Exhibit 4.1
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FRANKLIN AUTO TRUST 1998-1
FORM OF TRUST AGREEMENT
between
FRANKLIN RECEIVABLES LLC
and
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Owner Trustee
Dated as of August __, 1998
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Table of Contents
Page
ARTICLE I - Definitions
SECTION 1.1. Capitalized Terms...................................................................................1
SECTION 1.2 Other Definitional Provisions........................................................................3
ARTICLE II - Organization
SECTION 2.1 Name.................................................................................................4
SECTION 2.2 Office...............................................................................................4
SECTION 2.3 Purposes and Powers..................................................................................4
SECTION 2.4 Appointment of Owner Trustee.........................................................................5
SECTION 2.5 Initial Capital Contribution of Trust Estate.........................................................5
SECTION 2.6 Declaration of Trust.................................................................................5
SECTION 2.7 Liability of the Seller..............................................................................6
SECTION 2.8 Title to Trust Property..............................................................................6
SECTION 2.9 Situs of Trust.......................................................................................7
SECTION 2.10 Representations and Warranties of the Seller........................................................7
SECTION 2.11 [Reserved]..........................................................................................8
SECTION 2.12 Covenants of the Certificateholders.................................................................8
SECTION 2.13 Federal Income Tax Allocations......................................................................9
ARTICLE III - Trust Certificates And Transfer Of Interests
SECTION 3.1 Initial Ownership....................................................................................9
SECTION 3.2 The Trust Certificates...............................................................................9
SECTION 3.3 Authentication of Trust Certificates................................................................11
SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates.........................................11
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates.............................................12
SECTION 3.6 Persons Deemed Certificateholders...................................................................12
SECTION 3.7 Access to List of Certificateholders' Names and Addresses...........................................13
SECTION 3.8 Maintenance of Office or Agency.....................................................................13
SECTION 3.9 Appointment of Paying Agent.........................................................................13
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SECTION 3.10 [Reserved].........................................................................................14
SECTION 3.11 [Reserved].........................................................................................14
SECTION 3.12 [Reserved].........................................................................................14
SECTION 3.13 [Reserved].........................................................................................14
SECTION 3.14 [Reserved].........................................................................................14
SECTION 3.15 [Reserved].........................................................................................14
SECTION 3.16 [Reserved].........................................................................................14
SECTION 3.17. Trust Certificate Transfer Restrictions...........................................................14
ARTICLE IV - Actions By Owner Trustee
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain Matters..................................16
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters.......................................18
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy.............................................19
SECTION 4.4 Restrictions on Certificateholders' Power...........................................................19
SECTION 4.5 Majority Control....................................................................................19
SECTION 4.6 Rights of Security Insurer..........................................................................19
SECTION 4.7. Execution of Documents.............................................................................19
ARTICLE V - Application Of Trust Funds: Certain Duties
SECTION 5.1 Establishment of Certificate Distribution Account...................................................20
SECTION 5.2 Application of Funds in Certificate Distribution Account............................................20
SECTION 5.3. [Reserved].........................................................................................22
SECTION 5.4 Method of Payment...................................................................................22
SECTION 5.5 No Segregation of Monies; No Interest...............................................................23
SECTION 5.6 Accounting and Reports to the Noteholders, Certificateholders, the Internal
Revenue Service and Others.......................................................................................23
SECTION 5.7 Signature on Returns; Tax Matters Partner............................................................23
ARTICLE VI - Authority And Duties Of Owner Trustee
SECTION 6.1 General Authority...................................................................................24
SECTION 6.2 General Duties......................................................................................24
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SECTION 6.3 Action upon Instruction.............................................................................24
SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions..................................25
SECTION 6.5 No Action Except under Specified Documents or Instructions..........................................26
SECTION 6.6 Restrictions........................................................................................26
SECTION 6.7 Notice of Default Under Indenture...................................................................26
ARTICLE VII -Concerning The Owner Trustee
SECTION 7.1 Acceptance of Trusts and Duties.....................................................................26
SECTION 7.2 Furnishing of Documents.............................................................................28
SECTION 7.3 Representations and Warranties......................................................................28
SECTION 7.4 Reliance; Advice of Counsel.........................................................................28
SECTION 7.5 Not Acting in Individual Capacity...................................................................29
SECTION 7.6 Owner Trustee Not Liable for Trust Certificates or Receivables......................................29
SECTION 7.7 Owner Trustee May Own Trust Certificates and Notes..................................................30
SECTION 7.8 Payments from Owner Trust Estate....................................................................30
SECTION 7.9 Doing Business in Other Jurisdictions...............................................................31
ARTICLE VIII - Compensation Of Owner Trustee
SECTION 8.1 Owner Trustee's Fees and Expenses...................................................................31
SECTION 8.2 Indemnification.....................................................................................31
SECTION 8.3 Payments to the Owner Trustee.......................................................................32
SECTION 8.4 Non-recourse Obligations............................................................................32
ARTICLE IX -Dissolution And Termination Of Trust
SECTION 9.1 Termination of Trust Agreement......................................................................32
SECTION 9.2 [Reserved]..........................................................................................34
ARTICLE X - Successor Owner Trustees And Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee.........................................................34
SECTION 10.2 Resignation or Removal of Owner Trustee............................................................34
SECTION 10.3 Successor Owner Trustee............................................................................36
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SECTION 10.4. Merger or Consolidation of Owner Trustee..........................................................36
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee......................................................37
ARTICLE XI - Miscellaneous
SECTION 11.1 Supplements and Amendments.........................................................................38
SECTION 11.2 No Legal Title to Owner Trust Estate in Certificateholders.........................................39
SECTION 11.3. Limitations on Rights of Others...................................................................39
SECTION 11.4. Notices...........................................................................................40
SECTION 11.5 Severability.......................................................................................40
SECTION 11.6 Separate Counterparts..............................................................................40
SECTION 11.7 Successors and Assigns.............................................................................40
SECTION 11.8 [Reserved].........................................................................................41
SECTION 11.9 No Petition........................................................................................41
SECTION 11.10. No Recourse......................................................................................41
SECTION 11.11 Headings..........................................................................................41
SECTION 11.12. Governing Law....................................................................................41
SECTION 11.13 [Reserved]........................................................................................41
SECTION 11.14 Servicer..........................................................................................41
SECTION 11.15. Third Party Beneficiary..........................................................................42
EXHIBITS
EXHIBIT A FORM OF TRUST CERTIFICATE
EXHIBIT B FORM OF CERTIFICATE OF TRUST
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TRUST AGREEMENT dated as of August
____, 1998 between FRANKLIN RECEIVABLES LLC
as seller, and ______________, as Owner
Trustee.
ARTICLE I
Definitions
SECTION 1.1 Capitalized Terms. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may
be amended and supplemented from time to time.
"Basic Documents" shall mean this Agreement, the Sale and
Servicing Agreement, the Indenture, the Insurance Agreement, the Indemnification
Agreement, the Note Depository Agreement and the other documents and
certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in
Section 3.17.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended
from time to time.
"Certificate" means a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A attached hereto.
"Certificate Distribution Account" shall have the meaning
assigned to such term in Section 5.1.
"Certificate of Trust" shall mean the Certificate of Trust in
the form of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of
the Business Trust Statute.
"Certificate Paying Agent" shall mean any paying agent or
co-paying agent appointed pursuant to Section 3.9.
"Certificateholder" or "Holder" shall mean the Person in whose
name a Trust Certificate is registered on the Certificate Register.
"Certificate Register" and "Certificate Registrar" shall mean
the register mentioned and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
__________________; or at such other address as the Owner Trustee may designate
by notice to the Certificateholders and the Seller, or the principal corporate
trust office of any successor Owner Trustee (the address of which the successor
owner trustee will notify the Certificateholders and the Seller).
"Delaware Trustee" shall have the meaning assigned to such
term in Section 10.1.
"ERISA" shall have the meaning assigned to such term in
Section 3.17.
