FLAGSHIP AUTO RECEIVABLES OWNER TRUST 1999-2
AMENDED AND RESTATED TRUST AGREEMENT
between
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
FLAGSHIP CREDIT CORPORATION
and
FIRST UNION NATIONAL BANK,
as Owner Trustee
Dated as of November 8, 1999
TABLE OF CONTENTS
Page ||
ARTICLE I
Definitions
SECTION 1.01. Capitalized Terms...................................1
SECTION 1.02. Other Definitional Provisions.......................2
ARTICLE II
Organization
SECTION 2.01. Name................................................3
SECTION 2.02. Office..............................................3
SECTION 2.03. Purposes and Powers.................................3
SECTION 2.04. Appointment of Owner Trustee........................4
SECTION 2.05. Initial Capital Contribution of Owner Trust Estate..4
SECTION 2.06. Declaration of Trust................................5
SECTION 2.07. Liability of Owners.................................5
SECTION 2.08. Title to Trust Property.............................5
SECTION 2.09. Situs of Trust......................................5
SECTION 2.10. Representations and Warranties of the Depositor.....5
SECTION 2.11. [Reserved...........................................6
SECTION 2.12. Federal Income Tax Allocations; Tax Treatment.......6
SECTION 2.13. Administrative Duties...............................7
SECTION 2.14. [Reserved]..........................................8
ARTICLE III
Certificates
SECTION 3.01. Initial Ownership...................................8
SECTION 3.02. The Certificates....................................9
SECTION 3.03. Authentication of Trust Certificates................9
SECTION 3.04. Registration of Transfer and Exchange of
Certificates; Limitations on Transfer...............9
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Certificates..10
SECTION 3.06. Persons Deemed Certificateholders..................10
SECTION 3.07. Access to List of Certificateholders' Names and
Addresses..........................................10
SECTION 3.08. Maintenance of Office or Agency....................11
ARTICLE IV
Actions by Owner Trustee
SECTION 4.01. Prior Notice to the Certificateholders and the
Insurer with Respect to Certain Matters............11
SECTION 4.02. Action by the Certificateholders and the Insurer with
Respect to Certain Matters.........................12
SECTION 4.03. Action by the Certificateholders with Respect to
Bankruptcy.........................................12
SECTION 4.04. Restrictions on Power..............................13
SECTION 4.05. Majority Control...................................13
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.01. Establishment of Trust Account.....................13
SECTION 5.02. Application of Trust Funds.........................14
SECTION 5.03. Method of Payment..................................14
SECTION 5.04. No Segregation of Moneys; No Interest..............14
SECTION 5.05. Accounting and Reports to the Certificateholders,
Internal Revenue Service and Others................14
SECTION 5.06. Signature on Returns; Tax Matters Partner..........15
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.01. General Authority..................................15
SECTION 6.02. General Duties.....................................15
SECTION 6.03. Action upon Instruction............................16
SECTION 6.04. No Duties Except as Specified in this Agreement or in
Instructions.......................................17
SECTION 6.05. No Action Except Under Specified Documents or
Instructions.......................................17
SECTION 6.06. Restrictions.......................................17
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ARTICLE VII
Concerning Owner Trustee
SECTION 7.01. Acceptance of Trusts and Duties....................18
SECTION 7.02. Furnishing of Documents............................19
SECTION 7.03. Representations and Warranties.....................19
SECTION 7.04. Reliance; Advice of Counsel........................20
SECTION 7.05. Not Acting in Individual Capacity..................20
SECTION 7.06. Owner Trustee Not Liable for Certificates or Auto
Loans..............................................20
SECTION 7.07. Owner Trustee May Own Notes........................21
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.01. Owner Trustee's Fees and Expenses..................21
SECTION 8.02. Indemnification....................................21
SECTION 8.03. Payments to Owner Trustee..........................22
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement.....................22
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.01. Eligibility Requirements for Owner Trustee.........22
SECTION 10.02. Resignation or Removal of Owner Trustee............23
SECTION 10.03. Successor Owner Trustee............................23
SECTION 10.04. Merger or Consolidation of Owner Trustee...........24
SECTION 10.05. Appointment of Co-Trustee or Separate Trustee......24
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments.........................26
SECTION 11.02. No Legal Title to Owner Trust Estate in
Certificateholders.................................27
SECTION 11.03. Limitations on Rights of Others; Third Party
Beneficiary........................................27
SECTION 11.04. Notices............................................27
SECTION 11.05. Severability.......................................28
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SECTION 11.06. Separate Counterparts..............................28
SECTION 11.07. Successors and Assigns.............................28
SECTION 11.08. Covenants of the Company...........................28
SECTION 11.09. No Petition........................................29
SECTION 11.10. No Recourse........................................29
SECTION 11.11. Headings...........................................29
SECTION 11.12. GOVERNING LAW......................................29
SECTION 11.13. Cecate Transfer Restrictions.......................29
SECTION 11.14. Submission to Jurisdiction.........................30
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AMENDED AND RESTATED TRUST AGREEMENT dated as of November 8, 1999 (this
"Agreement"), between PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a
Delaware corporation, as depositor (the "Depositor"), FLAGSHIP CREDIT
CORPORATION, a Delaware corporation (the "Company"), and FIRST UNION NATIONAL
BANK, a national banking association (the "Bank," and not in its individual
capacity, but solely as owner trustee, the "Owner Trustee"). This Agreement
amends and restates the Trust Agreement dated as of November 8, 1999 between the
Depositor and the Bank (the "Original Trust Agreement").
ARTICLE I
Definitions
SECTION 1.01. Capitalized Terms. For all purposes of this Agreement,
capitalized terms used but not defined herein and defined in the Sales and
Servicing Agreement or, if not defined therein, in the Indenture and shall have
the meanings set forth therein. The "Sales and Servicing Agreement" means the
Sales and Servicing Agreement, dated as of November 1, 1999, among Flagship Auto
Loan Funding LLC 1999-II, a Delaware limited liability company, as purchaser
("Flagship LLC"), Flagship Credit Corporation, as originator and servicer (the
"Company" or the "Servicer"), Flagship Auto Receivables Owner Trust 1999-2, as
Issuer (the "Issuer"), ▇▇▇▇▇▇ Trust and Savings Bank, an Illinois banking
corporation, as indenture trustee (the "Indenture Trustee") and Copelco
Financial Services Group, Inc., a Delaware corporation, as Back-up Servicer (the
"Back-up Servicer"). For all purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Agreement" shall mean this Amended and Restated Trust Agreement, as the
same may be amended and supplemented from time to time.
"Bank" means First Union National Bank, its successors and assigns, and any
other Person that serves as Owner Trustee hereunder, each in its individual
capacity.
"Benefit Plan" shall have the meaning assigned to such term in Section
11.13.
"Certificate" means a certificate evidencing the beneficial interest of a
Certificateholder in the Issuer, substantially in the form of Exhibit A.
"Certificate Balance" shall have the meaning assigned to such term in
Section 2.05.
"Certificate Percentage Interest" shall mean with respect to any
Certificate, the percentage interest of ownership in the Issuer represented
thereby as set forth on the face thereof.
