning assigned to such term in the
----------------------------
Recitals hereto.
"Schedule of Receivables" means the schedule of Receivables to be delivered
-----------------------
to the Custodian on the date of delivery to the Custodian of the Custodian's
Receivable Files, in both hard copy and floppy disk, to be annexed hereto as
Exhibit 5 such schedule setting forth the following information with respect to
each Receivable:
(i) the loan number and name of the related Obligor;
(ii) the original principal amount;
(iii) the related Cutoff Date;
(iv) the principal amount outstanding as of the related Cutoff Date;
(v) the interest rate (APR);
(vi) the original term to maturity;
(vii) the remaining term to maturity as of the related Cutoff Date; and
(viii) the day of the month on which the scheduled monthly payment of
principal and interest are required to be made.
2. Delivery of Custodian's Receivable Files. The Servicer hereby
----------------------------------------
certifies that it shall deliver and release to the Custodian as custodian for,
and bailee of (i) the Indenture Trustee for the benefit of the Noteholders and
the Insurer, or, (ii) after all unpaid principal and interest on the Notes and
all amounts owing to the Insurer have been paid in full, the Owner Trustee for
the benefit of the Certificateholders, the following documents pertaining to
each of the Receivables identified in a Schedule of Receivables, a copy of which
Schedule of Receivables shall be provided to the Custodian, in a form acceptable
to the Custodian, on computer readable disk or via electronic transfer by the
Servicer:
(a) each executed cancelled check for the related Contract;
(b) a copy of the Note and Security Agreement for such Contract;
(c) the original certificate of title or, if not yet received,
evidence that an application therefor has been submitted with the appropriate
authority, a guaranty of title from a dealer or such other
2
<PAGE>
document (as used in the applicable jurisdiction) that the Servicer shall on
file in accordance with the Servicer's customary procedures, evidencing the
security interest of the originator;
(d) the originals of all assumption, consolidation, extension,
modification or waiver agreements, if any, relating to such Receivable; and
(e) any other documents that the Servicer shall keep on file, in
accordance with its customary procedures, or reasonably required by the Issuer,
from time to time to be kept on file, relating to a Receivable, the related
Obligor or the related Financed Vehicle.
The Servicer hereby certifies that it shall deliver to the Custodian an
electronic copy of the credit application by the related obligor via electronic
transfer.
The Custodian shall be entitled to rely upon each Schedule of Receivables
provided by the Servicer as the conclusive schedule in its review, pursuant to
Sections 3 and 17(b) hereof, of the Receivable Files delivered to it by the
Servicer. From time to time, the Servicer shall forward to the Custodian for
inclusion in the appropriate Custodian's Receivable File any additional original
loan documents evidencing any assumption, consolidation, extension, modification
or waiver of a Receivable approved by the Servicer.
3. Certification. Within two (2) Business Days after the delivery to the
-------------
Custodian of the Custodian's Receivable Files (or within such shorter period of
time as the Custodian shall agree), the Custodian shall deliver to the Indenture
Trustee, a certification (the "Certification"), in substantially the form
-------------
annexed as Exhibit 1, to the effect that (except as described on the attached
exception report) the Custodian has received a Custodian's Receivable File for
each Receivable listed on the related Schedule of Receivables and it has
received (i) all documents required to be delivered to it pursuant to Section 2
of this Agreement in its possession, (ii) such documents have been reviewed by
it and have not been mutilated, damaged, torn or otherwise physically altered
and relate to such Receivable identified on the Schedule of Receivables, (iii)
based on its examination and only as to the foregoing documents, the information
set forth in items (i), (ii), (v) and (vi) of the definition of Schedule of
Receivables respecting such Receivable accurately reflects the information on
the Schedule of Receivables and (iv) based on its examination, the Contract is
an executed original counterpart. The Custodian shall include in the
Certification any Deficiencies revealed in such review attached as an exception
report to the Certification. The Custodian shall not be required to review the
content (except to the extent necessary to certify to its presence or absence)
of any such document in order to deliver the Certification. The Custodian shall
be under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face.
4. Deficiencies in Custodian's Receivable Files. (a) If the Certification
--------------------------------------------
discloses that any of the documents enumerated in Section 2 are missing or
discloses any Deficiencies in the documents included in any Custodian's
Receivable Files delivered to the Custodian, then the Indenture Trustee shall
promptly notify the Custodian, with a copy to the Servicer, in the form of
Exhibit 4, that (1) the Servicer shall deliver the missing documents noted in
the Certification to the Custodian within ten (10) calendar days of the date of
such notice, (2) the Indenture Trustee has waived the Deficiencies noted in the
Certification, (3) the Servicer shall cure the Deficiencies within ten (10)
calendar days of the date of such notice, or (4) the Servicer shall repurchase
such Receivable in accordance with the terms of the Sale and Servicing
Agreement.
(b) If the Indenture Trustee's notice pursuant to Section 4(a)
above states that the Servicer shall take either of the actions specified in
clauses (1) or (3) of subsection (a) above and the
3
<PAGE>
Servicer fails to take such actions within ten (10) calendar days of the date of
such notice, then the Custodian shall notify the Indenture Trustee and the
Servicer of such failure and release or retain the deficient Custodian's
Receivable File in accordance with the written instructions of the Indenture
Trustee in the form of Exhibit 4.
(c) If the Indenture Trustee's notice pursuant to Section 4(a)
above states that the Servicer shall take the actions specified in clause (4) of
subsection (a) above, then the Custodian shall return the deficient Custodian's
Receivable File to the Servicer upon repurchase of the related Receivable.
(d) Within ten (10) calendar days after receipt by the Custodian
of any additional documents pursuant to Section 4(a), the Custodian shall review
such documents and deliver to the Indenture Trustee and the Servicer an
exception report listing any Deficiencies with respect to such documents. If the
notification shall indicate any remaining Deficiencies with respect to such
additional documents, the provisions of this Section 4 shall again be followed.
Within two (2) Business Days of the last Business Day of each calendar month,
the Custodian shall deliver to the Indenture Trustee and the Servicer a revised
exception report with respect to all of the Custodian's Receivable Files. If the
revised exception report shall indicate any remaining Deficiencies in any of the
Custodian's Receivable Files, the provisions of this Section 4 shall again be
followed.
5. Obligations of the Custodian. (a) The Custodian shall segregate and
----------------------------
maintain continuous custody of all items constituting the Custodian's Receivable
Files in secure, fire-resistant facilities in accordance with its customary
standards for such custody. The Custodian makes no representations as to and
shall not be responsible to verify (i) the validity, legality, enforceability,
sufficiency, due authorization or genuineness of any document in each
Custodian's Receivable File or of any of the Receivables or (ii) the
collectibility, insurability, effectiveness or suitability of any Receivable.
(b) With respect to the documents constituting each Custodian's
Receivable File that are delivered to the Custodian, the Custodian shall (i) act
exclusively as the custodian for, and the bailee of, the Indenture Trustee on
behalf of the Noteholders and the Insurer and the Owner Trustee on behalf of the
Certificateholders, (ii) hold all documents constituting such Custodian's
Receivable File received by it for the exclusive use and benefit of the
Indenture Trustee, and (iii) make disposition thereof only in accordance with
the terms of this Agreement or with written instructions furnished by the
Indenture Trustee.
(c) In the event that (i) the Indenture Trustee or the Custodian
shall be served by a third party with any type of levy, attachment, writ or
court order with respect to any Custodian's Receivable File or a document
included within a Custodian's Receivable File or (ii) a third party shall
institute any court proceeding by which any Custodian's Receivable File or a
document included within a Custodian's Receivable File shall be required to be
delivered otherwise than in accordance with the provisions of this Agreement,
the party or parties receiving such service shall promptly deliver or cause to
be delivered to the other parties to this Agreement copies of all court papers,
orders, documents and other materials concerning such proceedings. The Custodian
shall continue to hold and maintain all the Custodian's Receivable Files that
are the subject of such proceedings pending a final order of a court of
competent jurisdiction permitting or directing disposition thereof. Upon final
determination of such court, the Custodian shall dispose of such Custodian's
Receivable File or a document included within such Custodian's Receivable File
as directed by such determination or, if no such determination is made, in
accordance with the provisions of this Agreement. Expenses of the Custodian
incurred as a result of such proceedings shall be borne by the Issuer.
6. Release of Custodian's Receivable File. From time to time and as
--------------------------------------
appropriate for the foreclosure or servicing of any of the Receivables, the
Custodian is hereby authorized, upon receipt of a
4
<PAGE>
written request of the Servicer acknowledged by the Indenture Trustee in
substantially the form annexed as Exhibit 2 (a "Request for Release and Receipt
-------------------------------
of Documents"), to release to the Servicer by the close of business on the
- ------------
second Business Day following such request, the related Custodian's Receivable
File or the documents from a Custodian's Receivable File set forth in such
request and receipt. All documents so released to the Servicer shall be held by
the Servicer in trust for the benefit of the Indenture Trustee in accordance
with the Sale and Servicing Agreement. The Servicer shall return to the
Custodian each and every document previously requested from the Custodian's
Receivable File when the Servicer's need therefore in connection with such
foreclosure or servicing no longer exists, unless the Receivable shall be
liquidated, in which case, upon receipt of a certification to this effect from
the Servicer to the Custodian acknowledged by the Indenture Trustee in
substantially the form annexed as Exhibit 2, the Servicer's prior receipt shall
be returned by the Custodian to the Servicer. The Indenture Trustee agrees to
acknowledge, within one Business Day of receipt, any Request for Release and
Receipt of Documents properly completed and submitted by the Servicer, and not
unreasonably to withhold any such acknowledgment.
7. Release Upon Redelivery or Payment. Upon the redelivery of any
----------------------------------
Receivable pursuant to the Sale and Servicing Agreement or the payment in full
of any Receivable, which shall be evidenced by the delivery to the Custodian of
a Request for Release and Receipt of Documents executed by the Servicer and
acknowledged by the Indenture Trustee, the Custodian shall promptly release the
Custodian's Receivable File to the Servicer.