"Expenses" shall have the meaning assigned to such term in
Section 8.2.
"Holder" or "Certificateholder" shall mean the Person in whose
name a Trust Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such
term in Section 8.2.
"Owner Trust Estate" shall mean all right, title and interest
of the Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and all other property of the Trust from time to
time, including any rights of the Owner Trustee and the Trust pursuant to the
Sale and Servicing Agreement.
"Owner Trustee" shall mean
________________________________________, not in its individual capacity but
solely as owner trustee under this Agreement, and any successor Owner Trustee
hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9.
"Percentage Interest" shall mean with respect to any Trust
Certificate, the percentage interest of ownership in the Trust represented
thereby as set forth on the face thereof.
"Record Date" shall mean, with respect to any Distribution
Date, the close of business on the last day of the calendar month preceding such
Distribution Date.
"Responsible Officer" shall mean, when used with respect to
the Owner Trustee, any officer assigned to the Corporate Trust Office of the
Owner Trustee, including any Vice President, any Assistant Vice President, any
trust officer or any other officer of the Owner Trustee customarily performing
functions similar to those performed by any of the above designated officers or
any agent acting under a power of attorney from the Owner Trustee, having
responsibility for the administration of this Trust Agreement, as the case may
be, and also, with
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respect to a particular matter relating to the Trust, any other officer of the
Owner Trustee to whom such matter is referred because of such officer's
knowledge of and familiarity with such matter. Any notice given to the address
and in the manner specified in Section 11.4 hereof shall be deemed to be given
to a Responsible Officer.
"Sale and Servicing Agreement" shall mean the Sale and
Servicing Agreement among the Trust, Franklin Receivables LLC, as seller and
Franklin Capital Corporation, as representative and as servicer, dated as of
August 1, 1998, as the same may be amended and supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the
State of Delaware.
"Security Insurer" shall mean MBIA Insurance Corporation, or
its successor in interest.
"Security Act" means the Securities Act of 1933, as amended.
"Seller" shall mean Franklin Receivables LLC as the Seller of
the Receivables and each successor to Franklin Receivables LLC (in the same
capacity), to the extent permitted hereunder.
"Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References herein
to specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" shall mean a Certificate.
SECTION 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
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given to them under generally accepted accounting principles as in effect on the
date of this Agreement or any such certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall
control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
ARTICLE II
Organization
SECTION 2.1 Name. The Trust created hereby shall be known as
"Franklin Auto Trust 1998-1" in which name the Owner Trustee may engage in the
transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Trust and ▇▇▇ and be sued.
SECTION 2.2 Office. The office of the Trust shall be in care
of the Owner Trustee at the Corporate Trust Office, or at the office of the
Delaware Trustee, if one exists, or at such other address as the Owner Trustee
may designate by written notice to the Certificateholders, the Security Insurer
and the Seller.
SECTION 2.3 Purposes and Powers. (a) The purpose of the Trust
is, and the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the
Indenture and the Trust Certificates pursuant to this
Agreement, and to sell the Notes;
(ii) with the proceeds of the sale of the
Notes, to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Seller
pursuant to the Sale and Servicing Agreement;
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(iii) to acquire, receive and accept from
time to time the Owner Trust Estate, and to assign, grant,
transfer, pledge, mortgage and convey the Trust Estate (other
than the Certificate Distribution Account) to the Indenture
Collateral Agent pursuant to the Indenture for the benefit of
the Security Insurer and the Trustee on behalf of the
Noteholders, and to hold, manage and distribute to the
Certificateholders pursuant to the terms of the Sale and
Servicing Agreement any portion of the Trust Estate released
from the Lien of, and remitted to the Trust pursuant to, the
Indenture;
(iv) to enter into and perform its
obligations under the Basic Documents to which it is a party;
(v) to engage in those activities, including
entering into agreements, that are necessary, suitable or
convenient to accomplish the foregoing or are incidental
thereto or connected therewith; and
(vi) subject to compliance with the Basic
Documents to which the Trust is a party, to engage in such
other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of
distributions to the Certificateholders and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4 Appointment of Owner Trustee. The Seller hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5 Initial Capital Contribution of Trust Estate. The
Seller 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 Seller, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the Basic
Documents to which the Trust is a party. It is the intention of the parties
hereto that the Trust constitute a business trust under the Business Trust
Statute and that this Agreement constitute the governing instrument of such
business trust. It is the intention of the parties hereto that, solely for
federal income tax purposes, the Trust shall be disregarded as an entity apart
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from its owner, the Seller, in the event that the Seller is the sole
Certificateholder for federal income tax purposes, or treated as a partnership
if there is more than one Certificateholder for federal income tax purposes. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms consistent with the characterization of the Trust as a
division of the Seller, or as a partnership, as the case may be, for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and to the extent not inconsistent
herewith, in the Business Trust Statute with respect to accomplishing the
purposes of the Trust. The Owner Trustee shall file the Certificate of Trust
with the Secretary of State.
SECTION 2.7 Liability of the Seller . (a) The Seller shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee. The Seller shall also be liable directly to
and will indemnify any injured party for all losses, claims, damages,
liabilities and expenses of the Trust (including Expenses, to the extent not
paid out of the Owner Trust Estate) to the extent that the Seller would be
liable if the Trust were a partnership under the Delaware Revised Uniform
Limited Partnership Act in which the Seller were a general partner; provided,
however, that the Seller shall not be liable for any losses incurred by a
Certificateholder in the capacity of an investor in the Trust Certificates or a
Noteholder in the capacity of an investor in the Notes. In addition, any third
party creditors of the Trust (other than in connection with the obligations
described in the preceding sentence for which the Seller shall not be liable)
shall be deemed third party beneficiaries of this paragraph.
(b) No Holder, other than to the extent set forth in
clause (a), shall have any personal liability for any liability or obligation of
the Trust.
SECTION 2.8 Title to Trust Property. (a) Legal title to all
the Owner Trust Estate shall be vested at all times in the Trust as a separate
legal entity except where applicable law in any jurisdiction requires title to
any part of the Owner Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title
to any part of the Owner Trust Estate. The Certificateholders shall be entitled
to receive distributions with respect to their undivided Percentage Interest
therein only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title or interest by any Certificateholder of
its ownership interest in the Owner Trust Estate shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Owner Trust Estate.
SECTION 2.9 Situs of Trust. The Trust will be located 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
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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 Seller. The
Seller hereby represents and warrants to the Owner Trustee that:
(a) Organization and Good Standing. The Seller is
duly organized and validly existing as a Delaware limited liability company with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(b) Due Qualification. It is duly qualified to do
business as a limited liability company in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of its property, the conduct of its
business and the performance of its obligations under this Agreement
and the Basic Documents requires such qualification.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Trust and
the Seller has duly authorized such sale and assignment and deposit to
the Trust by all necessary corporate action; and the execution,
delivery and performance of this Agreement has been duly authorized by
the Seller by all necessary corporate action.
(d) No Violation. The consummation of the
transactions contemplated by this Agreement and the fulfillment of the
terms hereof do not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, the certificate of formation or limited
liability company agreement of the Seller, or any material indenture,
agreement or other instrument to which the Seller is a party or by
which it is bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to the Basic
Documents); nor violate any law or, to the best of the Seller's
knowledge, any order, rule or regulation applicable to the Seller of
any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Seller or its properties.
(e) No Consent Required. No consent, license,
approval or authorization or registration or declaration with, any
Person or with any governmental authority, bureau or agency is required
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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.
(f) No Proceedings. There are no proceedings or
investigations pending or, to its knowledge threatened against it
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over it or
its properties (A) asserting the invalidity of this Agreement or any of
the Basic Documents, (B) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic
Documents, (C) seeking any determination or ruling that might
materially and adversely affect its performance of its obligations
under, or the validity or enforceability of, this Agreement or any of
the Basic Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates.