"Certificate Register" and "Certificate Registrar" shall mean the register
mentioned in and the registrar appointed pursuant to Section 3.04.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee, the
corporate trust office of the Owner Trustee located at One ▇▇▇▇▇▇ Square, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration or
at such other address as the Owner Trustee may designate by notice to the
Certificateholder(s), and the Company, or the principal corporate trust office
of any successor Owner Trustee (the address of which the successor owner trustee
will notify the Certificateholder(s), and Flagship).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Governmental Authority" shall mean any court or federal or state
regulatory body, administrative agency or other tribunal or other governmental
instrumentality.
"Holder" or "Certificateholder" shall mean the Person in whose name a
Certificate is registered on the Certificate Register.
"Insurer" shall mean MBIA Insurance Corporation, its successors and
assigns.
"Issuer" shall mean the Trust established by this Agreement.
"Note Depository Agreement" means the agreement dated the Closing Date
among the Trust, the Indenture Trustee and The Depository Trust Company, as the
clearing agency, as the same may be amended, amended and restated or otherwise
modified from time to time.
"Owner Trust Estate" shall mean the property that is the subject of the
Flagship Auto Receivables Owner Trust 1999-2.
"Owner Trustee" shall mean First Union National Bank, a national banking
association, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
SECTION 1.02. Other Definitional Provisions.
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(a) 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.
(b) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto, accounting terms not defined in this Agreement or
in any such certificate or other document, and accounting terms partly defined
in this Agreement or in any such certificate or other document to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles. To the extent that the definitions of accounting
terms in this Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted accounting
principles, the definitions contained in this Agreement or in any such
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Article and Section references
contained in this Agreement are references to Articles and Sections in or to
this Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation".
(d) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein
(including the Sales and Servicing Agreement referred to above) or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, amended and restated or
otherwise modified and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
Organization
SECTION 2.01. Name. The Trust created under the Original Trust Agreement
shall be known as "Flagship Auto Receivables Owner Trust 1999-2," in which name
the Owner Trustee shall have power and authority and is hereby authorized and
empowered, without the need for further action on the part of the Owner Trustee,
to conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and ▇▇▇ and be sued.
SECTION 2.02. Office. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address outside of
Delaware as the Owner Trustee
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may designate by written notice to the Certificateholders, the Company, the
Insurer and the Depositor.
SECTION 2.03. Purposes and Powers.
(a) The purpose of the Trust is , and the Owner Trustee shall have power
and authority, and is hereby authorized and empowered, without the need for
further action on the part of the Owner Trustee, in the name and on behalf of
the Trust or in the name of the Owner Trustee, to do or cause to be done all
acts and things necessary, appropriate, or convenient to engage in the following
activities:
(i) to acquire the Auto Loans and Other Conveyed Property pursuant to
the Owner Trust Purchase Agreement;
(ii) to execute, (in the case of the Certificates) authenticate,
deliver, and issue the Notes pursuant to the Indenture and the Certificates
pursuant to this Agreement, and to sell the Notes and the Certificates and
to pay interest on and principal on the Notes and make distributions on the
Certificates;
(iii) 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 Depositor;
(iv) to Grant the Collateral pursuant to the Indenture and to hold,
manage and distribute to the Certificateholders pursuant to the terms of
the Sales and Servicing Agreement and Indenture any portion of the
Collateral released from the Lien of, and remitted to the Trust pursuant
to, the Indenture;
(v) to enter into, execute, deliver, and perform its obligations under
the Transaction Documents to which it is to be a party;
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vii) subject to compliance with the Transaction Documents, to engage
in such other activities as may be required in connection with conservation
of the Owner Trust Estate (as defined herein).
Each of the Owner Trustee and 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 other Transaction Documents.
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SECTION 2.04. Appointment of Owner Trustee. The Depositor hereby confirms
the appointment of 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 2.05. Initial Capital Contribution of Owner Trust Estate. Pursuant
to the Original Trust Agreement, the Depositor assigned, transferred, conveyed
and set over to the Owner Trustee, of the date thereof, the sum of $1 (the
"Certificate Balance"). The Owner Trustee hereby acknowledges receipt in trust
from the Depositor, as of the date thereof, of the foregoing contribution, which
shall constitute the initial Owner Trust Estate. The Company 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 or the Bank, as the case may be.
SECTION 2.06. Declaration of Trust. The Owner Trustee hereby declares that
it shall 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 Transaction Documents. It is the
intention of the parties hereto that the Trust constitute a trust under the
common law of the State of Delaware and that this Agreement constitute the
governing instrument of such trust.
SECTION 2.07. Liability of Owners. The Certificateholders shall not have
any personal liability for any liability or obligation of the Trust.
SECTION 2.08. Title to Trust Property. Legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a common law trust and
separate legal entity except where applicable law in any jurisdiction requires
title to any part of the Owner Trust Estate to be vested in the Owner Trustee
and/or another trustee or trustees, in which case title shall be deemed to be
vested in the Owner Trustee and/or, a co-trustee(s) and/or a separate
trustee(s), as the case may be.
SECTION 2.09. Situs of Trust. The Trust shall 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. Payments shall be
received by the Trust only in Delaware, and payments shall be made by the Trust
only from Delaware. The only office of the Trust shall be determined in
accordance with Section 2.02.
SECTION 2.10. Representations and Warranties of the Depositor. The
Depositor hereby represents and warrants to the Bank and Owner Trustee and the
Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware, with
power and authority to own
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its properties and to conduct its business as such properties are currently
owned and such business is presently conducted.
(ii) The Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require such qualifications.
(iii) The Depositor has the power and authority to execute and deliver
this Agreement and to carry out its terms; the Depositor has full power and
authority to sell and assign the property to be sold and assigned to and
deposited with the Trust and the Depositor has duly authorized such sale
and assignment and deposit to the Trust by all necessary corporate action;
and the execution, delivery and performance of this Agreement have been
duly authorized by the Depositor by all necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the certificate
of incorporation or bylaws of the Depositor, or any indenture, agreement or
other instrument to which the Depositor is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Transaction Documents); nor violate
any law or, to the best of the Depositor's knowledge, any order, rule or
regulation applicable to the Depositor of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(v) To the Depositor's best knowledge, there are no proceedings or
investigations pending or threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (A) asserting the
invalidity of this Agreement, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement.
SECTION 2.11. [Reserved]
SECTION 2.12. Federal Income Tax Allocations; Tax Treatment.
(a) If the Certificates are held by more than one Person or the Trust is
recharacterized as a separate entity the net income of the Trust for any month
as determined for federal income tax purposes (and each item of income, gain,
loss and deduction entering into the computation
6
thereof) shall be allocated among the Certificateholders as of the first day
following the end of such month, in proportion to their ownership of principal
amount of Certificates on such date, to the extent of any net income of the
Trust (including any amounts to be distributed to the Certificateholders
pursuant to the Indenture).
Net losses of the Trust, if any, for any month as determined for federal
income tax purposes (and each item of income, gain, loss and deduction entering
into the computation thereof) shall be allocated to the Company.