8. Fees and Expenses of the Custodian. It is understood that the Custodian
----------------------------------
will charge the Servicer such fees for its services, and shall be entitled to
reimbursement from the Issuer for expenses, under this Agreement as are set
forth on the separate fee letter submitted to the Issuer by the Custodian.
9. Examination of Custodian's Receivable Files. Upon reasonable prior
-------------------------------------------
written notice to the Custodian (but no less than one Business Day), the
Indenture Trustee and the Insurer and their respective authorized
representatives, will be permitted during the Custodian's normal business hours
to examine the Custodian's Receivable Files, documents, records and other papers
in the possession, or under the control, of the Custodian relating to any or all
of the Receivables.
10. Transfer of Custodian's Receivable Files Upon Termination. If the
---------------------------------------------------------
Custodian is furnished with written notice and satisfactory evidence from the
Indenture Trustee that the Trust has been terminated, the Custodian shall, upon
written request of the Indenture Trustee release to such Persons as the
Indenture Trustee shall designate such Custodian's Receivable Files relating to
such Receivables as the Indenture Trustee shall request and the Custodian shall
endorse the Receivable contracts only as, and if, the Indenture Trustee shall
request in writing.
11. Insurance of the Custodian. The Custodian shall, at its own expense,
--------------------------
maintain at all times during the term of this Agreement and keep in full force
and effect (a) fidelity insurance, (b) theft of documents insurance, and (c)
forgery insurance. All such insurance shall be in amounts, with standard
coverage and subject to deductibles, as are customary for similar insurance
typically maintained by banks that act as custodian in similar transactions.
12. Periodic Statements. The Custodian by electronic transfer shall provide
-------------------
monthly to the Indenture Trustee a list of all the Receivables for which the
Custodian holds a Custodian's Receivable File pursuant to this Agreement. Such
list shall include the loan number and name of the related Obligor and may be in
the form of a copy of the Schedule of Receivables with manual deletions to
specifically denote any Receivables redelivered since the date of this
Agreement.
5
<PAGE>
13. Copies of Documents. Within ten days after the written request and at
-------------------
the expense of the Servicer, the Custodian shall provide the Indenture Trustee
with copies of the documents in the Custodian's Receivable Files.
14. Resignation by and Removal of the Custodian: Successor Custodian. (a)
----------------------------------------------------------------
The Custodian may at any time resign and terminate its obligations under this
Agreement upon at least thirty (30) days prior written notice to the Servicer,
Insurer and Indenture Trustee. Promptly after receipt of notice of the
Custodian's resignation, the Controlling Party shall appoint, by written
instrument, a successor custodian, subject to prior written approval by the
Insurer. If the Controlling Party fails to appoint a successor within 30 days,
the Controlling Party shall appoint a successor custodian. If both the Servicer
and the Controlling Party fail to appoint a successor custodian pursuant to the
terms hereof, the Custodian may petition a court of competent jurisdiction to
appoint a successor custodian. One original counterpart of such instrument of
appointment shall be delivered to the Servicer, Insurer and Indenture Trustee
and the successor custodian.
(b) The Controlling Party, with or without cause, upon at least
thirty (30) days' written notice to the Custodian, may remove and discharge the
Custodian (or any successor custodian thereafter appointed) from the performance
of its obligations under this Agreement. A copy of such notice shall be
delivered to each of (i) the Servicer, (ii) if the Insurer is the Controlling
Party, the Indenture Trustee and the Owner Trustee or (iii) if the Indenture
Trustee is the Controlling Party, the Owner Trustee. Promptly after the giving
of notice of removal of the Custodian, the Controlling Party shall appoint, by
written instrument, a successor custodian reasonably acceptable to the Servicer.
One original counterpart of such instrument of appointment shall be delivered to
each of the Servicer, and to each of the Custodian and the successor custodian.
(c) No resignation or removal of the Custodian and no
appointment of a successor custodian under this Section 15 shall become
effective until the acceptance of a successor custodian hereunder.
(d) In the event of any such resignation or removal, the
Custodian shall promptly transfer to the successor custodian, as directed in
writing by the Controlling Party, all of the Custodian's Receivable Files being
administered pursuant to this Agreement.
15. Indemnity. The Servicer agrees to indemnify and hold harmless the
---------
Custodian against any and all claims, losses, liabilities, damages or expenses
(including, but not limited to, attorneys' fees, court costs and costs of
investigation) (Collectively, "Losses") of any kind or nature whatsoever arising
out of or in connection with this Agreement that may be imposed upon, incurred
by or asserted against the Custodian; provided, however, that this Section shall
not relieve the Custodian from liability for its willful misfeasance, bad faith
or gross negligence. The Custodian hereby acknowledges that if it, in bad faith,
fails to follow the express terms of this Agreement which results in a loss or
liability to the Issuer, that shall be deemed to constitute gross negligence on
the part of the Custodian hereunder except insofar as any such failure may be
excused (a) by the provisions of Section 17 hereof or (b) by the need for the
Custodian to follow any contrary orders or, instructions received by it from any
court having jurisdiction, Federal or State banking authorities or other
government or regulatory bodies having jurisdiction over the Custodian. The
provisions of this Section 16 shall survive the resignation or removal of the
Custodian and the termination of this Agreement.
16. Limitation of Liability. (a) The Custodian shall not be liable to the
-----------------------
Issuer, Servicer, Insurer, Indenture Trustee, Owner Trustee, Noteholders and
Certificateholders or any other Person with respect to any action taken or not
taken by it in good faith in the performance of its obligations under this
6
<PAGE>
Agreement. The obligations of the Custodian shall be determined solely by the
express provisions of this Agreement. No representation, warranty, covenant,
agreement, obligation or duty of the Custodian shall be implied with respect to
this Agreement or the Custodian's services hereunder.
(b) In the Custodian's review of documents pursuant to Section 3 of
this Agreement, the Custodian shall be under no duty or obligation to inspect,
review or examine the Custodian's Receivable Files to determine that the
contents thereof are genuine, enforceable or appropriate for the represented
purpose or that they have been actually recorded or that they are other than
what they purport to be on their face.
(c) The Custodian may rely, and shall be protected in acting or
refraining to act, upon and need not verify the accuracy of, any (i) oral
instructions from any Person the Custodian believes to be authorized to give
such instructions, who shall only be, with respect to the Servicer, Owner
Trustee, Indenture Trustee and Insurer, a Person whom the Custodian believes in
good faith to be Authorized Representatives, and (ii) any written instruction,
notice, order, request, direction, certificate, opinion or other instrument or
document believed by the Custodian to be genuine and to have been signed and
presented by the proper party or parties, which, with respect to the Controlling
Party, Servicer and Indenture Trustee, shall mean signature and presentation by
Authorized Representatives whether such presentation is by personal delivery,
express delivery or facsimile.
(d) The Custodian may consult with counsel nationally recognized in
the area of commercial transactions and with regard to legal questions arising
out of or in connection with this Agreement, and the advice or opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken, omitted or suffered by the Custodian in reasonable reliance,
in good faith, and in accordance therewith.
(e) No provision of this Agreement shall require the Custodian to
expend or risk its own funds or otherwise incur financial liability in the
performance of its duties under this Agreement if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity is not
reasonably assured to it.
(f) The Custodian shall not be responsible or liable for, and makes no
representation or warranty with respect to, the validity, adequacy or perfection
of any lien upon, or security interest in, any Receivables or Custodian's
Receivable Files.
17. Term of Agreement. This Agreement shall be terminated upon (a) the
-----------------
final payment or other liquidation (or advance with respect thereto) of the last
Receivable in the Custodian's Receivable Files, (b) the disposition of all
property acquired upon foreclosure of any Receivable in the Custodian's
Receivable Files, and (c) the termination of the Indenture.
If any of the circumstances described in clause (a), (b) or clause (c) of
this Section 17 shall occur, promptly after written notice from the Servicer to
such effect, all documents remaining in the Custodian's Receivable Files shall
be delivered to, or at the direction of, the Servicer.
18. Authorized Representatives. The names of the officers of the Servicer,
--------------------------
Indenture Trustee, Owner Trustee and the Insurer who are authorized to give and
receive notices, requests and instructions and to deliver certificates and
documents in connection with this Agreement on behalf of such parties
("Authorized Representative") are set forth on Exhibit 3, along with the
- ---------------------------
specimen signature of each such officer. From time to time, the Owner Trustee,
Indenture Trustee, Insurer and Servicer may, by delivering to the Custodian a
revised exhibit, change the information previously given, but the Custodian
shall be entitled to rely conclusively on the last exhibit until receipt of a
superseding exhibit.
7
<PAGE>
19. Notices. All demands, notices and communications relating to this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
mailed, by registered or certified mail, return receipt requested, or by
overnight courier, or, if by other means, when received by the other party or
parties at the address shown below, or such other address as may hereafter be
furnished to the other party or parties by like notice. Any such demand, notice
or communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee (as evidenced, in the
case of registered or certified mail, by the date noted on the return receipt).
If to the Servicer:
PeopleFirst Finance, LLC
401 West A Street, Suite 1000
San Diego, California 92101
Attention: W. Randolph Ellspermann
Phone Number: 619-544-0815
Fax Number: 619-232-4565
If to the Custodian:
Norwest Bank Minnesota, National Association
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479, MAC N9311-161
Attention: Corporate Trust Services - Asset Backed Administration
Phone Number: (612) 667-8058
Fax Number: (612) 667-3464
If to the Insurer:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Transaction Oversight Department
Re: PeopleFirst
Phone Number: (212) 826-0100
Fax Number: (212) 339-3518; (212) 339-3529
If to the Indenture Trustee:
Norwest National Bank, National Association
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479, MAC N9311-161
Attention: Corporate Trust Services - Asset Backed Administration
Phone Number: (612) 667-8058
Fax Number: (612) 667-3464
If to the Owner Trustee:
Wilmington Trust Company
1100 North Market Street
Wilmington, DE 19890
8
<PAGE>
Attention: Corporation Trust Administration
Phone Number: (302) 472-4700
Fax Number: (302) 651-1576
20. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York without regard to conflict of
laws applied in the State of New York.