SECTION 2.11 [Reserved]
SECTION 2.12 Covenants of the Certificateholders. Each
Certificateholder by becoming a holder of a Certificate agrees:
(a) to be bound by the terms and conditions of the
Certificates of which such Certificateholder is the beneficial owner and of this
Agreement, including any supplements or amendments hereto and to perform the
obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of the Trust, the Owner Trustee, the Security Insurer and all other
Certificateholders present and future;
(b) to hereby appoint the Seller so long as it is a
Certificateholder as such Certificateholder's agent and attorney-in-fact to sign
any federal income tax information return filed on behalf of the Trust and agree
that, if requested by the Trust, it will sign such federal income tax
information return in its capacity as holder of an interest in the Trust. Each
Certificateholder also hereby agrees that in its tax returns it will not take
any position inconsistent with those taken in any tax returns filed by the
Trust;
(c) if such Certificateholder is other than an
individual or other entity holding its Certificate through a broker who reports
securities sales on Form 1099-B, to notify the Owner Trustee of any transfer by
it of a Certificate in a taxable sale or exchange, within 30 days of the date of
the transfer; and
(d) until the completion of the events specified in
Section 9.1(e), not to, for any reason, institute proceedings for the Trust to
be adjudicated 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
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or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Trust or a substantial part of its property, or cause or permit
the Trust to make any assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
SECTION 2.13 Federal Income Tax Allocations. Net income of the
Trust for any month as determined for Federal income tax purposes (and each item
of income, gain, loss, credit and deduction entering into the computation
thereof) shall be allocated:
(a) for so long as (i) all of the Trust Certificates
are owned by the Seller, the Trust shall be disregarded as an entity separate
from the Seller such that net income of the Trust for any month as determined
solely for federal income tax purposes (and each item of income, gain, loss,
credit and deduction entering into the computation thereof) shall be allocated
to the Seller and treated in the same manner as if the Trust were a division or
branch of the Seller;
(b) in the event that the Seller transfers (as such
term is defined for federal income tax purposes) any Trust Certificates and
there is more than one owner of Trust Certificates for federal income tax
purposes, net income of the Trust for any month as determined solely for federal
income tax purposes (and each item of income, gain, loss, credit and deduction
entering into the computation thereof) shall be allocated pro rata to the
Certificateholders based on their Percentage Interest.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1 Initial Ownership. Upon the formation of the Trust
by the contribution by the Seller pursuant to Section 2.5 and until the issuance
of the Trust Certificates, the Seller shall be the sole beneficiary of the
Trust.
SECTION 3.2 The Trust Certificates. The Trust Certificates
shall be issued in minimum denominations of 5% Percentage Interest. The Trust
Certificates shall be initially issued to the Seller in a Percentage Interest of
100%. The Trust Certificates shall be executed on behalf of the Trust by manual
or facsimile signature of an authorized officer of the Owner Trustee, and the
Owner Trustee shall have the power and authority and it is hereby authorized and
empowered, in the name and on behalf of the Trust to authorize, execute, issue
and deliver Trust Certificates. Trust Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Trust, shall be
validly issued and entitled to the benefit of this Agreement, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the authentication and delivery of such Trust Certificates or did not hold
such offices at the date of
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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 sale of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Trust Certificates in an
aggregate Percentage Interest equal to 100% to be executed on behalf of the
Trust, authenticated and delivered to or upon the written order of the Seller,
signed by its chairman of the board, its president or any vice president,
without further corporate action by the Seller, in authorized denominations. No
Trust Certificate shall entitle its holder to any benefit under this Agreement,
or shall be valid for any purpose, unless there shall appear on such Trust
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A, executed by the Owner Trustee by manual signature; such
authentication shall constitute conclusive evidence that such Trust Certificate
shall have been duly authenticated and delivered hereunder. All Trust
Certificates shall be dated the date of their authentication.
SECTION 3.4 Registration of Transfer and Exchange of Trust
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided.
__________________________ shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust
Certificate at the office or agency maintained pursuant to Section 3.8, and,
upon satisfaction of the conditions set forth below, the Owner Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Trust Certificates in authorized denominations of a
like class and Percentage Interest 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 of a like Percentage Interest upon surrender of the
Trust Certificates to be exchanged at the office or agency maintained pursuant
to Section 3.8.
Every Trust Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by (i) in the case of
a transfer of a Certificate, an executed Investment Letter referred to in
Section 3.10 or an opinion of counsel (furnished at the cost of the transferee
or transferor) satisfactory to the Owner Trustee to the effect that the transfer
of such Certificate is exempt from the registration requirements of the
Securities Act and would not result in adverse tax consequences to the Trust,
the Noteholders or the Certificateholders and (ii) 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"
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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 Owner Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of
transfer or exchange of Trust Certificates, but the Owner Trustee or the
Certificate Registrar may, but shall not be obligated to, require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Trust Certificates.
Notwithstanding the foregoing, the Owner Trustee shall not
make and the Certificate Registrar shall not register, transfers or exchanges
of, Trust Certificates for a period of 15 days preceding the due date for any
payment with respect to any Trust Certificates.
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust
Certificates. If (a) any mutilated Trust Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Trust Certificate and
(b) there shall be delivered to the Certificate Registrar, the Owner Trustee and
(unless an Insurer Default shall have occurred and be continuing) the Security
Insurer, such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Trust Certificate shall
have been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Trust shall execute and the Owner Trustee 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 Percentage
Interest. In connection with the issuance of any new Trust Certificate under
this Section, the Owner Trustee or the Certificate Registrar may, but shall not
be obligated to, require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. Any
duplicate Trust Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Certificate shall be
found at any time.
SECTION 3.6 Persons Deemed Certificateholders. Every person by
virtue of becoming a Certificateholder in accordance with this Agreement shall
be deemed to be bound by the terms of this Agreement. Prior to due presentation
of a Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar and the Security Insurer and any agent of the Owner
Trustee, the Certificate Registrar and the Security Insurer, may treat the
Person in whose name any Trust Certificate shall be registered in the
Certificate Register as the Owner 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, the Certificate Registrar or the
Security Insurer nor any agent of the Owner Trustee, the Certificate Registrar,
or the Security Insurer shall be bound by any notice to the contrary.
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SECTION 3.7 Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, the Seller or (unless an Insurer Default shall have occurred and be
continuing) the Security Insurer, and the Representative within 15 days after
receipt by the Owner Trustee of a request therefore from the Servicer or the
Representative in writing, a list, in such form as the Servicer may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Holders of Trust Certificates or one or
more Holders of Trust Certificates evidencing not less than a Percentage
Interest of 25% apply in writing to the Owner Trustee, and such application
states that the applicants desire to communicate with other Certificateholders
with respect to their rights under this Agreement or under the Trust
Certificates and such application is accompanied by a copy of the communication
that such applicants propose to transmit, then the Owner Trustee shall, within
five Business Days after the receipt of such application, afford such applicants
access during normal business hours to the current list of Certificateholders.
Each Holder, by receiving and holding a Trust Certificate, shall be deemed to
have agreed not to hold any of the Seller, the Servicer, the Security Insurer or
the Owner Trustee or the Security Insurer or any agent thereof or the
Representative accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.8 Maintenance of Office or Agency. The Owner Trustee
shall maintain in the Borough of Manhattan, 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 shall give prompt written notice to the Seller
and to the Certificateholders and (unless an Insurer Default shall have occurred
and be continuing) the Security Insurer of any change in the location of the
Certificate Register or any such office or agency.