(b) All "excess nonrecourse liabilities" represented by all outstanding
Notes issued by the Trust, as well as the deductions attributable thereto, shall
be allocated one hundred percent to the Company in accordance with Treasury
Regulations section 1.752-3(a)(3). Notwithstanding any other provision of this
Agreement, if the Certificates are held solely by one Person or the Trust has
not been recharacterized as a separate entity, the application of clause (a) and
this clause (b) shall be disregarded.
(c) It is the intent of the parties hereto that, solely for purposes of
federal income, state and local income, franchise and single business tax and
any other taxes measured in whole or in part by income, until the Certificates
are held by more than one Person or the Trust is recharacterized as a separate
entity, the Trust will be disregarded as an entity separate from its beneficial
owner and the Notes will be treated as debt. If the Certificates are held by
more than one Person or the Trust is recharacterized as a separate entity, it is
the intention of the parties hereto that, solely for purposes of federal income,
state and local income, franchise and single business tax and any other taxes
measured in whole or in part by income, the Trust shall be treated as a
partnership and the Certificateholder(s) and the Company shall be treated as
partners in that partnership with the assets of the partnership being the Auto
Loans and other assets held by the Trust, and the Notes being debt of that
partnership. The parties agree that, unless otherwise required by appropriate
tax authorities, the Trust shall execute annual or other necessary returns,
reports and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes , as such returns, reports, and forms may be
represented to the Owner Trustee and upon the written direction of the Company.
The Owner Trustee (as such and in its individual capacity) shall have no
responsibility for the accuracy of the information contained in any such return,
report, or form and shall be fully protected in relying thereon.
SECTION 2.13. Administrative Duties.
(a) Duties with Respect to the Specified Agreements. The Company shall
perform the duties of the Trust and the Owner Trustee under the Indenture and
the Note Depository Agreement (collectively the "Specified Agreements"). In
addition, the Company shall consult with the Owner Trustee as the Company deems
appropriate regarding the duties of the Trust and the Owner Trustee under the
Specified Agreements. The Company shall monitor the performance of the Trust's
duties and shall advise the Owner Trustee and the Insurer when action
7
is necessary to comply with the Trust's and the Owner Trustee's duties under the
Specified Agreements. The Company shall prepare for execution by the Owner
Trustee or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Trust or the Owner Trustee to prepare, file or deliver
pursuant to the Specified Agreements. In furtherance and without limiting the
generality of the foregoing, the Company shall take all necessary action that is
the duty of the Trust or the Owner Trustee to take pursuant to Sections 3.05,
3.17 and 3.18 of the Indenture.
(b) Duties with Respect to the Trust.
(i) In addition to the duties of the Company set forth in the
Transaction Documents, but subject to the terms of the Transaction
Documents, the Company shall perform such calculations and shall prepare
for execution by the Trust or the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of
the Trust or the Owner Trustee to prepare, file or deliver pursuant to
state and federal tax and securities laws and shall take all other
appropriate action that it is the duty of the Trust or the Owner Trustee to
take pursuant to the Transaction Documents relating to the preparation and
filing of tax returns, the furnishing of documents and with respect to
supplements and amendments of the Specified Agreements. The Owner Trustee
(as such and in its individual capacity) shall have no responsibility for
the accuracy of the information contained in any such document, report,
filing, instrument, certificate, opinion, return, supplement, or amendment,
and shall be fully protected in relying thereon. In accordance with the
request of the Owner Trustee but subject to the terms of the Transaction
Documents, the Company shall administer, perform or supervise the
performance of such other activities in connection with the Transaction
Documents as are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee and are reasonably within the
capability of the Company.
(ii) Notwithstanding anything in this Agreement or any of the other
Transaction Documents to the contrary, the Company shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding tax
is imposed on the Trust's payments (or allocations of income) to a
Certificateholder. Any such notice shall be in writing and specify the
amount of any withholding tax required to be withheld by the Owner Trustee
pursuant to such provision. The Owner Trustee (as such and in its
individual capacity) shall have no responsibility for the accuracy of the
information contained in any such notice and shall be fully protected in
relying thereon.
(c) Records. The Company shall maintain appropriate books of account,
including capital accounts, and records relating to the Trust, which books of
account and records shall be accessible for inspection by the Owner Trustee and
the Certificateholders at any time during normal business hours.
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(d) Additional Information to be Furnished to the Trust. The Depositor
shall furnish to the Owner Trustee from time to time such additional information
regarding the Trust or the Transaction Documents as the Owner Trustee shall
reasonably request.
SECTION 2.14. [Reserved].
ARTICLE III
Certificates
SECTION 3.01. Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.05 and until the issuance of
the Certificates, the Depositor shall be the sole beneficiary of the Trust.
SECTION 3.02. The Certificates. The Certificates shall be initially issued
to Flagship LLC in a Certificate Percentage Interest of 100% upon the written
direction of the Depositor to the Owner Trustee. The Certificates shall be
executed by manual or facsimile signature of an authorized officer of the Owner
Trustee. 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 Owner Trustee 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 Certificates or did not hold such offices at the date of
authentication and delivery of such Certificates. A transferee of a 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 Certificate in such transferee's name pursuant to Section
3.04.
SECTION 3.03. Authentication of Trust Certificates. On the Closing Date,
the Owner Trustee shall cause the Certificates in aggregate Certificate
Percentage Interest of 100% to be executed on behalf of the Trust, authenticated
and delivered to or upon the written order of the Depositor, signed by its
chairman of the board, its president, any vice president, secretary or any
assistant treasurer as set forth in Exhibit B, without further corporate action
by the Depositor, in authorized denominations. No Certificate shall entitle its
Holder to any benefit under this Agreement or be valid for any purpose unless
there shall appear on such 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 Certificate has been validly issued, authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
SECTION 3.04. Registration of Transfer and Exchange of Certificates;
Limitations on Transfer. The Certificate Registrar shall keep or cause to be
kept, at the office or agency
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maintained pursuant to Section 3.08, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.
No Certificate may be transferred without the consent of the Insurer. Upon
surrender for registration of transfer of any Certificate at the office or
agency maintained pursuant to Section 3.08, the Owner Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
aggregate amount dated the date of authentication by the Owner Trustee. At the
option of a Holder, Certificates may be exchanged for other Certificates of
authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.08.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each
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 Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
The preceding provisions of this Section notwithstanding, the Certificate
Registrar shall not be required to register transfers or exchanges of,
Certificates for a period of 15 days preceding the due date for any payment with
respect to the Certificates (the parties hereto hereby, and each
Certificateholder by its acceptance of a Certificate thereby, agreeing that such
period is reasonable).
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated 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 Certificate and (b) there shall be delivered
to the Certificate Registrar, the Bank and the Owner Trustee such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Certificate has been acquired by a 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 Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section, the Owner Trustee or the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any
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duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership in the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 3.06. Persons Deemed Certificateholders. Prior to due presentation
of a Certificate for registration of transfer, the Owner Trustee and the
Certificate Registrar may treat the Person in whose name any Certificate is
registered in the Certificate Register as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 5.02 and for all other
purposes whatsoever, and none of the Owner Trustee, or the Certificate Registrar
shall be bound by any notice to the contrary.