21. Assignment. No party to this Agreement may assign its rights or
----------
delegate its obligations under this Agreement without the express written
consent of the other parties, except as otherwise set forth in this Agreement.
22. Counterparts. For the purpose of facilitating the execution of this
------------
Agreement and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed to be an original
and together shall constitute and be one and the same instrument.
23. Headings. The Section headings are not part of this Agreement and
--------
shall not be used in its interpretation.
24. Use of Words. The definitions set forth in this Agreement include both
------------
the singular and plural.
25. Transmission of Custodian's Receivable Files. Written instructions as
---------------------------------------------
to the method of shipment and shipper(s) the Custodian is directed to utilize in
connection with transmission of the Custodian's Receivable Files and loan
documents in the performance of the Custodian's duties hereunder shall be
delivered by the Servicer to the Custodian prior to any shipment of any
Custodian's Receivable Files and loan documents hereunder. The Servicer will
arrange for the provision of such services at its sole cost and expense (or, at
the Custodian's option, reimburse the Custodian for all costs and expenses
incurred by the Custodian consistent with such instructions) and will maintain
such insurance against loss or damage to Custodian's Receivable Files and loan
documents as the Servicer seems appropriate. Without limiting the generality of
the provisions of Section 16 above, it is expressly agreed that in no event
shall the Custodian have any liability for any losses or damages to any Person,
including, without limitation, the Servicer or the Issuer or Insurer, arising
out of actions of the Custodian consistent with instructions of the Servicer,
Issuer or Insurer.
26. Limitation of Liability.
-----------------------
It is expressly understood and agreed by the parties hereto that (a) this
Custodial Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of the PeopleFirst.com
Auto Receivables Owner Trust 1999-1, in the exercises of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company, but is made and intended for the purpose of binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties hereto and by any Person claiming by,
through or under the parties hereto and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Custodial Agreement or any other related documents.
[Signature Page Follows]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
PEOPLEFIRST FINANCE, LLC,
as Servicer
By: ____________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Custodian
and Indenture Trustee
By: ____________________________
Name: ________________________
Title: _______________________
PEOPLEFIRST.COM AUTO RECEIVABLES
OWNER TRUST 1999-1, by WILMINGTON
TRUST COMPANY, not in its individual
capacity, but solely as Owner Trustee
By: ____________________________
Name: ________________________
Title: _______________________
10
<PAGE>
EXHIBIT 1
---------
CERTIFICATION
-------------
[Indenture Trustee]
Re: Custodial Agreement (the "Custodial Agreement") dated as of
November 1, 1999, among PeopleFirst Finance, LLC, as Servicer,
PeopleFirst.com Auto Receivables Owner Trust 1999-1 and
Norwest Bank Minnesota, National Association ("Indenture Trustee"
and "Custodian")
-----------------------------------------------------------------
Ladies and Gentlemen:
In accordance with the provisions of Section 3 of the above-referenced
Custodial Agreement, the undersigned, as the Custodian, hereby certifies that as
to each Receivable listed on the Schedule of Receivables (other than any
Receivable paid in full or any Receivable listed on the exception report
attached hereto) it has reviewed the Custodian's Receivable Files and has
determined that (i) all documents required to be delivered to it pursuant to
Section 2 of the Custodial Agreement are in its possession; (ii) such documents
have been reviewed by it and have not been mutilated, damaged, torn or otherwise
physically altered and relate to such Receivable identified on the Schedule of
Receivables; (iii) based on its examination and only as to the foregoing
documents, the information set forth in items (i) (ii) (v) and (vi) of the
definition of Schedule of Receivables respecting such Receivable accurately
reflects the information on the Schedule of Receivables; and (iv) based on its
examination, the Contract is an executed original counterpart. The Custodian
makes no representations as to and shall not be responsible to verify (i) the
validity, legality, enforceability, sufficiency, due authorization or
genuineness of any of the documents contained in each Custodian's Receivable
File or of any of the Receivables or (ii) the collectability, insurability,
effectiveness or suitability of any such Receivable.
Capitalized words used herein shall have the respective meanings assigned
to them in the above-captioned Custodial Agreement.
Norwest Bank Minnesota, National Association, as
Custodian
By:___________________________________
Name:______________________________
Title:_____________________________
<PAGE>
EXCEPTION REPORT
----------------
<PAGE>
EXHIBIT 2
---------
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
--------------------------------------------
Norwest Bank Minnesota,
National Association
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Corporate Trust Services -
Asset Backed Administration
Re: Custodial Agreement (the "Custodial Agreement") dated as of
November 1, 1999, among PeopleFirst Finance, LLC, as Servicer,
PeopleFirst.com Auto Receivables Owner Trust 1999-1 and
Norwest Bank Minnesota, National Association ("Indenture Trustee
and "Custodian")
-----------------------------------------------------------------
In connection with the administration of the Receivables held by you as the
Custodian, we request the release of the (Custodian's Receivable File/specify
documents) for the Receivable described below, for the reason indicated.
Obligor's Name, Address & Zip Code:
- ----------------------------------
Receivable Number:
- ------------------
Reason for Requesting Documents (check one)
- -------------------------------
1. Receivable Paid in Full
2. Receivable Redelivered Pursuant to Section 7 of the Custodial
Agreement
3. Receivable Liquidated by __________
4. Receivable in Foreclosure
5. Other (explain)
If item 1, 2 or 3 above is checked, and if all or part of the Custodian's
Receivable File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified Receivable.
<PAGE>
If Item 4 or 6 above is checked, upon our return of all of the above
document to you as the Custodian, please acknowledge your receipt by signing in
the space indicated below, and returning this form.
PEOPLEFIRST FINANCE, LLC, as Servicer
By:_________________________________
Name:____________________________
Title:___________________________
Date:____________________________
ACKNOWLEDGED:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Indenture Trustee
By:_________________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
DOCUMENTS RETURNED TO THE CUSTODIAN
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Custodian
By:_________________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
2
<PAGE>
EXHIBIT 3
---------
AUTHORIZED REPRESENTATIVES
--------------------------
a) of PeopleFirst Finance, LLC
Name Specimen Signature
- ---- ------------------
1.
2.
3.
4.
5.
b) of Wilmington Trust Company
Name Specimen Signature
- ---- ------------------
1.
2.
3.
4.
c) of Norwest Bank Minnesota, National Association
Name Specimen Signature
- ---- ------------------
1.
2.
3.
4.
<PAGE>
d) of Financial Security Assurance Inc.
Name Specimen Signature
- ---- ------------------
1.
2.
3.
4.
4
<PAGE>
EXHIBIT 4
---------
NOTIFICATION IN EVENT OF DEFICIENCY
IN CUSTODIAN'S RECEIVABLE FILES
-------------------------------
TO: Norwest Bank Minnesota,
National Association
Sixth Street & Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Corporate Trust Services -
Asset Backed Administration
Re: Custodial Agreement (the "Custodial Agreement") dated as of
November 1, 1999, among PeopleFirst Finance, LLC, as Servicer,
PeopleFirst.com Auto Receivables Owner Trust 1999-1 and
Norwest Bank Minnesota, National Association ("Indenture Trustee"
and "Custodian")
-----------------------------------------------------------------
The undersigned, in accordance with Section 4 of the Custodial Agreement,
hereby notifies the Custodian that:
[_] The Servicer shall deliver the following documents to the Custodian within
ten (10) calendar days from the date hereof.
(list of documents)
[_] The Indenture Trustee has waived the Deficiencies noted in the
Certification.
[_] The Servicer shall cure the Deficiencies within ten (10) calendar days from
the date hereof.
[_] The Servicer shall repurchase the deficient Receivable.
[_] The Custodian shall release the deficient Custodian's Receivable File to
the Servicer.
[_] The Custodian shall retain the deficient Custodian's Receivable File.
<PAGE>
Capitalized words used herein shall have the respective meanings assigned
to them in the above-captioned Custodial Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By:__________________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
6
<PAGE>
EXHIBIT 5
---------
SCHEDULE OF RECEIVABLES
-----------------------
<PAGE>
Exhibit 4.5
FINANCIAL GUARANTY
INSURANCE POLICY
<TABLE>
<CAPTION>
<S> <C>
OBLIGOR: PeopleFirst.com Auto Receivables Owner Trust 1999-1 Policy No.: 50886-N
OBLIGATIONS: $116,000,000 Asset Backed Notes, Classes A-1, A-2 and A-3, Date of Issuance:
as described in Endorsement No. 1 hereto November 30, 1999
</TABLE>
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
each Holder, subject only to the terms of this Policy (which includes each
endorsement hereto), the full and complete payment by the Obligor of Scheduled
Payments of principal of, and interest on, the Obligations.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees:
(a) payment of the amount of any distribution of principal of, or
interest on, the Obligations made during the Term Of This Policy to such
Holder that is subsequently avoided in whole or in part as a preference
payment under applicable law (such payment to be made by Financial Security
in accordance with Endorsement No. 1 hereto).
(b) payment of any amount required to be paid under this Policy by
Financial Security following Financial Security's receipt of notice as
described in Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive payments under the Obligations to the extent of any payment by Financial
Security hereunder.
Except to the extent expressly modified by an endorsement hereto, the
following terms shall have the meanings specified for all purposes of this
Policy. "Holder" means the registered owner of any Obligation as indicated on
the registration books maintained by or on behalf of the Obligor for such
purpose or, if the Obligation is in bearer form, the holder of the Obligation.