SECTION 3.9 Appointment of Paying Agent. The Paying Agent
shall make distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.2 and shall report the amounts of such
distributions to the Owner Trustee. Any Paying Agent shall have the revocable
power to withdraw funds from the Certificate Distribution Account for the
purpose of making the distributions referred to above. The Owner Trustee may
revoke such power and remove the Paying Agent if the Owner Trustee determines in
its sole discretion that the Paying Agent shall have failed to perform its
obligations under this Agreement in any material respect. The Paying Agent shall
initially be _____________________ and any co-Paying Agent chosen by the Owner
Trustee, and acceptable to the Servicer and the Security Insurer. The Paying
Agent shall be permitted to resign upon 30 days' written notice to the Owner
Trustee and the Servicer. In the event that the Owner Trustee shall no longer be
the Paying Agent, the Owner Trustee shall appoint a successor to act as Paying
Agent (which shall be a bank or trust company). The Owner Trustee shall cause
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such successor Paying Agent or any additional Paying Agent appointed by the
Owner Trustee to execute and deliver to the Owner Trustee and (unless and
Insurer Default shall have occurred and be continuing) the Security Insurer an
instrument in which such successor Paying Agent or additional Paying Agent shall
agree with the Owner Trustee that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholders and
the Security Insurer entitled thereto until such sums shall be paid to such
Certificateholders or the Security Insurer. The Paying Agent shall return all
unclaimed funds to the Owner Trustee and upon removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to the Owner Trustee.
The provisions of Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Owner
Trustee also in its role as Paying Agent, for so long as the Owner Trustee shall
act as Paying Agent and, to the extent applicable, to any other Paying Agent
appointed hereunder. Any reference in this Agreement to the Paying Agent shall
include any co-Paying Agent unless the context requires otherwise.
SECTION 3.10 [Reserved]
SECTION 3.11 [Reserved]
SECTION 3.12 [Reserved]
SECTION 3.13 [Reserved]
SECTION 3.14 [Reserved]
SECTION 3.15 [Reserved]
SECTION 3.16 [Reserved]
SECTION 3.17. Trust Certificate Transfer Restrictions. (a) The
Trust Certificates may not be acquired by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that is subject to the provisions of
Title 1 of ERISA, (ii) a plan described in Section 4975(e) (1) of the Code, or
(iii) any entity whose underlying assets include plan assets by reason of such
plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding a Trust Certificate, the Holder thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan. The Owner Trustee shall
have no duty to determine whether Trust Certificates are owned by a Benefit
Plan.
(b) The Trust Certificates may not be offered or sold
except to Qualified Institutional Buyers in reliance on the exemption from the
registration requirements of the Securities Act provided by Rule 144A
thereunder.
Each purchaser of the Trust Certificates will be deemed to
have represented and agreed as follows:
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(i) It is a Qualified Institutional Buyer as defined
in Rule 144A promulgated under the Securities Act and is
acquiring the Trust Certificates for its own institutional
account or for the account of a Qualified Institutional Buyer.
(ii) It understands that the Trust Certificates will
be offered in a transaction not involving any public offering
within the meaning of the Securities Act, and that, if in the
future it decides to resell, pledge or otherwise transfer any
Trust Certificates, such Trust Certificates may be resold,
pledged or transferred only (a) to the Servicer (upon
redemption), (b) to a person who the seller reasonably
believes is a Qualified Institutional Buyer that purchases for
its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A or
(c) pursuant to an effective registration statement under the
Securities Act.
(iii) It understands that the Trust Certificates will
bear a legend substantially to the following effect:
THE TRUST CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES
OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING ANY TRUST
CERTIFICATE, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH TRUST
CERTIFICATE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW
TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR TRANSFERRED ONLY (1) TO
THE ISSUER (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, OR (3) IN A TRANSACTION COMPLYING WITH THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER JURISDICTION.
NO INTEREST IN THIS TRUST CERTIFICATE MAY BE ACQUIRED BY OR FOR THE
ACCOUNT OF (i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3)
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED,
("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii)
A PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (INCLUDING, WITHOUT LIMITATION, INDIVIDUAL RETIREMENT
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ACCOUNTS AND ▇▇▇▇▇ PLANS), OR (iii) ANY ENTITY WHOSE UNDERLYING ASSETS
INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY. BY
ACCEPTING AND HOLDING THIS CERTIFICATE, THE HOLDER HEREOF AND THE
CERTIFICATE OWNER SHALL EACH BE DEEMED TO HAVE REPRESENTED AND
WARRANTED THAT IT IS NOT A BENEFIT PLAN.
ARTICLE IV
Actions by Owner Trustee
SECTION 4.1 Prior Notice to Certificateholders with Respect to
Certain Matters. With respect to the following matters, the Owner Trustee shall
not take action unless at least 30 days before the taking of such action, the
Owner Trustee shall have notified the Certificateholders and the Security
Insurer in writing of the proposed action and neither the Certificateholders nor
the Security Insurer shall have notified the Owner Trustee in writing prior to
the 30th day after such notice is given that it has withheld consent or provided
alternative direction (provided that no consent or direction of the
Certificateholders pursuant to this Section 4.1 shall be effective without the
consent of the Security Insurer.
(a) the initiation of any material claim or lawsuit
by the Trust except claims or lawsuits brought in connection with the collection
of the Receivables and the compromise of any material action, claim or lawsuit
brought by or against the Trust (except with respect to the aforementioned
claims or lawsuits for collection of the Receivables);
(b) the election by the Trust to file an amendment to
the Certificate of Trust (unless such amendment is required to be filed under
the Business Trust Statute or unless such amendment would not materially and
adversely affect the interests of the Certificateholders);
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder or the Security
Insurer is required;
(d) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder or the Security
Insurer is not required and such amendment materially adversely affects the
interest of the Certificateholders;
(e) the amendment, change or modification of the Sale
and Servicing Agreement, except to cure any ambiguity or defect or to amend or
supplement any provision in a manner that would not materially adversely affect
the interests of the Certificateholders;
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(f) the consent to the calling, or waiver of any
default of any Basic Document;
(g) the consent to the assignment by the Indenture
Trustee or Servicer of their respective obligations under any Basic Document;
(h) except as provided in this Agreement dissolve,
terminate or liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any
other entity, or convey or transfer all or substantially all of the Trust's
assets to any other entity;
(j) cause the Trust to incur, assume or guaranty any
indebtedness other than as set forth in this Agreement or the other Basic
Documents;
(k) perform any act that conflicts with any other
Basic Document;
(l) perform any act which would make it impossible to
carry on the ordinary business of the Trust as described in this Agreement;
(m) confess a judgment against the Trust;
(n) cause the Trust to lend any funds to any entity;
(o) change the Trust's purpose and powers from those
enumerated in this Agreement; or
(p) possess Trust assets or assign the Trust's right
to property for other than a Trust purpose.
The Owner Trustee shall notify the Certificateholders and the Security Insurer
in writing of any appointment of a successor Note Registrar, Certificate Paying
Agent or Certificate Registrar within five Business Days thereof.
SECTION 4.2 Action by Certificateholders with Respect to
Certain Matters. The Owner Trustee shall not have the power, except upon the
direction of the Security Insurer in accordance with the Basic Documents to (a)
remove the Servicer under the Sale and Servicing Agreement pursuant to Section
8.1 thereof or (b) except as expressly provided in the Basic Documents, sell the
Receivables after the termination of the Indenture. The Owner Trustee shall take
the actions referred to in the preceding sentence only upon written instructions
signed by the Certificateholders or the Security Insurer, as the case may be,
and the furnishing of indemnification satisfactory to the Owner Trustee by the
Certificateholders.
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SECTION 4.3 Action by Certificateholders with Respect to
Bankruptcy. The Owner Trustee shall not have the power to, and shall not,
commence a voluntary proceeding in bankruptcy relating to the Trust without the
prior written consent of the Security Insurer (unless an Insurer Default shall
have occurred and be continuing) and the delivery to the Owner Trustee by each
Certificateholder of a certificate certifying that it reasonably believes that
the Trust is insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3 nor shall the Owner Trustee be
obligated to determine if a Certificateholder's direction violates this Section
4.4 or to follow any such direction, if given.
SECTION 4.5 Majority Control. Except as otherwise specifically
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Trust Certificates evidencing not
less than a majority of the Percentage Interest. Except as otherwise
specifically provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by Holders of
Certificates evidencing not less than a majority of the Percentage Interest at
the time of the delivery of such notice.