SECTION 3.07. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar shall furnish or cause to be furnished to the Servicer
and the Depositor, within 15 days after receipt by the Owner Trustee of a
written request therefor from the Servicer or the Depositor, a list, in such
form as the Servicer or the Depositor may reasonably require, of the names and
addresses (as reflected on the Certificate Register) of the Certificateholders
as of the most recent Record Date. If a Certificateholder applies in writing to
the Certificate Registrar, and such application states that the applicant
desires to communicate with other Certificateholders with respect to their
rights under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicant proposes to
transmit, then the Certificate Registrar shall, within five Business Days after
the receipt of such application, afford such applicant access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate, shall be deemed to have agreed not to hold
any of the Depositor, the Company, the Certificate Registrar, the Bank, or the
Owner Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.08. Maintenance of Office or Agency. The Owner Trustee shall
maintain in Wilmington, Delaware, an office or offices or agency or agencies
where 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
Certificates and the Transaction Documents may be served. The Owner Trustee
initially designates its Corporate Trust Office as its office for such purposes.
The Owner Trustee shall give prompt written notice to the Company and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
ARTICLE IV
Actions by Owner Trustee
SECTION 4.01. Prior Notice to the Certificateholders and the Insurer 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
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the Certificateholders and the Insurer in writing of the proposed action and the
Certificateholders prior to the 30th day after such notice is given shall not
have notified the Owner Trustee in writing that the Certificateholders and the
Insurer have withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims or
lawsuits brought in connection with the collection of the Auto Loans) and the
compromise of any action, claim or lawsuit brought by or against the Owner
Trustee (except with respect to the aforementioned claims or lawsuits brought in
connection with collection of the Auto Loans);
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interests of the Certificateholders;
or
(d) the appointment pursuant to the Indenture of a successor Note Registrar
or Indenture Trustee or pursuant to this Agreement of a successor Certificate
Registrar, or the consent to the assignment by the Note Registrar or Indenture
Trustee or Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable.
In addition, the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separately from those of any other entity. Except as expressly set forth
herein, the Trust shall not pay any indebtedness, operating expenses or
liabilities of any other entity. The Trust shall maintain appropriate minutes or
other records of all appropriate actions and shall maintain its offices separate
from the offices of the Company, Flagship LLC, the Depositor and the Servicer.
SECTION 4.02. Action by the Certificateholders and the Insurer with Respect
to Certain Matters. The Owner Trustee shall not have the power, except upon the
written direction of the Certificateholders and the Insurer and as expressly
provided for in the Transaction Documents to (a) to remove the Servicer under
the Sales and Servicing Agreement or (b) to sell the Auto Loans 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 and the Insurer.
SECTION 4.03. Action by the Certificateholders with Respect to Bankruptcy.
(a) The Trust shall not, without the prior written consent of the Owner
Trustee, (i) institute any proceedings to adjudicate the Trust as bankrupt or
insolvent, (ii) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (iii) file a petition seeking
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or consenting to reorganization or relief under any applicable federal or state
law relating to bankruptcy with respect to the Trust, (iv) 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, (v) make
any assignment for the benefit of the Trust's creditors; (vi) cause the Trust to
admit in writing its inability to pay its debts generally as they become due; or
(vii) take any action in furtherance of any of the foregoing (any of the above
foregoing actions, a "Bankruptcy Action"). In considering whether to give or
withhold written consent to the Bankruptcy Action by the Trust, the Owner
Trustee, with the consent of the Certificateholders (hereby given, which consent
the Certificateholders believe to be in the best interest of Certificateholders
and the Trust), shall consider the interests of the Noteholders and the Insurer
in addition to the interests of the Trust and whether the Trust is insolvent.
The Owner Trustee shall have no duty to give such written consent to Bankruptcy
Action by the Trust if the Owner Trustee shall not have been furnished (at the
expense of the Person that requested that such letter be furnished to the Owner
Trustee) a letter from an independent accounting firm of national reputation
stating that in the opinion of such firm the Trust is then insolvent. The Owner
Trustee shall not be personally liable to any Person on account of the Owner
Trustee's good faith reliance on the provisions of this Section or in connection
with the Owner Trustee's giving prior written consent to Bankruptcy Action by
the Trust in accordance herewith, or withholding such consent in good faith, and
neither the Trust nor any Certificateholder shall have any claim for breach of
fiduciary duty or otherwise against the Owner Trustee or the Bank for giving or
withholding its consent to any such Bankruptcy Action.
(b) The parties hereto stipulate and agree that no Certificateholder has
power to commence any Bankruptcy Action on the part of the Trust or to direct
the Owner Trustee to take any Bankruptcy Action on the part of the Trust. To the
extent permitted by applicable law, the consent of the Controlling Part and the
Indenture Trustee shall be obtained prior to taking any Bankruptcy Action by the
Trust.
(c) The provisions of this Section do not constitute an acknowledgment or
admission by the Trust, the Owner Trustee, any Certificateholder or any creditor
of the Trust that the Trust is eligible to be a debtor under the United States
Bankruptcy Code, 11 U.S.C.ss.ss.101 et seq., as amended.
SECTION 4.04. Restrictions on Power. The Owner Trustee shall not be
required to take or to refrain from taking any action if such action or inaction
would be contrary to any obligation of the Trust, or of the Owner Trustee under
this Agreement or any of the other Transaction Documents or would be contrary to
the purpose of this Trust as set forth in Section 2.03, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
SECTION 4.05. Majority Control. Except as expressly provided herein, any
action that may be taken by the Certificateholders under this Agreement may be
taken by the Holders of Certificates aggregating more than 50% of the
Certificates by Certificate Percentage Interest. Except as expressly provided
herein, any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Holders of Certificates aggregating
more than 50% by the Certificate Percentage Interest.
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ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.01. Establishment of Trust Account. The Owner Trustee, for the
benefit of the Certificateholders, shall establish and maintain in the name of
the Trust an Eligible Account (the "Certificate Distribution Account"), bearing
a designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders.
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. Except as otherwise provided herein the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Account, the Owner
Trustee (or the Depositor on behalf of the Owner Trustee, if the Certificate
Distribution Account is not then held by the Owner Trustee or an Affiliate
thereof) shall within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a new
Certificate Distribution Account as an Eligible Account and shall transfer any
cash and/or any investments to such new Certificate Distribution Account.
SECTION 5.02. Application of Trust Funds.
(a) On each Payment Date, Certificateholders shall receive on a pro rata
basis, amounts, if any distributable by the Indenture Trustee pursuant to
Section 4.07 of the Indenture with respect to such Payment Date.
(b) On each Payment Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee by
the Servicer pursuant to the Sales and Servicing Agreement with respect to such
Payment Date.
(c) In the event that any withholding tax is imposed on distributions (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, in
accordance with the written directions of the Company, 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
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tax imposed with respect to a Certificateholder shall be treated as cash
distributed to the 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-U.S. Certificateholder), the Owner Trustee may in its sole
discretion withhold such amounts in accordance with this paragraph (c).