"Scheduled Payments" means payments which are scheduled to be made during the
Term Of This Policy in accordance with the original terms of the Obligations
when issued and without regard to any amendment or modification of such
Obligations thereafter; payments which become due on an accelerated basis as a
result of (a) a default by the Obligor, (b) an election by the Obligor to pay
principal on an accelerated basis or (c) any other cause, shall not constitute
"Scheduled Payments" unless Financial Security shall elect, in its sole
discretion, to pay such principal due upon such acceleration together with any
accrued interest to the date of acceleration. "Term Of This Policy" shall have
the meaning set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto, or by the merger,
consolidation or dissolution of the Obligor. Except to the extent expressly
modified by an endorsement hereto, the premiums paid in respect of this Policy
are nonrefundable for any reason whatsoever, including payment, or provision
being made for payment, of the Obligations prior to maturity. This Policy may
not be canceled or revoked during the Term Of This Policy. THIS POLICY IS NOT
COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76
OF THE NEW YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
Policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By_______________________________
Authorized Officer
A subsidiary of Financial Security Assurance Holdings Ltd.
350 Park Avenue, New York, N.Y. 10022-6022 (212) 826-0100
Form 100NY (5/89)
<PAGE>
ENDORSEMENT NO. 1 TO FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY 350 Park Avenue
ASSURANCE INC. New York, New York 10022
OBLIGOR: PEOPLEFIRST.COM AUTO RECEIVABLES OWNER TRUST 1999-1
OBLIGATIONS: $56,000,000 6.415% Asset Backed Notes, Class A-1
$42,000,000 6.685% Asset Backed Notes, Class A-2
$18,000,000 6.835% Asset Backed Notes, Class A-3
Policy No.: 50886-N
Date of Issuance: November 30, 1999
1. Definitions. For all purposes of this Policy, the terms specified
below shall have the meanings or constructions provided below. Capitalized terms
used herein and not otherwise defined herein shall have the meanings provided in
the Indenture unless the context shall otherwise require.
"Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in the City of San Diego, California,
New York, New York, Minneapolis, Minnesota or Wilmington, Delaware or any other
location of the Servicer, any successor Servicer, successor Owner Trustee or
successor Indenture Trustee are authorized or obligated by law, executive order
or government decree to be closed.
"Class A Notes" shall mean the $56,000,000 6.415% Asset Backed Notes,
Class A-1, the $42,000,000 6.685% Asset Backed Notes, Class A-2 and the
$18,000,000 6.835% Asset Backed Notes, Class A-3.
"Class A Noteholder" shall mean the Holder of a Class A-1 Note, Class
A-2 Note or Class A-3 Note; provided, however Class A Noteholder shall not
include the Obligor or any affiliates or successors thereof in the event the
Obligor, or any such affiliate or successor, is a registered or beneficial owner
of the Obligation.
"Financial Security" means Financial Security Assurance Inc., a New
York stock insurance company.
"Holder" shall have the meaning set forth in the Indenture.
"Indenture" means the Indenture, dated as of November 1, 1999, between
PeopleFirst.com Auto Receivables Owner Trust 1999-1, a Delaware business trust,
and Norwest Bank Minnesota, National Association as Indenture Trustee, as
amended from time to time in accordance with its terms.
<PAGE>
Policy No.: 50886-N Date of Issuance: November 30, 1999
"Indenture Trustee" means Norwest Bank Minnesota, National
Association, a national banking association, in its capacity as Indenture
Trustee under the Indenture and any successor in such capacity.
"Noteholders' Interest Carryover Shortfall" shall have the meaning set
forth in the Sale and Servicing Agreement.
"Noteholders Interest Distributable Amount" shall have the meaning set
forth in the Sale and Servicing Agreement.
"Noteholders' Principal Distributable Amount" shall have the meaning
set forth in the Sale and Servicing Agreement.
"Policy" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
"Receipt" and "Received" mean actual delivery to Financial Security
and to its Fiscal Agent (as defined below), if any, prior to 12:00 noon, New
York City time, on a Business Day; delivery either on a day that is not a
Business Day, or after 12:00 noon, New York City time, shall be deemed to be
"Receipt" on the next succeeding Business Day. If any notice or certificate
given hereunder by the Indenture Trustee is not in proper form or is not
properly completed, executed or delivered, it shall be deemed not to have been
Received, and Financial Security or its Fiscal Agent shall promptly so advise
the Indenture Trustee and the Indenture Trustee may submit an amended notice.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of November 1, 1999, among the Obligor, as Issuer, Prudential
Securities Secured Financing Corporation, as Depositor, PeopleFirst Finance,
LLC, in its individual capacity and as Servicer, and Norwest Bank Minnesota,
National Association as Indenture Trustee, Backup Servicer and Custodian, as
amended from time to time in accordance with its terms.
"Scheduled Payments" means, with respect to each Payment Date, the
distribution to be made to the Class A Noteholders in an aggregate amount equal
to the Noteholders' Interest Distributable Amount and the Noteholders' Principal
Distributable Amount due and payable on such Payment Date, in each case in
accordance with the original terms of the Class A Notes when issued and without
regard to any amendment or modification of the Class A Notes, the Indenture or
the Sale and Servicing Agreement, except amendments or modifications to which
Financial Security has given its prior written consent; provided, however, that
Scheduled Payments shall not include (x) any portion of the Noteholders'
Interest Distributable Amount due to Class A Noteholders because the appropriate
notice and certificate for payment in proper form was not timely Received by
Financial Security or (y) any portion of the Noteholders' Interest Distributable
Amount due to Class A Noteholders representing interest on any Noteholders'
Interest Carryover Shortfall or (z) the amount, if any, remaining of the Pre-
Funded Amount on the Class A Mandatory Redemption Amount, unless, in each case,
Financial Security elects, in its sole discretion, to pay such amount in whole
or in part.
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<PAGE>
Policy No.: 50886-N Date of Issuance: November 30, 1999
Scheduled Payments do not include payments (including, without limitation, the
amounts set forth in clause (z) above) that become due on an accelerated basis
as a result of (a) a default by the Obligor, (b) an election by the Obligor to
pay principal on an accelerated basis, (c) the occurrence of an Event of Default
under the Indenture or (d) any other cause, unless, in each case, Financial
Security elects, in its sole discretion, to pay in whole or in part such
principal due upon acceleration, together with any accrued interest to the date
of acceleration. Scheduled Payments shall not include any amounts due in respect
of the Class A Notes attributable to any increase in interest rate, penalty or
other sum payable by the Obligor by reason of any default or event of default in
respect of the Obligations, or by reason of any deterioration of the
creditworthiness of the Obligor nor shall Scheduled Payments include, nor shall
coverage be provided under the Policy in respect of, any taxes, withholding or
other charge imposed by any governmental authority due in connection with the
payment of any Scheduled Payment to a Class A Noteholder.
"Term Of This Policy" means the period from and including the Date of
Issuance to and including the latest of the date on which (i) the outstanding
principal amount of Class A Notes has been reduced to zero and all distributions
of the Noteholders' Interest Distributable Amount have been paid on the Class A
Notes, (ii) any period during which any payment on the Class A Notes could have
been avoided in whole or in part as a preference payment under applicable
bankruptcy, insolvency, receivership or similar law has expired, and (iii) if
any proceedings requisite to avoidance as a preference payment have been
commenced prior to the occurrence of (i) and (ii), a final and nonappealable
order in resolution of each such proceeding has been entered.
2. Notices and Conditions to Payment in Respect of Scheduled
Payments. Following Receipt by Financial Security of a notice and certificate
from the Indenture Trustee in the form attached as Exhibit A to this
Endorsement, Financial Security will pay any amount payable hereunder in respect
of Scheduled Payments on the Obligations out of the funds of Financial Security
on the later to occur of (a) 12:00 noon, New York City time, on the third
Business Day following such Receipt; and (b) 12:00 noon, New York City time, on
the Business Day preceding the applicable Payment Date to which such claim
relates. Payments due hereunder in respect of Scheduled Payments will be
disbursed by wire transfer of immediately available funds to the Policy Payments
Account established pursuant to the Sale and Servicing Agreement or, if no such
Policy Payments Account has been established, to the Indenture Trustee.
Financial Security shall be entitled to pay any amount hereunder in
respect of Scheduled Payments on the Obligations, including any amount due on
the Obligations on an accelerated basis, whether or not any notice and
certificate shall have been Received by Financial Security as provided above;
provided, however, that by acceptance of this Policy the Indenture Trustee
agrees to provide upon request by Financial Security to the Indenture Trustee a
notice and certificate in respect of any such payments made by Financial
Security. Financial Security shall be entitled to pay hereunder any amount due
on the Obligations on an accelerated basis at any time or from time to time, in
whole or in part, prior to the scheduled date of payment thereof; Scheduled
Payments insured hereunder shall not include interest, in respect of principal
paid hereunder on an accelerated basis, accruing from and after the date of such
payment of principal.
3
<PAGE>
Policy No.: 50886-N Date of Issuance: November 30, 1999
Financial Security's obligations hereunder in respect of Scheduled Payments
shall be discharged to the extent funds are disbursed by Financial Security as
provided herein whether or not such funds are properly applied by the Indenture
Trustee.