SECTION 4.6 Rights of Security Insurer. Notwithstanding
anything to the contrary in the Basic Documents, without the prior written
consent of the Security Insurer (so long as no Insurer Default shall have
occurred and be continuing), the Owner Trustee shall not (i) 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.
SECTION 4.7 Execution of Documents. Notwithstanding anything herein to
the contrary, the Owner Trustee is authorized, empowered and directed, on behalf
of the Trust, to execute, deliver, issue and authenticate the Certificates, to
execute, deliver and issue the Notes, and to execute and deliver each Basic
Document to which the Trust or the Owner Trustee is or is to be a party and any
other document, instrument, certificate or other writing that may be necessary,
convenient or incidental thereto. Any such execution, delivery, issuance and
authentication is hereby ratified and confirmed in all respects and does not and
will be deemed not to conflict with, constitute or result in a breach or
violation of, or a default under, any provision of or any duty under this Trust
Agreement.
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ARTICLE V
Application of Trust Funds: Certain Duties
SECTION 5.1 Establishment of Certificate Distribution Account.
(a) The Owner Trustee, for the benefit of the Certificateholders and the
Security Insurer, shall establish and maintain in the name of the Trust an
Eligible Deposit Account (the "Certificate Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders and the Security Insurer.
(b) The Owner Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Deposit Account, the
Owner Trustee shall within five Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency and, so long as no
Insurer Default shall have occurred and be continuing, the Security Insurer may
consent) establish 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 Owner Trustee at the Servicer's written direction, in Eligible
Investments that mature not later than one Business Day prior to the
Distribution Date for the Monthly Period to which such amounts relate.
Investments in Eligible Investments shall be made in the name of the Trust, and
such investments shall not be sold or disposed of prior to their maturity.
Subject to the other provisions hereof, the Owner Trustee shall have sole
control over each such investment and the income thereon, and any certificate or
other instrument evidencing any such investment, if any, shall be delivered
directly to the Owner Trustee. All Investment Earnings on funds in the
Certificate Distribution Account shall be distributed on the next Distribution
Date pursuant to Section 5.6 of the Sale and Servicing Agreement.
SECTION 5.2 Application of Funds in Certificate Distribution
Account. (a) On each Distribution Date, the Owner Trustee will, based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9 of the Sale and Servicing Agreement,
distribute pro rata to Certificateholders based on Percentage Interest, to the
extent of the funds available, amounts deposited in the Certificate Distribution
Account pursuant to Sections 5.6(b) of the Sale and Servicing Agreement on such
Distribution Date. Notwithstanding any other provision hereof, the
Certificateholders hereby authorize the Trustee on their behalf to remit all
amounts payable to the Certificate Distribution Account pursuant to Section
5.6(b)(vi) of the Sale and Servicing Agreement to the [Insurer's Agent] for
deposit in the Spread Account up to the amount necessary to cause the Collateral
Amount to
18
equal the Specified Spread Account Requirement and then to the [Payment
Provider] for payment of the [Required Amount] on the previous Distribution Date
and to the extent any funds remain, to the Certificateholders. (Capitalized
terms in this Section not defined in this Agreement shall have the meaning as
set forth in the Spread Account and Payment Agreement).
(b) On each Distribution Date, the Owner Trustee 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
Distribution Date.
(c) If any withholding tax is imposed on the Trust's payment
(or allocations of income) to a Certificateholder, such tax shall reduce the
amount otherwise distributable to the Certificateholder in accordance with this
Section. The Owner Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificateholders sufficient funds for
the payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee 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 Owner Trustee may in it sole discretion withhold such
amounts in accordance with this clause (c). In the event that an Owner wishes to
apply for a refund of any such withholding tax, the Owner Trustee shall
reasonably cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees to reimburse the Owner Trustee for any
out-of-pocket expenses incurred. The Servicer shall facilitate compliance with
this Section 5.2(c) by performance of its duties under the Sale and Servicing
Agreement.
SECTION 5.3 [Reserved]
SECTION 5.4 Method of Payment. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Distribution Date
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
Distribution Date and such Holder's Trust Certificates in the aggregate evidence
a Percentage Interest of not less than 20% or (ii) such Certificateholder is the
Seller, or an Affiliate thereof, or, if not, by check mailed to such
Certificateholder at the address of such holder appearing in the Certificate
Register. Notwithstanding the foregoing, the final distribution in respect of
any Trust Certificate (whether on the Final Scheduled Distribution Date or
otherwise) will be payable only upon presentation and surrender of such Trust
Certificate at the office or agency maintained for that purpose by the Owner
Trustee pursuant to Section 3.8.
19
SECTION 5.5 No Segregation of Monies; No Interest. Subject to
Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law. The Owner
Trustee shall not be liable for any interest thereon.
SECTION 5.6 Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
10.1(b)(iii) and 10.1(c) of the Sale and Servicing Agreement, the Seller 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,
if applicable, Schedule K-1) to enable each Certificateholder to prepare its
Federal and state income tax returns, (c) prepare or cause to be prepared, and
file or cause to be filed, all tax returns, if any, relating to the Trust
(including, if applicable, a partnership information return, Form 1065), 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
division or branch of its 100% owner, or as a partnership, as the case may be,
for Federal income tax purposes and (d) collect or cause to be collected any
withholding tax as described in and in accordance with Section 5.2(c) with
respect to income or distributions to Certificateholders. The Owner Trustee
shall make all elections pursuant to this Section as directed by the Seller. The
Owner Trustee shall sign all tax information returns furnished to it in
execution form by the Seller, and filed pursuant to this Section 5.6 and any
other returns as may be required by law and so furnished to it by the Seller,
and in doing so shall rely entirely upon, and shall have no liability for
information provided by, or calculations provided by, the Seller. In the event
the Trust is characterized as a partnership for federal income tax purposes, the
Seller shall cause the Trust to elect under Section 1278 of the Code to include
in income currently any market discount that accrues with respect to the
Receivables, and the Trust shall not make the election provided under Section
754 of the Code.
SECTION 5.7 Signature on Returns; Tax Matters Partner. (a)
Notwithstanding the provisions of Section 5.6, the Owner Trustee shall sign on
behalf of the Trust the tax returns of the Trust, if any, furnished to it in
execution form by the Seller, unless applicable law requires a Certificateholder
to sign such documents, in which case such documents shall be signed by the
Seller so long as it is a Certificateholder, in its capacity as "tax matters
partner."
(b) In the event the Trust is characterized as a
partnership for federal income tax purposes, and the Seller is a
Certificateholder, the Seller shall be the "tax matters partner" of the Trust
pursuant to the Code.
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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 presented in connection
therewith attached as an exhibit to or contemplated by the Basic Documents to
which the Trust is named as a party and any amendment thereto, in each case, in
such form as the Seller shall approve as evidenced conclusively by the Owner
Trustee's execution thereof, and on behalf of the Trust, to direct the Trustee
to authenticate and deliver Class A-1 Notes in the aggregate principal amount of
$_______________ and Class A-2 Notes in the aggregate principal amount of
$_________________. 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 Servicer recommends to it in
writing with respect to the Basic Documents.
SECTION 6.2 General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and the Basic Documents and to
administer the Trust in the interest of the Certificateholders, subject to the
Basic Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Servicer has agreed in the Sale and Servicing
Agreement, or the Seller has agreed hereunder or thereunder, to perform any act
or to discharge any duty of the Owner Trustee hereunder or of the Trust under
any Basic Document, and the Owner Trustee shall not be liable for the default or
failure of the Servicer or the Seller to carry out its obligations hereunder or
thereunder.
SECTION 6.3 Action upon Instruction. (a) Subject to Article
IV, the Security Insurer (so long as an Insurer Default shall not have occurred
and be continuing) or the Certificateholders (if an Insurer Default shall have
occurred and be continuing) (the "Instructing Party") shall have the exclusive
right to direct the actions of the Owner Trustee in the management of the Trust.