SECTION 5.03. Method of Payment. Distributions required to be made to
Certificateholders on any Payment Date shall be made to each Certificateholder
of record on the preceding Record Date pursuant to the Indenture either by wire
transfer, in immediately available funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if the Certificateholder shall have provided to the Indenture Trustee
appropriate written instructions at least five Business Days prior to such
Payment Date or, if not, by check mailed to the Certificateholder at the address
of the Certificateholder appearing in the Certificate Register.
SECTION 5.04. No Segregation of Moneys; No Interest. Moneys received by the
Owner Trustee hereunder need not be segregated in any manner except to the
extent required by law or the Transaction Documents and may be deposited under
such general conditions as may be prescribed by law, and the Owner Trustee shall
not be personally liable for any interest thereon.
SECTION 5.05. Accounting and Reports to the Certificateholders, Internal
Revenue Service and Others. Subject to Section 2.12, the Depositor shall (a)
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis and the accrual method of accounting, (b) prepare and deliver to the
Certificateholders during such calendar year, as may be required by the Code and
applicable Treasury Regulations, and not later than the latest date permitted by
law, such information as may be required (including Schedule K-1) to enable each
Certificateholder to prepare its federal and state income tax returns, (c)
prepare and file such tax returns relating to the Trust (including a partnership
information return, IRS Form 1065) and make such elections as from time to time
may be required or appropriate under any applicable state or federal statute or
any rule or regulation thereunder so as to maintain the Trust's characterization
as a disregarded entity if there is only one Certificateholder, or, if there is
more than one Certificateholder, as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax as described in and
in accordance with Section 5.02(c) with respect to income or distributions to
the Certificateholders. The Owner Trustee shall execute such documents, in the
forms furnished to the Owner Trustee by the Company, to elect under Section 1278
of the Code to include in income currently any market discount that accrues with
respect to the Auto Loans. The Owner Trustee shall not make the election
provided under Section 754 of the Code.
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SECTION 5.06. Signature on Returns; Tax Matters Partner.
(a) Subject to Section 2.12, the Owner Trustee shall sign on behalf of the
Trust the tax returns of the Trust in such form as the same may be presented to
the Owner Trustee for signature, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents shall not
be presented to the Owner Trustee for signature but rather shall be presented to
and shall be signed by a Certificateholder.
(b) The Company shall be designated the "tax matters partner" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.01. General Authority. The Owner Trustee shall have power and
authority and hereby is authorized and empowered to execute and deliver the
Transaction Documents to which the Trust or the Owner Trustee is to be a party
and each certificate or other document attached as an exhibit to or contemplated
by the Transaction Documents to which the Trust or the Owner Trustee is to be a
party and, in each case, in such form as the Depositor shall approve, as
evidenced conclusively by the Owner Trustee's execution thereof. In addition to
the foregoing, the Owner Trustee shall have power and authority and hereby is
authorized and empowered, but shall not be obligated, to take all actions
required of the Trust or the Owner Trustee pursuant to the Transaction
Documents. The Owner Trustee shall have power and authority and hereby is
further authorized and empowered from time to time to take such action as the
Servicer recommends or directs in writing with respect to the Transaction
Documents, except to the extent this Agreement requires the consent of
Certificateholders for such action.
SECTION 6.02. General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) the duties expressly required to be
performed by the Owner Trustee under the terms of this Agreement and the other
Transaction Documents to which the Trust is a party in the interest of the
Certificateholders, subject to the Transaction Documents and in accordance with
the provisions of this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties under the Transaction
Documents to the extent the Company has agreed to perform them pursuant to
Section 2.13 of this Agreement.
SECTION 6.03. Action upon Instruction.
(a) Subject to Article IV and to the other terms of the Transaction
Documents, the Certificateholders may by written instruction direct 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.
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(b) The Owner Trustee shall not be required to take any action hereunder or
under any other Transaction 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 the Bank or is contrary
to the terms hereof or of any other Transaction Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any other Transaction Document, the Owner Trustee shall promptly give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders and the Insurer requesting instruction as to the course of
action to be adopted, and to the extent the Owner Trustee acts or refrains from
acting in good faith in accordance with any written instruction of the
Certificateholders and the Insurer, the Owner Trustee shall not be personally
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 other Transaction Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no personal 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 other Transaction Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders and the Insurer 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 personally
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 other Transaction Documents, as it shall deem to be in the
best interests of the Certificateholders, and shall have no personal liability
to any Person for such action or inaction.
SECTION 6.04. 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, this Agreement or
17
any document contemplated hereby to which the Trust or the Owner Trustee is a
party or otherwise, except for duties expressly required to be performed by the
Owner Trustee by the terms of this Agreement, any other Transaction Document to
which the Trust is a party or in any written instruction received by the Owner
Trustee as contemplated by Section 6.03; and no implied duties or obligations
shall be read into this Agreement or any other Transaction Document against the
Owner Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or under any other document or to prepare or file any
Securities and Exchange Commission filing for the Trust or to record this
Agreement or any other Transaction Document. The Bank nevertheless agrees that
it shall, 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 that are not
related to the ownership or the administration of the Owner Trust Estate, this
Agreement, the Trust or the Bank's serving as Owner Trustee.
SECTION 6.05. 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 Transaction Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee as
contemplated by Section 6.03.
SECTION 6.06. Restrictions. The Owner Trustee shall not take any action
that, to the actual knowledge of a Responsible Officer 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 be inconsistent with the purposes of the Trust set forth in
Section 2.03 or violate the provisions of this Section. A "Responsible Officer
of the Owner Trustee" is an officer in the Owner Trustee's Corporate Trust
Office having direct responsibility for the performance of the Owner Trustee's
duties hereunder.
ARTICLE VII
Concerning Owner Trustee
SECTION 7.01. 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 also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Transaction Documents and
this Agreement. The Owner Trustee shall not be personally answerable or
accountable hereunder or under any other Transaction Document under any
circumstances, except (i) for its own willful misconduct or gross negligence or
(ii) in the case of the inaccuracy of any representation or warranty contained
in Section 7.03 expressly made by the
18
Bank. 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 personally liable for any error of
judgment made by the Owner Trustee.
(b) The Owner Trustee shall not be personally liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
any Certificateholder.
(c) No provision of this Agreement or any other Transaction Document shall
require the Owner Trustee to expend or risk its own funds or otherwise incur any
personal financial liability in the performance of any of its rights or powers
hereunder or under any other Transaction Document if the Owner Trustee or the
Bank 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 personally liable for
indebtedness evidenced by or arising under any of the Transaction Documents,
including the principal of and interest on the Notes.
(e) The Owner Trustee shall not be personally responsible for or in respect
of the validity or sufficiency of this Agreement or for the due execution hereof
by the Depositor or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate, or for or in respect of the validity
or sufficiency of the Transaction Documents, other than the validity of the
Owner Trustee's signature on the certificate of authentication on the
Certificates and the Owner Trustee shall in no event assume or incur any
personal liability, duty or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein or expressly
agreed to in the Transaction Documents.
(f) The Owner Trustee shall not be personally liable for the default or
misconduct of, and shall have no duty to monitor or supervise, the Depositor,
the Indenture Trustee or the Servicer or any other Person under any of the
Transaction Documents or otherwise, and the Owner Trustee shall have no
obligation or personal liability to perform the obligations of the Trust or the
Owner Trustee under this Agreement or the other Transaction Documents that are
required to be performed by the Indenture Trustee under the Indenture or the
Servicer under the Sales and Servicing Agreement.