3. Notices and Conditions to Payment in Respect of Scheduled
Payments Avoided as Preference Payments. If any Scheduled Payment is avoided as
a preference payment under applicable bankruptcy, insolvency, receivership or
similar law, Financial Security will pay such amount out of the funds of
Financial Security on the later of (a) the date when due to be paid pursuant to
the Order (as defined below) or (b) the first to occur of (i) the fourth
Business Day following Receipt by Financial Security from the Indenture Trustee
of (A) a certified copy of the order (the "Order") of the court or other
governmental body that exercised jurisdiction to the effect that the Class A
Noteholder is required to return the amount of any Scheduled Payment distributed
with respect to the Class A Notes during the Term Of This Policy because such
distributions were avoidable as preference payments under applicable bankruptcy
law, (B) a certificate of the Class A Noteholder that the Order has been entered
and is not subject to any stay and (C) an assignment duly executed and delivered
by the Class A Noteholder, in such form as is reasonably required by Financial
Security and provided to the Class A Noteholder by Financial Security,
irrevocably assigning to Financial Security all rights and claims of the Class A
Noteholder relating to or arising under the Class A Notes against the debtor
that made such preference payment or otherwise with respect to such preference
payment, or (ii) the date of Receipt by Financial Security from the Indenture
Trustee of the items referred to in clauses (A), (B) and (C) above if, at least
four Business Days prior to such date of Receipt, Financial Security shall have
Received written notice from the Indenture Trustee that such items were to be
delivered on such date and such date was specified in such notice. Such payment
shall be disbursed to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy named in the Order and not to the Indenture Trustee or any Class A
Noteholder directly (unless a Class A Noteholder has previously paid such amount
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order, in which case such payment shall be disbursed to the
Indenture Trustee for distribution to such Class A Noteholder upon proof of such
payment reasonably satisfactory to Financial Security). In connection with the
foregoing, Financial Security shall have the rights provided pursuant to Section
5A.2 of the Sale and Servicing Agreement.
4. Governing Law. This Policy shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term Of This Policy,
Financial Security may appoint a fiscal agent (the "Fiscal Agent") for purposes
of this Policy by written notice to the Indenture Trustee at the notice address
specified in the Sale and Servicing Agreement specifying the name and notice
address of the Fiscal Agent. From and after the date of receipt of such notice
by the Indenture Trustee, (i) copies of all notices and documents required to be
delivered to Financial Security pursuant to this Policy shall be simultaneously
delivered to the Fiscal Agent and to Financial Security and shall not be deemed
Received until Received by both and (ii) all payments required to be
4
<PAGE>
Policy No.: 50886-N Date of Issuance: November 30, 1999
made by Financial Security under this Policy may be made directly by Financial
Security or by the Fiscal Agent on behalf of Financial Security. The Fiscal
Agent is the agent of Financial Security only and the Fiscal Agent shall in no
event be liable to any Class A Noteholder for any acts of the Fiscal Agent or
any failure of Financial Security to deposit, or cause to be deposited,
sufficient funds to make payments due under this Policy.
6. Waiver of Defenses. To the fullest extent permitted by applicable
law, Financial Security agrees not to assert, and hereby waives, for the benefit
of each Class A Noteholder, all rights (whether by counterclaim, setoff or
otherwise) and defenses (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to Financial Security to avoid payment
of its obligations under this Policy in accordance with the express provisions
of this Policy.
7. Notices. All notices to be given hereunder shall be in writing
(except as otherwise specifically provided herein) and shall be mailed by
registered mail or personally delivered or telecopied to Financial Security as
follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President-Transaction Oversight
Re: PeopleFirst.com Auto Receivables Owner Trust 1999-1
$56,000,000 6.415% Asset Backed Notes, Class A-1
$42,000,000 6.685% Asset Backed Notes, Class A-2
$18,000,000 6.835% Asset Backed Notes, Class A-3
Telecopy No.: (212) 339-3518
Confirmation: (212) 826-0100
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Indenture Trustee.
8. Priorities. In the event any term or provision of the face of
this Policy is inconsistent with the provisions of this Endorsement, the
provisions of this Endorsement shall take precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article 76
of the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
5
<PAGE>
Policy No.: 50886-N Date of Issuance: November 30, 1999
10. Surrender of Policy. The Indenture Trustee shall surrender this
Policy to Financial Security for cancellation upon expiration of the Term Of
This Policy.
IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By:
-----------------------------------
Authorized Officer
6
<PAGE>
Exhibit A To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
-------------------------------
(Letterhead of Indenture Trustee)
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Re: PeopleFirst.com Auto Receivables Owner Trust 1999-1
$56,000,000.00 6.415% Asset Backed Notes, Class A-1
$42,000.000.00 6.685% Asset Backed Notes, Class A-2
$18,000,000.00 6.835% Asset Backed Notes, Class A-3
---------------------------------------------------
The undersigned, a duly authorized officer of Norwest Bank Minnesota,
National Association (the "Indenture Trustee") hereby certifies to Financial
Security Assurance Inc. ("Financial Security"), with reference to Financial
Guaranty Insurance Policy No. 50886-N dated November 30, 1999 (the "Policy")
issued by Financial Security in respect of the $56,000,000 6.415% Asset Backed
Notes, Class A-1 (the "Class A-1 Notes"), the $42,000,000 6.685% Asset Backed
Notes, Class A-2 (the "Class A-2 Notes") and the $18,000,000 6.835% Asset Backed
Notes, Class A-3 (the "Class A-3 Notes and together with the Class A-1 Notes and
the Class A-2 Notes, the "Class A Notes") of the above referenced Trust, that:
(i) The Indenture Trustee is the Indenture Trustee under the
Indenture for the Class A Noteholders.
(ii) The sum of all amounts on deposit (or scheduled to be on
deposit) in the Note Distribution Account and available for
distribution to the Class A Noteholders pursuant to the Sale and
Servicing Agreement will be $___________ (the "Shortfall") less than
the Scheduled Payments with respect to the Payment Date occurring
_______ __, ____.
(iii) The Indenture Trustee is making a claim under the Policy
for the Shortfall to be applied to distributions of Scheduled Payments
with respect to the Class A Notes.
(iv) The Indenture Trustee agrees that, following receipt of
funds from Financial Security, it shall (a) hold such amounts in trust
and apply the same directly to the payment of Scheduled Payments on
the Obligations when due; (b) not apply such funds for any other
purpose; (c) not commingle such funds with other funds held by the
Indenture Trustee and (d) maintain an accurate record of such payments
with respect to each Class A Note and the corresponding claim on the
Policy and proceeds thereof and, if the Class A Note is required to be
surrendered or
<PAGE>
presented for such payment, shall stamp on each such Class A Note the
legend "$[insert applicable amount] paid by Financial Security and the
balance hereof has been canceled and reissued" and than shall deliver
such Class A Note to Financial Security.
(v) The Indenture Trustee, on behalf of the Class A Noteholders,
hereby assigns to Financial Security the rights of the Class A
Noteholders with respect to the Class A Notes to the extent of any
payments under the Policy, including, without limitation, any amounts
due to the Class A Noteholders in respect of securities law violations
arising from the offer and sale of the Class A Notes. The foregoing
assignment is in addition to, and not in limitation of, rights of
subrogation otherwise available to Financial Security in respect of
such payments. The Indenture Trustee shall take such action and
deliver such instruments as may be reasonably requested or required by
Financial Security to effectuate the purpose or provisions of this
clause (v).
(vi) The Indenture Trustee, on its behalf and on behalf of the
Class A Noteholders, hereby appoints Financial Security as agent and
attorney-in-fact for the Indenture Trustee and each such Class A
Noteholder in any legal proceeding with respect to the Class A Notes.
The Indenture Trustee hereby agrees that Financial Security may at any
time during the continuation of any proceeding by or against any
debtor with respect to which a Preference Claim (as defined below) or
other claim with respect to the Class A Notes is asserted under the
United States Bankruptcy Code or any other applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (an
"Insolvency Proceeding") direct all matters relating to such
Insolvency Proceeding, including without limitation, (A) all matters
relating to any claim in connection with an Insolvency Proceeding
seeking the avoidance as a preferential transfer of any payment made
with respect to the Class A Notes (a "Preference Claim"), (B) the
direction of any appeal of any order relating to any Preference Claim
at the expense of Financial Security but subject to reimbursement as
provided in the Insurance Agreement and (C) the posting of any surety,
supersedes or performance bond pending any such appeal. In addition,
the Indenture Trustee hereby agrees that Financial Security shall be
subrogated to, and the Indenture Trustee on its behalf and on behalf
of each Class A Noteholder, hereby delegates and assigns, to the
fullest extent permitted by law, the rights of the Indenture Trustee
and each Class A Noteholder in the conduct of any Insolvency
Proceeding, including, without limitation, all rights of any party to
an adversary proceeding or action with respect to any court order
issued in connection with any such Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to
[Specify Account].
8
<PAGE>
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
IN WITNESS WHEREOF, the Indenture Trustee has executed and delivered
this Notice of Claim and Certificate as of the ____ day of _______________,
_______.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
not in its individual capacity but solely as
Indenture Trustee
By:_______________________________________________
Title:____________________________________________
- -----------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent on by
-----------------------------------------
__________________________________________________________________
Confirmation Number ______________________________________
9
<PAGE>
Exhibit 4.6
INDEMNIFICATION AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
PEOPLEFIRST FINANCE, LLC
BARCLAYS CAPITAL INC.
and
PRUDENTIAL SECURITIES INCORPORATED
Dated as of November 17, 1999
$56,000,000 6.415% Asset Backed Notes, Class A-1
$42,000,000 6.685% Asset Backed Notes, Class A-2
$18,000,000 6.835% Asset Backed Notes, Class A-3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Definitions...................................................... 1
Section 2. Representations, Warranties and Agreements of Financial Security. 3
Section 3. Representations, Warranties and Agreements of the Underwriter.... 6
Section 4. Indemnification.................................................. 6
Section 5. Indemnification Procedures....................................... 7
Section 6. Contribution..................................................... 8
Section 7. Third-Party Beneficiaries........................................ 9
Section 8. Miscellaneous.................................................... 9
</TABLE>
EXHIBIT A - Opinion of Assistant General Counsel
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of November 17, 1999, among
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), PEOPLEFIRST FINANCE,
LLC (the "Company"), BARCLAYS CAPITAL INC. and PRUDENTIAL SECURITIES
INCORPORATED (collectively, the "Underwriter").
Section 1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings provided below:
"Agreement" means this Indemnification Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Commission" means the Securities and Exchange Commission.
"Company Party" means any of the Company, its parent, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Securities Act) of any of the
foregoing.