Such direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Article IV.
(b) The Owner Trustee shall not be required to take
any action hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide
between alternative courses of action permitted or required by the terms of this
21
Agreement or any Basic Document, the Owner Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Instructing Party received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within 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 the Security Insurer, and
shall have no liability to any Person for such action or inaction.
(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 Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders and the Security Insurer, and shall have no liability to any
Person for such action or inaction.
SECTION 6.4 No Duties Except as Specified in this Agreement or
in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation or termination statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Basic
Document. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any Liens
on any part of the Owner Trust Estate that result from actions by, or claims
against, the Owner Trustee (solely in its individual capacity) and that are not
related to the ownership or the administration of the Owner Trust Estate.
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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's 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.
SECTION 6.7 Notice of Default Under Indenture. Within 10
business days of receipt of a notice of Default under the Indenture, the Owner
Trustee shall provide notice to each Certificateholder by letter.
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties. The Owner
Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this Agreement.
The Owner Trustee in its individual capacity also agrees to disburse all moneys
actually received by it constituting part of the Owner Trust Estate upon the
terms of the Basic Documents and this Agreement. The Owner Trustee in its
individual capacity shall not be answerable or accountable hereunder or under
any Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence (ii) in the case of the 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;
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(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 Seller or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or in
respect of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty or obligation to the
Security Insurer, Trustee, Indenture Collateral Agent, the Collateral Agent, any
Noteholder or to any Certificateholder, other than as expressly provided for
herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the
default or misconduct of the Security Insurer, the Trustee, the Servicer, the
Certificateholders or the Seller under any of the Basic Documents or otherwise
and the Owner Trustee shall have no obligation or liability to insure compliance
by the Servicer, the Certificateholders or the Seller with any agreement to
which it is a party or to perform the obligations of the Trust under this
Agreement or the Basic Documents that are required to be performed by the
Trustee under the Indenture or the Servicer under the Sale and Servicing
Agreement or the Seller under this Agreement; and
(g) the Owner Trustee shall be under no obligation to
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
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 Seller, and the
Security Insurer, the Representative, and for the benefit of the
Certificateholders, that:
(a) It is a ________________ duly organized and
validly existing in good standing under the laws of the State of Delaware and
having an office within the State of Delaware. It has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement.
(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, Delaware or New York 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.
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
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them, and the Owner Trustee shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been selected by
the Owner Trustee with reasonable care, and (ii) may consult with counsel,
accountants and other skilled persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written opinion
or advice of any such counsel, accountants or other such persons and not
contrary to this Agreement or any Basic Document herein.
SECTION 7.5 Not Acting in Individual Capacity. Except as
provided herein or in any other Basic Document, in accepting the trusts hereby
created ____________________ 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 Seller and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement, of
any Basic Document or of the Trust Certificates (other than the signature and
countersignature of the Owner Trustee on the Trust Certificates) or the Notes,
or of any Receivable or related documents. The Owner Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Receivable, or the perfection and priority of
any security interest created by any Receivable in any Financed Vehicle or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments to
be distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation: the existence, condition and
ownership of any Financed Vehicle; the existence and enforceability of any
insurance thereon; the existence and contents of any Receivable or any computer
or other record thereof; the validity of the assignment of any Receivable to the
Trust or of any intervening assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance by the Seller or
the Servicer with any warranty or representation made under any Basic Document
or in any related document or the accuracy of any such warranty or
representation or any action of the Trustee or the Servicer or any subservicer
taken in the name of the Owner Trustee.
SECTION 7.7 Owner Trustee May Own Trust Certificates and
Notes. The Owner Trustee in its individual or any other capacity may become the
owner or pledgee of Trust Certificates or Notes and may deal with the Seller,
the Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee.
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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. __________________, 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 ____________________
or any successor thereto, nor the Owner Trustee shall be required to take any
action in any jurisdiction other than in the State of Delaware if the taking of
such action will, even after the appointment of a co-trustee or separate trustee
in accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by (____________) (or any successor thereto); or
(iii) subject (____________) (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
(____________) (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 between the
Representative and the Owner Trustee, and the Owner Trustee shall be entitled to
be reimbursed by the Representative 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
provided, however, that the Owner Trustee shall only be entitled to
reimbursement for expenses hereunder to the extent such expenses (i) are fees of
outside counsel engaged by the Owner Trustee in respect of the performance of
its obligations hereunder, but up to a dollar amount not to exceed the amount
previously agreed to with the Representative or (ii) relate to the performance
of its obligations pursuant to Section 5.6 hereof its rights and its duties
hereunder.
SECTION 8.2 Indemnification. The Seller shall be liable as
primary obligor for, and shall indemnify the Owner Trustee and its successors,
assigns, agents and servants (collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses, damages, taxes, claims,
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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 Seller shall not be liable
for or required to indemnify the Owner Trustee from and against Expenses arising
or resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In any
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Seller, which approval shall not be unreasonably
withheld.
SECTION 8.3 Payments to the Owner Trustee. Any amounts paid to
the Owner Trustee pursuant to this Article VIII shall be deemed not to be a part
of the Owner Trust Estate immediately after such payment.
SECTION 8.4 Non-recourse Obligations. Notwithstanding anything
in this Agreement or any Basic Document, the Owner Trustee agrees in its
individual capacity and in its capacity as Owner Trustee for the Trust that all
obligations of the Trust to the Owner Trustee individually or as Owner Trustee
for the Trust shall be recourse to the Owner Trust Estate only and specifically
shall not be recourse to the assets of any Certificateholder.
ARTICLE IX
Dissolution and Termination of Trust
SECTION 9.1 Termination of Trust Agreement. (a) This Agreement
and the Trust shall terminate and be of no further force or effect upon the
latest of (i) the maturity or other liquidation of the last Receivable
(including the purchase by the Servicer at its option of the corpus of the Trust
as described in Section 9.1 of the Sale and Servicing Agreement) and the
subsequent distribution of amounts in respect of such Receivables as provided in
the Basic Documents, or (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement and the payment to the
Security Insurer of all amounts payable or reimbursable to it, provided,
however, that in no event shall the trust created by this Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living on the date of this Agreement of ▇▇▇▇ ▇▇▇▇▇▇▇ of the
Commonwealth of Massachusetts; and provided, further, that the rights to
indemnification under Section 8.2 shall survive the termination of the Trust.
The Servicer shall promptly notify the Owner Trustee and the Security Insurer of
any prospective termination pursuant to this Section 9.1. The bankruptcy,
liquidation, dissolution, death or incapacity of any Certificateholder, or
Owner, shall not (x) operate to terminate this Agreement or the Trust, nor (y)
entitle such Certificateholder's or Owner'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.
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(b) Except as provided in clause (a), neither the
Seller nor any Certificateholder shall be entitled to revoke or terminate the
Trust.
(c) Notice of any termination of the Trust,
specifying the Distribution Date upon which the Certificateholders shall
surrender their Trust Certificates to the Paying Agent for payment of the final
distribution and cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of such
termination from the Servicer given pursuant to Section 9.1(c) of the Sale and
Servicing Agreement, stating (i) the Distribution Date upon or with respect to
which final payment of the Trust Certificates shall be made upon presentation
and surrender of the Trust Certificates at the office of the Paying Agent
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Trust
Certificates at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Paying Agent (if other than the Owner Trustee) at the
time such notice is given to Certificateholders. Upon presentation and surrender
of the Trust Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution 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 Seller. Certificateholders
shall thereafter look solely to the Seller as general unsecured creditors.
(d) Any funds remaining in the Trust after funds for
final distribution have been distributed or set aside for distribution shall be
distributed by the Owner Trustee to the Seller.