(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 other Transaction Document, at the request, order or direction
of any of the Certificateholders, unless the Certificateholders have offered to
the Owner Trustee and the Bank security or indemnity satisfactory to it against
the
19
costs, expenses and liabilities that may be incurred by the Owner Trustee or the
Bank therein or thereby. The right of the Owner Trustee to perform any
discretionary act enumerated in this Agreement or in any other Transaction
Document shall not be construed as a duty, and the Owner Trustee shall not be
answerable or personally liable other than for its gross negligence or willful
misconduct in the performance of any such act.
SECTION 7.02. Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders and the Insurer, 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 Transaction Documents.
SECTION 7.03. Representations and Warranties. The Bank hereby represents
and warrants to the Depositor and the Insurer, for the benefit of the
Certificateholders, that:
(a) The Bank is a national banking association duly organized and validly
existing in good standing under the laws of the United States. The Bank has all
requisite power and authority to execute, deliver and perform its and the Owner
Trustee's obligations under this Agreement and each other Transaction Document
to which it or the Owner Trustee is a party.
(b) The Bank has taken all action necessary to authorize the execution and
delivery by it of this Agreement and by the Owner Trustee each of the other
Transaction Documents to which it is a party, and this Agreement and each of the
other Transaction Documents to which the Owner Trustee is a party has been
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement and each of the other Transaction Documents to which
it or the Owner Trustee is a party on its behalf.
(c) This Agreement and each of the other Transaction Documents to which it
is a party constitutes a legal, valid and binding obligation of the Bank or the
Owner Trustee, as the case may be, enforceable against the Bank or the Owner
Trustee in accordance with its respective terms, subject, as to enforceability,
to applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws affecting enforcement of the
rights of creditors of banks generally and to equitable limitations on the
availability of specific remedies.
(d) Neither the execution or the delivery by the Bank or by the Owner
Trustee of this Agreement and each of the other Transaction Documents to which
it is a party, nor the consummation by it or the Owner Trustee of the
transactions contemplated hereby and thereby, nor compliance by it or the Owner
Trustee with any of the terms or provisions hereof and thereof, shall contravene
any federal or state law, governmental rule or regulation governing the banking
and trust powers of the Bank or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
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SECTION 7.04. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no personal 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 an appropriate Person or Persons.
The Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any Person 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 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 or other authorized officer 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 other
Transaction Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be personally 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 personally 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 other Transaction Document.
SECTION 7.05. Not Acting in Individual Capacity. Except as provided in this
Article VII, in accepting the trusts hereby created, First Union National Bank,
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 other Transaction Document
shall look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.06. Owner Trustee Not Liable for Certificates or Auto Loans. The
recitals contained herein, in the Certificates, and in the Notes shall be taken
as the statements of the Depositor, and the Owner Trustee assumes no personal
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
other Transaction Document or of the Certificates (other than as to the validity
of the signature and countersignature of the Owner Trustee on the Certificates)
or the Notes, or of any Auto Loan or related documents. The Owner Trustee shall
at no time have any responsibility or personal liability for or with respect to
the legality, validity and enforceability of any Auto Loan or the perfection and
priority of any security interest created by any Auto Loan in any Financed
21
Vehicle or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Owner Trust Estate or its ability to generate
the payments to be distributed to the Certificateholders under this Agreement or
the Noteholders under the Indenture, including, without limitation: the
existence, condition and ownership of any Financed Vehicle; the existence and
enforceability of any insurance thereon; the existence and contents of any Auto
Loan on any computer or other record thereof; the validity of the transfer of
any Auto Loan to the Trust or Owner Trustee or of any intervening transfer; the
completeness of any Auto Loan; the performance or enforcement of any Auto Loan;
the compliance by the Depositor or the Servicer with any warranty or
representation made under any other Transaction Document or in any related
document or the accuracy of any such warranty or representation, or any action
of the Indenture Trustee or the Servicer or any subservicer or other Person
taken in the name of the Owner Trustee.
SECTION 7.07. Owner Trustee May Own Notes. The Owner Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may deal with the Depositor, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.01. Owner Trustee's Fees and Expenses. The Bank shall receive as
compensation for its services hereunder reasonable expenses incurred before the
date hereof and such fees as have been separately agreed upon before the date
hereof between the Originator and the Bank, and shall be entitled to be
reimbursed by the Originator for its other reasonable expenses hereunder
incurred on and after the date hereof, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel
as the Owner Trustee may employ in connection with the negotiation and
preparation of this Agreement and the Transaction Documents or exercise and
performance of its rights and its duties hereunder.
SECTION 8.02. Indemnification. The Company shall be liable as primary
obligor for, and shall indemnify, defend, and hold harmless the Bank (which to
the fullest extent permitted by applicable law, shall not be limited by any
provision of law limiting the compensation of a trustee of a trust), 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, 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
other Transaction 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
22
Company shall not be liable for or required to indemnify an Indemnified Party
from and against Expenses arising or resulting from any of the matters described
in the third sentence of Section 7.01. The indemnities contained in this Section
shall survive the resignation or termination of the Owner Trustee and the
termination of this Agreement. In any event of any claim, action or proceeding
for which indemnity shall be sought pursuant to this Section, the Owner
Trustee's choice of legal counsel shall be subject to the approval of the
Company, which approval shall not be unreasonably withheld.
SECTION 8.03. Payments to 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.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement.
(a) This Agreement (other than Article VIII and the other rights, benefits,
privileges and immunities of the Bank) and the Trust shall terminate and be of
no further force or effect upon the final distribution by the Owner Trustee of
all moneys or other property or proceeds of the Owner Trust Estate in accordance
with the terms of the Indenture, the Sales and Servicing Agreement, the
Insurance Agreement and Article V. The bankruptcy, liquidation, dissolution,
death or incapacity of any Certificateholder shall not, to the fullest extent
permitted by applicable law, (x) operate to terminate this Agreement or the
Trust or (y) entitle any Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust Estate or
(z) otherwise affect the rights, obligations and liabilities of the parties
hereto.
(b) Except as provided in Section 9.01(a), none of the Company, the
Depositor nor any Certificateholder shall be entitled to revoke or terminate the
Trust.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a bank, trust company, or other Person authorized
to exercise corporate trust powers; having (or have a parent that has) a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal or state authorities; and having (or having a parent
that has) time deposits that are rated at least A-1 by Standard & Poor's and
D-1+ by DCR and P-1 by Moody's. If such bank, trust company, or other Person
shall publish reports of
23
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 bank, trust company, or other
Person 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 10.02.
SECTION 10.02. 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 Depositor and the Insurer. Upon receiving
such notice of resignation, the Depositor, with the written consent of the
Insurer, shall promptly appoint a successor Owner Trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to the resigning
Owner Trustee and one copy to the successor Owner Trustee. 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
at the expense of the Company 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 10.01 and shall fail to resign after written
request therefor by the Depositor and the Insurer, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor with the written consent of the
Insurer may remove the Owner Trustee. If the Depositor shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the Depositor
with the written consent of the Insurer shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the outgoing Owner Trustee so removed and one copy to the
successor Owner Trustee, and shall pay all fees owed to the outgoing Owner
Trustee in its individual capacity.