"Depositor" means Prudential Securities Secured Financing Corporation.
"Federal Securities Laws" means the Securities Act, the Securities
Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company
Act of 1940, the Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, each as amended from time to time, and the rules and
regulations in effect from time to time under such Acts.
"Financial Security Agreements" means this Agreement, the Pledge
Agreement, the Reserve Account Agreement and the Insurance Agreement.
"Financial Security Information" has the meaning provided in Section
2(g) hereof.
"Financial Security Party" means any of Financial Security, its
parent, subsidiaries and affiliates, and any shareholder, director, officer,
employee, agent or "controlling person" (as such term is used in the Securities
Act) of any of the foregoing.
"Indemnified Party" means any party entitled to any indemnification
pursuant to Section 4 hereof.
"Indemnifying Party" means any party required to provide
indemnification pursuant to Section 4 hereof.
"Indenture" means the Indenture dated as of November 1, 1999 between
the Trust and Norwest Bank Minnesota, National Association, as trustee, as the
same may be amended and supplemented from time to time in accordance with its
terms.
-1-
<PAGE>
"Insurance Agreement" means the Insurance and Indemnity Agreement,
dated as of November 1, 1999, among Financial Security, the Trust, PF Funding
II, LLC and the Company, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Losses" means (a) any actual out-of-pocket damages incurred by the
party entitled to indemnification or contribution hereunder, (b) any actual out-
of-pocket costs or expenses incurred by such party, including reasonable fees or
expenses of its counsel and other expenses incurred in connection with
investigating or defending any claim, action or other proceeding which entitle
such party to be indemnified hereunder (subject to the limitations set forth in
Section 5 hereof), to the extent not paid, satisfied or reimbursed from funds
provided by any other Person other than an affiliate of such party (provided
that the foregoing shall not create or imply any obligation to pursue recourse
against any such other Person), plus (c) interest on the amount paid by the
party entitled to indemnification or contribution from the date of such payment
to the date of payment by the party who is obligated to indemnify or contribute
hereunder at the statutory rate applicable to judgments for breach of contract.
"Note Policy" means the financial guaranty insurance policy delivered
by Financial Security with respect to the Securities.
"Offering Document" means the Prospectus and any other material or
documents delivered by the Underwriter or any Underwriter Party to any Person in
connection with the offer or sale of the Securities.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or other organization or entity
(whether governmental or private).
"Pledge Agreement" means the Pledge Agreement dated as of November 1,
1999 among the Company, Norwest Bank Minnesota, National Association, as
Collateral Agent, and Financial Security.
"Preliminary Prospectus Supplement" means the Preliminary Prospectus
Supplement dated November 9, 1999 relating to the Securities.
"Prospectus" means, collectively, the Prospectus relating to the
Securities dated November 17, 1999, the Prospectus Supplement and the
Preliminary Prospectus Supplement.
"Prospectus Supplement" means the Prospectus Supplement dated November
17, 1999 relating to the Securities.
"Rating Agencies" has the meaning provided in the last paragraph of
Section 2 hereof.
-2-
<PAGE>
"Reserve Account Agreement" means the Master Reserve Account Agreement
dated as of November 1, 1999, among the PF Funding II, LLC, Financial Security,
the Collateral Agent and the Trustee specified therein, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"Securities" means the Trust's $56,000,000 6.415% Asset Backed Notes,
Class A-1, $42,000,000 6.685% Asset Backed Notes, Class A-2 and $18,000,000
6.835% Asset Backed Notes, Class A-3, described in the Offering Document and
issued pursuant to the Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any rule or regulation in effect from time to time under such
Act.
"Trust" means PeopleFirst.com Auto Receivables Owner Trust 1999-1.
"Underwriter Information" has the meaning provided in Section 3(c)
hereof.
"Underwriter Party" means any of the Underwriter, its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee, or
agent of the "controlling person" (as such item is used in the Securities Act)
of any of the foregoing.
"Underwriting Agreement" means the Underwriting Agreement dated as of
November 17, 1999 between the Company and the Underwriter with respect to the
offer and sale of the Securities, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
Section 2. Representations, Warranties and Agreements of Financial
Security. Financial Security represents, warrants and agrees with the parties
hereto as follows:
(a) Organization, Etc. Financial Security is a stock insurance
company duly organized, validly existing and authorized to transact
financial guaranty insurance business under the laws of the State of New
York.
(b) Authorization, Etc. The Note Policy and the Financial Security
Agreements have been duly authorized, executed and delivered by Financial
Security.
(c) Validity, Etc. The Note Policy and the Financial Security
Agreements constitute valid and binding obligations of Financial Security,
enforceable against Financial Security in accordance with their terms,
subject, as to the enforcement of remedies, to bankruptcy, insolvency,
reorganization, rehabilitation, moratorium and other similar laws affecting
the enforceability of creditors' rights generally applicable in the event
of the bankruptcy or insolvency of Financial Security and to the
application of general principles of equity and
-3-
<PAGE>
subject, in the case of this Agreement, to principles of public policy
limiting the right to enforce the indemnification provisions contained
herein.
(d) Exemption From Registration. The Note Policy is exempt from
registration under the Securities Act.
(e) No Conflicts. Neither the execution or delivery by Financial
Security of the Note Policy or the Financial Security Agreements, nor the
performance by Financial Security of its obligations thereunder, will
conflict with any provision of the certificate of incorporation or the
bylaws of Financial Security nor result in a breach of, or constitute a
default under, any material agreement or other instrument to which
Financial Security is a party or by which any of its property is bound nor
violate any judgment, order or decree or any law regulation or rule
applicable to Financial Security of any governmental or regulatory body,
administrative agency, court or arbitrator having jurisdiction over
Financial Security (except that, in the published opinion of the Securities
and Exchange Commission, the indemnification provisions of this Agreement,
insofar as they relate to indemnification for liabilities arising under the
Securities Act, are against public policy as expressed in the Securities
Act and are therefore unenforceable).
(f) Financial Information. The consolidated balance sheets of
Financial Security as of December 31, 1998 and December 31, 1997 and the
related consolidated statements of income, changes in shareholder's equity
and cash flows for the fiscal years then ended and the interim consolidated
balance sheet of Financial Security as of September 30, 1999, and the
related statements of income, changes in shareholder's equity and cash
flows for the interim period then ended, furnished by Financial Security to
the Underwriter, fairly present in all material respects the financial
condition of Financial Security as of such dates and for such periods in
accordance with generally accepted accounting principles consistently
applied (subject as to interim statements to normal year-end adjustments)
and since the date of the most current interim consolidated balance sheet
referred to above there has been no change in the financial condition of
Financial Security which would materially and adversely affect its ability
to perform its obligations under the Note Policy.
(g) Financial Security Information. The information in the Prospectus
Supplement set forth under the caption "THE INSURER"(as revised from time
to time in accordance with the provisions hereof, the "Financial Security
Information") is limited and does not purport to provide the scope of
disclosure required to be included in a prospectus with respect to a
registrant in connection with the offer and sale of securities of such
registrant registered under the Securities Act. Within such limited scope
of disclosure, however, as of the date of the Preliminary Prospectus
Supplement, as of the date of the Prospectus Supplement and as of the date
hereof, the Financial Security Information does not contain any untrue
statement of a material fact, or omit to state a material fact
-4-
<PAGE>
necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
(h) Additional Information. Financial Security will furnish to the
Underwriter or the Company, upon request of the Underwriter or the Company,
as the case may be, copies of Financial Security's most recent financial
statements (annual or interim, as the case may be) which fairly present in
all material respects the financial condition of Financial Security as of
the dates and for the periods indicated, in accordance with generally
accepted accounting principles consistently applied except as noted therein
(subject, as to interim statements, to normal year-end adjustments). In
addition, if the delivery of a Prospectus relating to the Securities is
required at any time prior to the expiration of nine months after the time
of issuance of the Prospectus in connection with the offering or sale of
the Securities, the Company or the Underwriter will notify Financial
Security of such requirement to deliver a Prospectus and Financial Security
will promptly provide the Underwriter with any revisions to the Financial
Security Information that are in the judgment of Financial Security
necessary to prepare a supplement to the Prospectus.
(i) Opinion of Counsel. Financial Security will furnish to the
Underwriter and the Company, on the closing date for the sale of the
Securities an opinion of its Assistant General Counsel, to the effect set
forth in Exhibit A attached hereto, dated such closing date and addressed
to the Company and the Underwriter together with any related consents from
its auditors.
(j) Consents and Reports of Independent Accountants. Financial
Security will furnish to the Underwriter and the Company, upon request, as
comfort from its independent accountants in respect of its financial
condition, (i) at the expense of the Person specified in the Insurance
Agreement, a copy of the Prospectus, including either a manually signed
consent or a manually signed report of Financial Security's independent
accountants and (ii) the quarterly review letter by Financial Security's
independent accountants in respect of the most recent interim financial
statements of Financial Security.
Nothing in this Agreement shall be construed as a representation or warranty by
Financial Security concerning the rating of its insurance financial strength by
Moody's Investors Service, Inc. or its insurer financial strength by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, or any other
rating agency (collectively, the "Rating Agencies"). The Rating Agencies, in
assigning such ratings, take into account facts and assumptions not described in
the Prospectus and the facts and assumptions considered by the Rating Agencies,
and the ratings issued thereby, are subject to change over time.
-5-
<PAGE>
Section 3. Representations, Warranties and Agreements of the Underwriter.
The Underwriter represents, warrants and agrees with the parties hereto as
follows:
(a) Compliance With Laws. The Underwriter will comply in all material
respects with all legal requirements in connection with offers and sales of
the Securities and make such offers and sales in the manner provided in the
Offering Document.