(e) Upon dissolution and completion of the winding up
of the Trust, the Owner Trustee shall cause the Certificate of Trust to be
canceled by filing a certificate of cancellation with the Secretary of State in
accordance with the provisions of Section 3810 of the Business Trust Statute and
thereupon the Trust and this Agreement shall terminate. The Owner Trustee shall
furnish notice of such dissolution to each Rating Agency and the Security
Insurer.
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SECTION 9.2 [Reserved]
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1 Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times be a corporation (i) satisfying the provisions
of Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (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 Security 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. In addition, at all times the Owner
Trustee or a co-trustee shall be a person that satisfies the requirements of
Section 3807(a) of the Business Trustee Statute (the "Delaware Trustee").
SECTION 10.2 Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer and the Security
Insurer. Upon receiving such notice of resignation, the Servicer shall promptly
appoint a successor Owner Trustee acceptable to the Security Insurer 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 Seller shall have received written confirmation from each of the Rating
Agencies that the proposed appointment will not result in an increased capital
charge to the Security Insurer by either of the Rating Agencies. If no successor
Owner Trustee shall have been so appointed and have accepted appointment within
30 days after the giving of such notice of resignation, the resigning Owner
Trustee or the Security Insurer may petition any court of competent jurisdiction
for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer with the consent of the Security Insurer (so long
as an Insurer Default shall not have occurred and be continuing) or the Security
Insurer may remove the Owner Trustee. If the Servicer shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the Servicer
shall promptly appoint a
30
successor Owner Trustee acceptable to the Security Insurer by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed, one copy to the Security Insurer and one copy
to the successor Owner Trustee and 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 Servicer shall provide notice
of such resignation or removal of the Owner Trustee to each of the Rating
Agencies.
SECTION 10.3 Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Servicer, the Security Insurer and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Servicer and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties and obligations.
No successor Owner Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Servicer shall mail notice of the successor of
such Owner Trustee to all Certificateholders, the Security Insurer the Trustee,
the Noteholders and the Rating Agencies. If the Servicer shall fail to mail such
notice within 10 days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at the
expense of the Servicer.
SECTION 10.4 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
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further that the Owner Trustee shall mail notice of such merger, sale,
conversion or consolidation to the Rating Agencies.
SECTION 10.5 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Vehicle may at the time be located;
the Servicer and the Owner Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Owner Trustee and the Security Insurer to act as co-trustee, jointly with
the Owner Trustee, or separate trustee or separate trustees, of all or any part
of the Owner Trust Estate, and to vest in such Person, in such capacity, such
title to the Owner Trust Estate, or any part thereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Servicer and the Owner Trustee may consider necessary or desirable. If
the Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee subject, unless an
Insurer Default shall have occurred and be continuing, to the approval of the
Security Insurer (which approval shall not be unreasonably withheld) alone shall
have the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 10.1 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and
obligations conferred or imposed upon the Owner Trustee shall
be conferred upon and exercised or performed by the Owner
Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee
joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to
be performed, the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding
of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of
the Owner Trustee;
(ii) no trustee under this Agreement shall
be personally liable by reason of any act or omission of any
other trustee under this Agreement; and
(iii) the Servicer and the Owner Trustee
acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee.
32
Any notice, request or other writing given to the Owner
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer and the Security Insurer.
Any separate trustee or co-trustee may at any time appoint the
Owner Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE XI
Miscellaneous
SECTION 11.1 Supplements and Amendments. (a) This Agreement
may be amended by the Seller and the Owner Trustee, with the prior written
consent of the Security Insurer (so long as an Insurer Default shall not have
occurred and be continuing) and with prior written notice to the Rating
Agencies, without the consent of any of the Noteholders or the
Certificateholders (i) to cure any ambiguity 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 from time to
time, with the prior written consent of the Security Insurer (so long as an
Insurer Default shall not have occurred and be continuing) by the Seller and the
Owner Trustee, with prior written notice to the Rating Agencies, with the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and, to the extent the Certificates affected
thereby, the consent of the Holders of Certificates evidencing not less than a
majority in Percentage Interest for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that subject to the express rights of the
Security Insurer under the Basic Documents, no such amendment shall (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made for the benefit of the Noteholders or the Certificateholders or (ii)
reduce the aforesaid percentage of the Outstanding Amount of the Notes and the
Percentage Interest required to consent to any such amendment, without the
consent of the Holders of all the outstanding Notes and Holders of all
outstanding Certificates.
33
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 Trustee and each of the
Rating Agencies.
(c) 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.
(d) Promptly after the execution of any amendment to
the Certificate of Trust, the Owner Trustee shall cause the filing of such
amendment with the Secretary of State.
(e) Prior to the execution of any amendment to this
Agreement or the Certificate of Trust, the Owner Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all conditions
precedent to the execution and delivery of such amendment have been satisfied.
The Owner Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Owner Trustee's own rights, duties or immunities
under this Agreement or otherwise. The Owner Trustee shall furnish copies of any
such amendments to this Agreement to each Rating Agency and the Security
Insurer.
SECTION 11.2 No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided beneficial ownership
interest therein only in accordance with Articles V and IX. No transfer, by
operation of law or otherwise, of any right, title or interest of the
Certificateholders to and in their ownership interest in the Owner Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
SECTION 11.3 Limitations on Rights of Others. Except for Section 2.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Security Insurer, the Seller, the Certificateholders, the Servicer
and, to the extent expressly provided herein, the Trustee and the Noteholders,
and nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
34
SECTION 11.4 Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt personally delivered, delivered by overnight
courier or mailed certified mail, return receipt requested and shall be deemed
to have been duly given upon receipt, if to the Owner Trustee, addressed to the
Corporate Trust Offices if to the Seller, addressed to ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention _____________ ; if to the Security
Insurer, addressed to MBIA Insurance Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Insured Portfolio Management SF; or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 Successors and Assigns. This Agreement shall
inure to the benefit of, the Representative, the Security Insurer, the Owner
Trustee and its successors, each Certificateholder and its successors and
permitted assigns and be binding upon the parties hereto and their respective
successors and permitted assigns. Any request, notice, direction, consent,
waiver or other instrument or action by a Certificateholder shall bind the
successors and assigns of such Certificateholder. Except as otherwise provided
in this Agreement, no other Person shall have any right or obligation hereunder.
Without limiting the generality of the foregoing, all covenants and agreements
in this Agreement which confer rights upon the Security Insurer shall be for the
benefit of and run directly to the Security Insurer, and the Security Insurer
shall be entitled to rely on and enforce such covenants, subject, however, to
the limitations on such rights provided in this Agreement and the Basic
Documents. The Security Insurer may disclaim any of its rights and powers under
this Agreement (but not its duties and obligations under the Note Policy) upon
delivery of a written notice to the Owner Trustee.
SECTION 11.8 [Reserved]
35
SECTION 11.9 No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, each Certificateholder, by accepting a Trust Certificate, and the
Trustee and each Noteholder by accepting the benefits of this Agreement, hereby
covenants and agrees that they will not at any time institute against the
Seller, or join in any institution against the Seller of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust Certificates, the
Notes, this Agreement or any of the Basic Documents.
SECTION 11.10 No Recourse. Each Certificateholder by accepting
a Trust Certificate acknowledges that such Certificateholder's Trust
Certificates represent beneficial ownership interests in the Trust only and do
not represent interests in or obligations of the Seller, the Servicer, the Owner
Trustee, the Trustee, the Security Insurer or any Affiliate thereof and no
recourse by such Certificateholder may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Trust Certificates or the Basic Documents.
SECTION 11.11 Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13 [Reserved]
SECTION 11.14 Servicer. The Servicer is authorized to prepare,
or cause to be prepared, execute and deliver on behalf of the Trust all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Trust or Owner Trustee to prepare, file or deliver pursuant
to the Basic Documents. Upon written request, the Owner Trustee shall execute
and deliver to the Servicer a limited power of attorney appointing the Servicer
the Trust's agent and attorney-in-fact to prepare, or cause to be prepared,
execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.