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 10.03 and (in the case of removal) payment of all
fees and expenses owed to the outgoing Owner Trustee in its individual capacity.
The Depositor shall provide notice of such resignation or removal of the Owner
Trustee to each of the Rating Agencies.
SECTION 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Depositor and the 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
24
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 in its individual capacity deliver to the
successor Owner Trustee all documents and statements and monies held by it under
this Agreement; and the Depositor and the predecessor Owner Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Depositor shall mail notice thereof to all Certificateholders,
the Indenture Trustee, the Noteholders, the Insurer and the Rating Agencies. If
the Depositor shall fail to mail such notice within 10 days after acceptance of
such appointment by the successor Owner Trustee, the successor Owner Trustee
shall cause such notice to be mailed at the expense of the Depositor.
SECTION 10.04. Merger or Consolidation of Owner Trustee. Any Person into
which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, 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, that such Person shall be eligible pursuant to Section 10.01 and,
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies and the Insurer.
SECTION 10.05. 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 Depositor 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 Depositor and Owner Trustee to act as co-trustee, jointly with
the Owner Trustee, or as 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 Depositor and the Owner Trustee may consider necessary or
desirable. If the Depositor shall not have joined in such appointment within 15
days after the receipt by it of a request so to do, the Owner Trustee alone
shall have the power to make such appointment. No co-trustee or
25
separate trustee under this Agreement shall be required to meet the terms of
eligibility as a successor Owner Trustee pursuant to Section 10.01 and no notice
of the appointment of any co-trustee or separate trustee shall be required
pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(a) 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 Owner Trust Estate 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;
(b) No trustee under this Agreement shall be personally liable by reason of
any act or omission of any other trustee under this Agreement; and
(c) The Depositor and the Owner Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect 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 co-trustee or separate trustee.
26
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments. This Agreement may be amended
from time to time by the Depositor, the Company, the Bank and the Owner Trustee,
with prior written notice to the Rating Agencies, with the prior written consent
of the Insurer, and without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; 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.
This Agreement may also be amended from time to time by the Depositor, the
Company, the Bank and the Owner Trustee, with prior written notice to the Rating
Agencies, with the prior written consent of the Insurer, and with the consent of
the holders of Notes evidencing not less than a majority of the outstanding
principal amount of the Notes and the consent of the Certificateholders
evidencing not less than a majority of the Certificate Balance, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such amendment
shall: (a) increase or reduce in any manner the amount of, or accelerate or
delay the timing of, collections of payments on Auto Loans or distributions that
shall be required to be made for the benefit of the Noteholders or the
Certificateholders; or (b) reduce the percentage of the Outstanding Amount of
the Notes required to consent to any such amendment to less than the percentage
contemplated by the definition of Majority Noteholders, without the consent of
the Holders of all the outstanding Notes.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee, the Insurer and each
of the Rating Agencies.
It shall not be necessary for the consent of the Certificateholders or the
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Certificateholders provided for in this Agreement or in any
other Transaction 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.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Insurer shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution
27
of such amendment is authorized or permitted by this Agreement. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment that
affects the Owner Trustee's own rights, benefits, duties or immunities under
this Agreement or otherwise. Notwithstanding any other provision herein or
elsewhere, no provision, amendment, supplement, waiver, or consent of or with
respect to any of the Transaction Documents that affects any right, power,
authority, duty, benefit, protection, privilege, immunity, or indemnity of the
Owner Trustee or the Bank shall be binding on the Owner Trustee or the Bank
unless the Owner Trustee and the Bank shall have expressly consented thereto in
writing.
In connection with the execution of any amendment to this Trust Agreement
or any amendment of any other agreement to which the Trust or the Owner Trustee
is a party, the Owner Trustee and the Insurer shall be entitled to receive and
conclusively rely upon an Opinion of Counsel to the effect that such amendment
is authorized or permitted by the Transaction Documents and that all conditions
precedent in the Transaction Documents for the execution and delivery thereof by
the Trust or the Owner Trustee, as the case may be, have been satisfied.
The Owner Trustee shall comply with Article XI of the Indenture with
respect to the amendments, modifications, supplements, terminations and
surrenders referred to therein.
SECTION 11.02. No Legal Title to Owner Trust Estate in Certificateholders.
The Certificateholders shall not have legal title to any part of the Owner Trust
Estate. Each Certificateholder shall be entitled to receive distributions with
respect to its undivided ownership interest in the Trust only in accordance with
the terms of this Agreement and the other Transaction Documents. No transfer, by
operation of law or otherwise, of any right, title or interest of the
Certificateholders to and in its undivided ownership interest 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 11.03. Limitations on Rights of Others; Third Party Beneficiary.
The provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Bank, the Indemnified Parties, the Depositor, the
Certificateholder, the Insurer and, to the extent expressly provided herein, the
Indenture 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. The parties hereto agree that the Insurer is an express third party
beneficiary.
SECTION 11.04. 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 by the
intended recipient or three Business Days after mailing if mailed by certified
mail, postage prepaid (except that notice to the
28
Owner Trustee shall be deemed given only upon actual receipt by the Owner
Trustee), if to the Owner Trustee, addressed to First Union National Bank, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; if to the Insurer,
addressed to MBIA Insurance Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
to the Depositor, addressed to Prudential Securities Secured Financing
Corporation, ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Group
Head, Asset Backed Finance Group, or, as to each party, at such other address as
shall be designated by such party in a written notice to the other party hereto.
(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,
SECTION 11.05. 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 11.06. 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 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor and its permitted assigns, the Owner Trustee and its successors and
each Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by such Certificateholder shall bind the successors and assigns of the
Certificateholder.
SECTION 11.08. Covenants of the Company. In the event that any litigation
with claims in excess of $1,000,000 to which the Company is a party which shall
be reasonably likely to result in a material judgment against the Company that
the Company shall not be able to satisfy shall be commenced by a
Certificateholder, during the period beginning nine months following the
commencement of such litigation and continuing until such litigation is
dismissed or otherwise terminated (and, if such litigation has resulted in a
final judgment against the Company, such judgment has been satisfied), the
Company shall not declare any dividend or make any other distribution on or in
respect of its shares to any of its equity holders, or repay the principal
amount of any indebtedness of the Company held by any Affiliate of the Company,
unless (i) after giving effect to such distribution or repayment, the Company's
liquid assets shall not be less than the amount of actual damages claimed in
such litigation and (ii) the Rating Agencies shall have been notified with
respect to any such distribution or repayment.
29
The Company will not at any time institute against the Trust any bankruptcy
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes, the
Trust Agreement or any of the Transaction Documents.
SECTION 11.09. No Petition. The Owner Trustee, by entering into this
Agreement, each Certificateholder, by accepting a Certificate, and the Indenture
Trustee and each Noteholder, by accepting the benefits of this Agreement, hereby
covenant and agree that they shall not at any time, acquiesce, petition or
otherwise invoke or cause (or join with any other Person in acquiescing,
petitioning or otherwise invoking or causing) the Depositor or the Trust to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Depositor or the Trust under any
federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Depositor or the Trust or any substantial part of the
property of the Depositor or the Trust, or ordering the winding up or
liquidation of the affairs of the Depositor or the Trust.