(b) Offering Document. The Underwriter will not use, or distribute to
other broker-dealers for use, any Offering Document in connection with the
offer and sale of the Securities unless such Offering Document includes
such information as has been furnished by Financial Security for inclusion
therein and the information therein concerning Financial Security has been
approved by Financial Security in writing. Financial Security hereby
consents to the information in respect of Financial Security included in
the Prospectus Supplement. Each Offering Document will include the
following statement:
"The Note Policy is not covered by the property/casualty insurance security
fund specified in Article 76 of the New York Insurance Law."
Each Offering Document including financial information (other than
financial information included in the Financial Security Information) with
respect to Financial Security prepared in accordance with generally
accepted accounting principles will include the following statement
immediately preceding such financial information:
"The New York State Insurance Department recognizes only statutory
accounting practices for determining and reporting the financial condition
and results of operations of an insurance company, for determining its
solvency under the New York Insurance Law, and for determining whether its
financial condition warrants the payment of a dividend to its stockholders.
No consideration is given by the New York State Insurance Department to
financial statements prepared in accordance with generally accepted
accounting principles in making such determinations."
(c) Underwriter Information. All material provided by the Underwriter
for inclusion in the Offering Document (as revised from time to time, the
"Underwriter Information"), insofar as such information relates to the
Underwriter is true and correct in all material respects. In respect of
the Prospectus Supplement, the Underwriter Information is limited to the
information identified in the Underwriting Agreement as "Underwriter
Information."
Section 4. Indemnification.
(a) Financial Security agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each
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<PAGE>
Company Party, each Underwriter Party and the Depositor against (i) any and
all Losses incurred by them with respect to the offer and sale of the
Securities and resulting from Financial Security's breach of any of its
representations, warranties or agreements set forth in Section 2 hereof and
(ii) any and all Losses to which any Company Party or Underwriter Party may
become subject, under the Securities Act or otherwise, insofar as such
Losses arise out of or result from an untrue statement of a material fact
contained in any Offering Document or the 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 omission was made in the
Financial Security Information included therein in accordance with the
provisions hereof.
(b) The Underwriter agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each
Financial Security Party against (i) any and all Losses incurred by them
with respect to the offer and sale of the Securities and resulting from the
Underwriter's breach of any of its representations, warranties or
agreements set forth in Section 3 hereof and (ii) any and all Losses to
which any Financial Security Party may become subject, under the Securities
Act or otherwise, insofar as such Losses arise out of or result from an
untrue statement of a material fact contained in any Offering Document or
the 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 omission
was made in the Underwriter Information included therein.
(c) Upon the incurrence of any Losses for which a party is entitled to
indemnification hereunder, the Indemnifying Party shall reimburse the
Indemnified Party promptly upon establishment by the Indemnified Party to
the Indemnifying Party of the Losses incurred.
Section 5. Indemnification Procedures. Except as provided below in Section
6 with respect to contribution, the indemnification provided herein by an
Indemnifying Party shall be the exclusive remedy of any and all Indemnified
Parties for the breach of a representation, warranty or agreement hereunder by
an Indemnifying Party; provided, however, that each Indemnified Party shall be
entitled to pursue any other remedy at law or in equity for any such breach so
long as the damages sought to be recovered shall not exceed the Losses incurred
thereby resulting from such breach. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Indemnified
Party to be indemnified under this Agreement, such party shall give the
Indemnifying Party written or telegraphic notice of such action or claim
reasonably promptly after receipt of written notice thereof. The Indemnifying
Party shall be entitled to participate in and, upon notice to the Indemnified
Party, assume the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof at the expense of the
Indemnified Party; provided, however, that the fees and expenses of such
separate
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<PAGE>
counsel shall be at the expense of the Indemnifying Party if (i) the
Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel satisfactory to the Indemnified Party in any such
action or proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised by counsel
that (A) 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
(B) the representation of the Indemnifying Party and the Indemnified Party by
the same counsel would be inappropriate or contrary to prudent practice, in
which case, if the 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 or proceeding on behalf of such Indemnified Party, it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction 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 at any time for all the
Company Parties, one such firm for all Underwriter Parties and one such firm for
all Financial Security Parties, as the case may be, which firm shall be
designated in writing by the Company in respect of the Company Parties, by the
Underwriter in respect of the Underwriter Parties and by Financial Security in
respect of the Financial Security Parties. The Indemnifying Party shall not be
liable for any settlement of any such claim or action unless the Indemnifying
Party shall have consented thereto or be in default in its obligations
hereunder. Any failure by an Indemnified Party to comply with the provisions of
this Section shall relieve the Indemnifying Party of liability only if such
failure is prejudicial to the position of the Indemnifying Party and then only
to the extent of such prejudice.
Section 6. Contribution.
(a) To provide for just and equitable contribution if the
indemnification provided by any Indemnifying Party is determined to be
unavailable for any Indemnified Party (other than due to application of
this Section), each Indemnifying Party shall contribute to the Losses
arising from any breach of any of its representations, warranties or
agreements contained in this Agreement on the basis of the relative fault
of each of the parties as set forth in Section 6(b) below; provided,
however, that an Indemnifying Party shall in no event be required to
contribute to all Indemnified Parties an aggregate amount in excess of the
Losses incurred by such Indemnified Parties resulting from the breach of
representations, warranties or agreements contained in this Agreement.
(b) The relative fault of each Indemnifying Party, on the one hand,
and of each Indemnified Party, on the other, shall be determined by
reference to, among other things, whether the breach of, or alleged breach
of, any representations, warranties or agreements contained in this
Agreement relates to information supplied by, or action within the control
of, the Indemnifying Party or
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<PAGE>
the Indemnified Party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such breach.
(c) The parties agree that Financial Security shall be solely
responsible for the Financial Security Information and the Underwriter
shall be solely responsible for the Underwriter Information and that the
balance of each Offering Document shall be the responsibility of the
Company.
(d) Notwithstanding anything in this Section 6 to the contrary, the
Underwriter shall not be required to contribute an amount in excess of the
amount by which the total underwriting discounts and commissions received
by the Underwriter exceeds the amount of any damages that such Underwriter
has otherwise been required to pay in respect of any breach by the
Underwriter of its representations or warranties contained in Section 3
hereof.
(e) No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(f) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to
contribution promptly upon establishment by the party entitled to
contribution to the contributor of the Losses incurred.
Section 7. Third-Party Beneficiaries. Except as otherwise provided in this
Agreement, no other Person shall have any right or obligation hereunder. This
Agreement shall also inure to the benefit of the Depositor. Without limiting the
generality of the foregoing, all covenants and agreements in this Agreement
which confer rights upon the Depositor shall be for the benefit of and run
directly to the Depositor and the Depositor 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.
Section 8. Miscellaneous.
(a) Notices. All notices and other communications provided for under
this Agreement shall be delivered to the address set forth below or to such
other address as shall be designated by the recipient in a written notice
to the other party or parties hereto:
If to Financial Security: Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Senior Vice President -- Transaction
Oversight
Department (with a copy to the attention of
the General Counsel)
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<PAGE>
Re: PeopleFirst.com Auto Receivables Owner
Trust, 1999-1, $56,000,000 6.415% Asset Backed
Notes, Class A-1, $42,000,000 6.685% Asset
Backed Notes, Class A-2 and $18,000,000 6.835%
Asset Backed Notes, Class A-3
Confirmation: (212) 826-0100
Facsimile Nos.: (212) 339-3518, (212) 339-3529
(in each case in which notice or other
communication to Financial Security refers to an
Event of Default, a claim on the Note Policy or
with respect to which failure on the part of
Financial Security to respond shall be deemed to
constitute consent or acceptance, then a copy of
such notice or other communication should also
be sent to the attention of each of the General
Counsel and the Head-Financial Guaranty Group
and shall be marked to indicate "URGENT MATERIAL
ENCLOSED.")
If to the Company: PeopleFirst Finance, LLC
401 West A Street, Suite 1000
San Diego, CA 92101
Attention: Randy Ellspermann, CFO
Facsimile No: (619) 232-4565
Confirm No: (619) 544-0815
If to the Underwriter: Prudential Securities Incorporated
One New York Plaza, 14th Floor
New York, NY 10292
Attention: Asset-Backed Group
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(c) Assignments. This Agreement may not be assigned by any party
without the express written consent of each other party. Any assignment
made in violation of this Agreement shall be null and void.
(d) Amendments. Amendments of this Agreement shall be in writing
signed by each party hereto.
(e) Survival, Etc. The indemnity and contribution agreements
contained in this Agreement shall remain operative and in full force and
effect,
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<PAGE>
regardless of (i) any investigation made by or on behalf of any
Indemnifying Party, (ii) the issuance of the Securities or (iii) any
termination of this Agreement or the Note Policy. The indemnification
provided in this Agreement will be in addition to any liability which the
parties may otherwise have and shall in no way limit any obligations of the
parties to the Underwriting Agreement or the Insurance Agreement.
(f) Counterparts. This Agreement may be executed in counterparts by
the parties hereto, and all such counterparts shall constitute one and the
same instrument.
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<PAGE>
IN WITNESS WHEREOF,the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered as of the date first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
------------------------------------------
Name:
Title:
PEOPLEFIRST FINANCE, LLC
By:
-------------------------------------------
Name:
Title:
BARCLAYS CAPITAL INC.
By:
-------------------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered as of the date first above written.
PRUDENTIAL SECURITIES INCORPORATED
By:
----------------------------
Name:
Title:
<PAGE>
EXHIBIT A
OPINION OF ASSISTANT GENERAL COUNSEL
Based upon the foregoing, I am of the opinion that:
1. Financial Security is a stock insurance company duly organized,
validly existing and authorized to transact financial guaranty insurance
business under the laws of the State of New York.
2. The Note Policy and the Financial Security Agreements have been duly
authorized, executed and delivered by Financial Security.