SECTION 11.15. Third Party Beneficiary. The Security Insurer
shall be a third party beneficiary hereof and, so long as no Insurer Default
shall have occurred and be continuing shall be entitled to enforce the
provisions hereof as if a party hereto.
36
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.
as Owner Trustee
By:____________________
Name:
Title:
FRANKLIN RECEIVABLES LLC
as Seller,
By: ____________________
Name:
Title:
37
EXHIBIT A
NUMBER __% Percentage Interest
R- CUSIP NO.
SEE REVERSE FOR CERTAIN DEFINITIONS
THE TRUST CERTIFICATES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES OR "BLUE SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING ANY TRUST
CERTIFICATE, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH TRUST CERTIFICATE IS
BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY
BE RESOLD, PLEDGED OR TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION
THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, OR (3) IN A TRANSACTION COMPLYING WITH THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
NO INTEREST IN THIS TRUST CERTIFICATE MAY BE ACQUIRED BY OR
FOR THE ACCOUNT OF (i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA")) THAT
IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN DESCRIBED IN
SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (INCLUDING,
WITHOUT LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS AND ▇▇▇▇▇ PLANS), OR (iii)
ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF SUCH PLAN'S
INVESTMENT IN THE ENTITY (EACH A "BENEFIT PLAN"). BY ACCEPTING AND HOLDING THIS
CERTIFICATE, THE HOLDER HEREOF AND THE CERTIFICATE OWNER SHALL EACH BE DEEMED TO
HAVE REPRESENTED AND WARRANTED THAT IT IS NOT A BENEFIT PLAN.
A-1
FRANKLIN AUTO TRUST 1998-1
ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Trust, as defined below, the property of which includes a pool of motor vehicle
retail installment sale contracts secured by new and used automobiles and light
trucks, and sold to the Trust by Franklin Receivables LLC.
(This Trust Certificate does not represent an interest in or obligation of
Franklin Receivables LLC or any of its Affiliates, except to the extent
described below.)
THIS CERTIFIES THAT ____________ is the registered owner of %
Percentage Interest nonassessable, fully-paid, beneficial ownership interest in
Franklin Auto Trust 1998-1 (the "Trust") formed by Franklin Receivables LLC, a
limited liability company (the "Seller").
The Trust was created pursuant to a Trust Agreement dated as
of August 1, 1998 (the "Trust Agreement"), between the Seller and
____________________, not in its individual capacity but solely as owner trustee
(the "Owner Trustee"), a summary of certain of the pertinent provisions of which
is set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Trust
Certificates designated as "Asset Backed Certificates" (herein called the "Trust
Certificates"). Also issued under the Indenture dated as of August 1, 1998,
between the Trust and __________________________ as trustee, are Notes
designated as "Class A-1 ______% Asset Backed Notes" (the "Class A-1 Notes"),
and "Class A-2 ____% Asset Backed Notes" (the "Class A-2 Notes" and together
with the Class A-1 Notes, the "Notes"). This Trust Certificate is issued under
and is subject to the terms, provisions and conditions of the Trust Agreement,
to which Trust Agreement the holder of this Trust Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of motor vehicle retail installment sale contracts secured
by new and used automobiles and light trucks, (the "Receivables"), all monies
received on the Receivables on or after August 1, 1998, security interests in
the vehicles financed thereby, certain bank accounts and the proceeds thereof,
proceeds from claims on certain insurance policies and certain other rights
under the Trust Agreement and the Sale and Servicing Agreement.
Under the Trust Agreement, there will be distributed on the
____ day of each month or, if such ____ day is not a Business Day, the next
Business Day (the "Distribution Date"), commencing in September 1998 to the
Person in whose name this Trust Certificate is registered at the close of
business on the last day of the calendar month immediately preceding the
Distribution Date (the "Record Date") such Certificateholder's Percentage
Interest in the amount to be distributed to Certificateholders on such
Distribution Date.
A-2
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, and
Certificateholders that, for purposes of Federal income taxes, the Trust will be
disregarded as an entity apart from its owner if there is only one owner for
Federal income tax purposes, or, if there is more than one owner for Federal
income tax purposes, will be treated as a partnership the partners of which are
the Certificateholders. The Certificateholders by acceptance of a Trust
Certificate, agree to treat, and to take no action inconsistent with the
treatment of, the Trust and the Trust Certificates for such tax purposes as just
described.
Each Certificateholder, by its acceptance of a Trust
Certificate, covenants and agrees that such Certificateholder will not at any
time institute against the Trust or the Seller, or join in any institution
against the Trust or the Seller of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Trust Certificates, the Notes, the Trust Agreement
or any of the Basic Documents.
Distributions on this Trust Certificate will be made as
provided in the Trust Agreement by the Owner Trustee by wire transfer or check
mailed to the Certificateholder of record in the Trust Certificate Register
without the presentation or surrender of this Trust Certificate or the making of
any notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Trust Certificate will
be made after due notice by the Owner Trustee of the pendency of such
distribution and only upon presentation and surrender of this Trust Certificate
at the office or agency maintained for the purpose by the Owner Trustee in the
Borough of Manhattan, City of New York.
Reference is hereby made to the further provisions of this
Trust Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Trust Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
THIS TRUST CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
A-3
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust
and not in its individual capacity, has caused this Trust Certificate to be duly
executed.
Date:
FRANKLIN AUTO TRUST 1998-1
By: ____________________,
solely as Owner Trustee and not in
its individual capacity
By: ________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates of Franklin Auto Trust
1998-1 referred to in the within-mentioned Trust Agreement.
Date:
--------------------,
solely as Owner Trustee and not in
its individual capacity
By:___________________________
Authorized Signatory
A-4
(Reverse of Trust Certificate)
The Trust Certificates do not represent an obligation of, or
an interest in, the Seller, the Servicer, the Owner Trustee or any 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 (and certain other amounts), all as more specifically set forth
herein and in the Sale and Servicing Agreement. The Trust Certificates are
limited in right of payment to certain collections and recoveries respecting the
Receivables, all as more specifically set forth in the Sale and Servicing
Agreement. A copy of each of the Sale and Servicing Agreement and the Trust
Agreement may be examined during normal business hours at the principal office
of the Seller, and at such other places, if any, designated by the Seller, by
any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller and the rights of the Certificateholders under the
Trust Agreement at any time by the Seller and the Owner Trustee with the consent
of the holders of the Notes and the Trust Certificates evidencing not less than
a majority of the outstanding principal balance of the Notes and 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 the Owner Trustee.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, Trust Certificates are exchangeable for new Trust
Certificates in authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same.
A-5
No service charge will be made for any such registration of
transfer or exchange, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of
the Owner Trustee or the Certificate Registrar may treat the person in whose
name this Trust Certificate is registered as the owner hereof for all purposes,
and none of the Owner Trustee, the Certificate Registrar or any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of all
property held as part of the Owner Trust Estate. The Servicer may at its option
purchase the corpus of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable, subject to certain restrictions, only as of the last
day of any Monthly Period as of which the Pool Balance is [10]% or less of the
Initial Pool Balance. In addition, if the Servicer does not exercise its option
to purchase the Receivables within 90 days after the last day of the Monthly
Period as of which such right can first be exercised, an auction sale shall be
conducted (as described in the Sale and Servicing Agreement) and such auction
shall effect early retirement of the Certificates.
A-6
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.
Dated:
*
Signature Guaranteed:
*
--------------------------
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Trust Certificate in
every particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may be
determined by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
A-7
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
FRANKLIN AUTO TRUST 1998-1
THIS Certificate of Trust of Franklin Auto Trust 1998-1 (the
"Trust"), is being duly executed and filed by
_______________________________________________, as trustee, to form a business
trust under the Delaware Business Trust Act (12 Del. Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is
FRANKLIN AUTO TRUST 1998-1.
2. Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware is _______________________, , ,
Delaware _________, Attention: _____________________________.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust.
-----------------------,
not in its individual capacity but
solely as owner trustee of the Trust.
By:________________________________
Name:
Title:
B-1