3. The Note Policy and the Financial Security Agreements constitute valid
and binding obligations of Financial Security, enforceable against Financial
Security in accordance with their terms, subject, as to the enforcement of
remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium
and other similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy or insolvency of Financial
Security and to the application of general principles of equity and subject, in
the case of the Indemnification Agreement, to principles of public policy
limiting the right to enforce the indemnification provisions contained therein
insofar as they relate to indemnification for liabilities arising under
applicable securities laws.
4. The Note Policy is exempt from registration under the Securities Act
of 1933, as amended (the "Act").
5. Neither the execution nor delivery by Financial Security of the Note
Policy or the Financial Security Agreements, nor the performance by Financial
Security of its obligations thereunder, will conflict with any provision of the
certificate of incorporation or the bylaws of Financial Security or, to the best
of my knowledge, result in a breach of, or constitute a default under, any
agreement or other instrument to which Financial Security is a party or by which
it or any of its property is bound or, to the best of my knowledge, violate any
judgment, order or decree applicable to Financial Security of any governmental
or regulatory body, administrative agency, court or arbitrator having
jurisdiction over Financial Security (except that in the published opinion of
the Securities and Exchange Commission the indemnification provisions of the
Indemnification Agreement, insofar as they relate to indemnification for
liabilities arising under the Act, are against public policy as expressed in the
Act and are therefore unenforceable).
In addition, please be advised that I have reviewed the description of
Financial Security under the caption "THE INSURER" in the Prospectus Supplement
dated November 17, 1999 (the "Offering Document") with respect to the
Securities. The information provided in the Offering Document with respect to
Financial Security is limited and does not purport to provide the scope of
disclosure required to be included in a prospectus with respect to a registrant
under the Act in connection with the public offer and sale of securities of such
registrant. Within such limited scope of disclosure,
A-2
<PAGE>
however, there has not come to my attention any information which would cause me
to believe that the description of Financial Security referred to above, as of
the date of the Prospectus Supplement, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (except that no opinion is rendered with respect to any
financial statements or other financial information contained or referred to
therein).
A-3
<PAGE>
Exhibit 4.7
INDEMNIFICATION AGREEMENT
among
PEOPLEFIRST.COM INC.,
PEOPLEFIRST FINANCE, LLC,
PF FUNDING II, LLC
and
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
Dated as of November 30, 1999
PeopleFirst.com Auto Receivables Owner Trust 1999-1
$56,000,000 6.415% Asset Backed Notes, Class A-1
$42,000,000 6.685% Asset Backed Notes, Class A-2
$18,000,000 6.835% Asset Backed Notes, Class A-3
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1. Definitions.........................................2
Section 2. Indemnification.....................................3
Section 3. Indemnification Procedures..........................4
Section 4. Contribution........................................4
Section 5. Miscellaneous.......................................5
1
<PAGE>
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT dated as of November 30, 1999 among
PEOPLEFIRST.COM INC. ("Parent"), PEOPLEFIRST FINANCE, LLC (the "Company"), PF
FUNDING II, LLC (the "Transferor") and PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION (the "Depositor").
Section 1. Definitions. (a) For purposes of this Agreement, the following
terms shall have the meanings provided below:
"Agreement" means this Indemnification Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Basic Documents" has the meaning assigned to such term in the Sale
and Servicing Agreement.
"Depositor Information" has the meaning provided in Section 2 hereof.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or other organization or entity
(whether governmental or private).
"Preliminary Prospectus" means the Preliminary Prospectus dated
November 9, 1999, together with the Preliminary Prospectus Supplement dated
November 9, 1999 relating to the Securities.
"Prospectus" means collectively the Prospectus dated November 17,
1999, together with the Prospectus Supplement and the Preliminary Prospectus.
"Prospectus Supplement" means the Prospectus Supplement dated November
17, 1999 relating to the Securities.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of November 1, 1999 among the Trust, PF Funding II, LLC, PeopleFirst
Finance, LLC, the Depositor, and Norwest Bank Minnesota, National Association,
as Backup Servicer, Indenture Trustee and Custodian.
"Securities" means the Trust's $56,000,000 6.415% Asset Backed Notes,
Class A-1, $42,000,000 6.685% Asset Backed Notes, Class A-2 and $18,000,000
6.835% Asset Backed Notes, Class A-3, described in the Prospectus and issued
pursuant to the Indenture.
"Underwriting Agreement" means the Underwriting Agreement with respect
to the Securities and the Standard Provisions to the Underwriting Agreement,
each dated as of
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November 17, 1999, among the PF Entities, the Depositor and the Prudential
Securities Incorporated, as representative of the Underwriters.
(b) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Underwriting Agreement.
Section 2. Indemnification.
(a) The Depositor agrees to indemnify and hold harmless each PF Entity and
each of its directors and each Person who controls any PF Entity within the
meaning of the 1933 Act or the 1934 Act, against any losses, claims, damages or
liabilities, joint or several, to which such PF Entity or such director or
controlling Person may become subject under the 1933 Act, the 1934 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Prospectus Supplement, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statements or
alleged untrue statements or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the PF Entities by
the Depositor specifically for use therein, and the Depositor will reimburse
each PF Entity and each such controlling Person for any legal or other expenses
reasonably incurred by such PF Entity or such director or controlling Person in
connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which the Depositor may otherwise have. Each PF Entity acknowledges
that the information under the headings "Summary of Terms-Depositor" and "The
Depositor" in the Prospectus Supplement (the "Depositor Information") constitute
the only information furnished to the PF Entities by or on behalf of the
Depositor for use in the Registration Statement or the Prospectus.
(b) Each of the PF Entities agrees (severally and not jointly) (A) to
indemnify and hold harmless the Depositor, and each of its directors and each
Person who controls the Depositor or any such person, within the meaning of the
1933 Act or the 1934 Act, against any losses, claims, damages or liabilities,
joint and several, to which the Depositor or such Person may become subject,
under the 1933 Act, the 1934 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any ABS Term Sheets or Computational Materials furnished to
prospective investors or any Current Report or any amendment or supplement
thereof, the Prospectus, any amendment or supplement to the Prospectus, or the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, but only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission does not relate to the Underwriter Information or the Depositor
Information; this indemnity agreement will be in addition to any liability which
the PF Entities may otherwise have; and (B) to indemnify and to hold the
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<PAGE>
Depositor harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Depositor may sustain in any way related to the failure of
any of the PF Entities to perform its duties in compliance with the terms of the
Basic Documents.
Section 3. Indemnification Procedures. Promptly after receipt by an
indemnified party under Section 2 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 Section 2, notify the indemnifying party in writing
of the commencement thereof, but the omission to so notify the indemnifying
party will not relieve the indemnifying party from any liability which the
indemnifying party may have to any indemnified party hereunder except to the
extent such indemnifying party has been prejudiced thereby. 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 elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. After notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under Section 2 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, if the defendants in any
such action include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. The indemnifying party shall not be liable for the
expenses of more than one separate counsel.
Section 4. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 2 is for any reason held to be unavailable to or insufficient to hold
harmless an indemnified party under Section 2 above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof); provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by the PF Entities on the one hand,
and the Depositor on the other, from the offering of the Securities (taking into
account the portion of the proceeds of the offering realized by each), the PF
Entities' and the Depositor's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and any other
equitable considerations appropriate in the circumstances. The PF Entities and
the Depositor agree that it would not be equitable if the amount of such
4
<PAGE>
contribution were determined by pro rata or per capita allocation. For purposes
of this Section 4, each officer, each director and each person who controls the
Depositor within the meaning of the 1933 Act or 1934 Act shall have the same
rights to contribution as the Depositor, and each officer, each director, and
each person who controls any PF Entity within the meaning of the 1933 Act or the
1934 Act, shall have the same rights to contribution as such PF Entity.
Section 5. Miscellaneous.
(a) Notices. All notices and other communications provided for under this
Agreement shall be delivered to the address set forth below or to such other
address as shall be designated by the recipient in a written notice to the other
party or parties hereto:
If to the PF Entities: People First Finance LLC
401 West A Street
Suite 1000
San Diego, California 92101
Attention: Gary J. Miller
Facsimile No: (619) 232-4565
Confirm No: (619) 232-4568
If to the Depositor: Prudential Securities Secured Financing Corporation
One New York Plaza
New York, New York 10292
Attention: Group Head Asset-Backed Group
Facsimile No: 212-778-7401
(b) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(c) Assignments. This Agreement may not be assigned by any party without
the express written consent of each other party. Any assignment made in
violation of this Agreement shall be null and void.
(d) Amendments. Amendments of this Agreement shall be in writing signed by
each party hereto.
(e) Survival, Etc. The indemnity and contribution agreements contained in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Indemnifying Party, (ii)
the issuance of the Securities or (iii) any termination of this Agreement. The
indemnification provided in this Agreement will be in
5
<PAGE>
addition to any liability which the parties may otherwise have and shall in no
way limit any obligation of the parties to the Underwriting Agreement.
(f) Counterparts. This Agreement may be executed in counterparts by the
parties hereto, and all such counterparts shall constitute one and the same
instrument.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
PEOPLEFIRST.COM INC.
By:
----------------------------------------
Name:
Title:
PEOPLEFIRST FINANCE, LLC
By:
----------------------------------------
Name:
Title:
PF FUNDING II, LLC
By:
----------------------------------------
Name:
Title:
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
By:
----------------------------------------
Name:
Title:
7
<PAGE>
Exhibit 23.2
[Logo PricewaterhouseCoopers]
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Telephone (212) 596-8000
Facsimile (212) 596-8910
CONSENT OF INDEPENDENT ACCOUNTANTS
-----------------
We consent to the incorporation by reference in the Prospectus Supplement of
PeopleFirst Finance, LLC relating to PeopleFirst.com Auto Receivables Owner
Trust 1999-1 of our report dated January 26, 1999 on our audits of the
consolidated financial statements of Financial Security Assurance Inc. and
Subsidiaries as of December 31, 1998 and 1997, and for each of the three years
in the period ended December 31, 1998. We also consent to the reference to our
Firm under the caption "Experts".
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
November 8, 1999