SECTION 11.10. No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interest in the Trust only and does not represent interests in or
obligations of the Depositor, the Company, the Servicer, the Bank, the Indenture
Trustee or any Affiliate thereof and no recourse may be had against such Persons
or their assets, except as may be expressly set forth or contemplated in this
Agreement or the Transaction 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 3540
OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE TRUST.
SECTION 11.13. Certificate Transfer Restrictions. The Certificates may not
be acquired by or for the account of (i) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I 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 a plan's investment in
the entity (each, a "Benefit Plan"). By accepting and holding a Certificate, the
Holder thereof shall be deemed to have represented and warranted that it is not
a Benefit Plan.
30
Notwithstanding any other provision herein or elsewhere, the Owner Trustee shall
have no obligation to determine whether any transfer or exchange or proposed or
purported transfer or exchange of a Certificate is permitted under or in
accordance with this Agreement, and the Owner Trustee shall have no personal
liability to any Person in connection with any transfer or exchange or proposed
or purported transfer or exchange (and/or registration thereof).
SECTION 11.14. Submission to Jurisdiction. Each of the parties hereto
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Transaction Document or
for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York,
the courts of the United States of America for the Southern District of New
York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Person at its address set forth in Section 11.04 or at such other address
notified to the other party to this Agreement pursuant thereto; and
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction.
[SIGNATURES FOLLOW]
31
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION, as Depositor
By:
-------------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK, not in its
individual capacity but solely as Owner Trustee
By:
-------------------------------------------
Name:
Title:
FLAGSHIP CREDIT CORPORATION
By:
-------------------------------------------
Name:
Title:
S-1
EXHIBIT A
____% Certificate Percentage Interest
NUMBER
R-
SEE REVERSE FOR CERTAIN DEFINITIONS
--------------------------
ASSET BACKED CERTIFICATE
--------------------------
evidencing a beneficial ownership interest in certain distributions of the
Issuer, as defined below, the property of which includes a pool of motor vehicle
retail installment contracts secured by new or used automobiles, light trucks
and vans or mini vans and sold by Flagship Credit Corporation, a Delaware
corporation ("Flagship" or in its capacity as Servicer under the Sales and
Servicing Agreement (as defined below), the "Servicer") to Flagship Auto Loan
Funding LLC 1999-II ("Flagship LLC"), by Flagship LLC to Prudential Securities
Secured Financing Corporation ("Prudential"), and by Prudential to the Issuer.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR
OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION
MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR
QUALIFICATION.
THIS CERTIFICATE MAY NOT BE PURCHASED BY EMPLOYEE BENEFIT PLANS THAT ARE SUBJECT
TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR
PERSONS USING ASSETS OF SUCH PLANS.
(This Certificate does not represent an interest in or obligation of Flagship
Credit Corporation, the Servicer, Flagship LLC, Prudential or any Affiliate
thereof, except to the limited extent described below.)
A-1
THIS CERTIFIES THAT _____________ is the registered owner of a __%
Certificate Percentage Interest that is a nonassessable, fully-paid, beneficial
ownership interest in certain distributions of Flagship Auto Receivables Owner
Trust 1999-2 (the "Issuer").
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
First Union National Bank, First Union National Bank,
not in its individual not in its individual
capacity but solely as capacity but solely as
Owner Trustee or Owner Trustee
By: By:
----------------------- ----------------------
Authenticating Agent
By:
-----------------------
The Issuer was created pursuant to a Trust Agreement, dated as of _______
__, 1999 (the "Trust Agreement"), between Flagship, Prudential and First Union
National Bank, 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 Certificates designated as
"Asset Backed Certificates" (herein called the "Certificates"). Also issued
under the Indenture, dated as of November __, 1999, between the Issuer, ▇▇▇▇▇▇
Trust & Savings Bank, as Indenture Trustee (the "Indenture Trustee"), are four
classes of Notes designated as "Class A-1 ____% Asset Backed Notes" (the "Class
A-1 Notes"), "Class A-2 ____% Asset Backed Notes" (the "Class A-2 Notes"),
"Class A-3 ____% Asset Backed Notes" (the "Class A-3 Notes") and "Class A-4
____% Asset Backed Notes" (the "Class A-4 Notes"), (collectively, the "Notes").
This 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
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property subject to the Trust Agreement includes a pool of motor
vehicle retail installment contracts secured by new and used automobiles, light
trucks and vans or mini vans (the "Auto Loans"), all monies received thereunder
or in respect thereof on or after the Cutoff Date, security interests in the
vehicles financed thereby, certain bank accounts and the proceeds thereof,
proceeds from claims on certain insurance policies and certain other rights
under the Trust Agreement and the Sales and Servicing Agreement, dated as of
November __, 1999 (the "Sales and Servicing Agreement"),
A-2
between Flagship, Flagship LLC, the Issuer, the Back-up Servicer and the
Indenture Trustee, all right to and interest of Prudential in and to the
Depositor Purchase Agreement, dated as of November 1, 1999, between Flagship LLC
and Prudential, all right to, and interest of the Issuer in and to the Owner
Trust Purchase Agreement, dated as of November 1, 1999, between Prudential and
the Issuer, and all proceeds of the foregoing.
The holder of this Certificate acknowledges and agrees that its rights to
receive distributions in respect of this 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 Flagship, the Servicer, Flagship LLC, Prudential
and the Certificateholders that, for purposes of all applicable federal and
state income taxes, until the Certificates are held by more than one person or
the Trust is recharacterized as a separate entity, the Trust will be disregarded
as an entity separate from its owner. If the Certificates are held by more than
one person or the Trust is recharacterized as a separate entity, it is the
intent of Flagship, the Servicer and the Certificateholder that, for purposes of
all applicable federal and state income taxes, the Issuer will be treated as a
partnership and the Certificateholders will be treated as partners in that
partnership. Flagship LLC and any other Certificateholders by acceptance of a
Certificate, agree to treat, and to take no action inconsistent with such
treatment of, the Certificates for such tax purposes.
Distributions on this Certificate will be made on behalf of the Trust by
the Indenture Trustee as provided in the Indenture and Sales and Servicing
Agreement by wire transfer or check mailed to the Certificateholder of record in
the Certificate Register without the presentation or surrender of this
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 Certificate will be made after due notice by the Indenture Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained for the purpose by the Indenture
Trustee.
Reference is hereby made to the further provisions of this 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
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or the Sales and Servicing Agreement or be valid for any purpose.
No Certificate may be transferred without the consent of the Insurer.
A-3
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
A-4
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not in
its individual capacity, has caused this Certificate to be duly executed.
FLAGSHIP AUTO RECEIVABLES OWNER
TRUST 1999-2
By: FIRST UNION NATIONAL BANK,
not in its individual capacity but solely
as Owner Trustee
Dated: By:
-------------------------------------------
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest in,
Flagship, the Servicer, Flagship LLC, Prudential, the Owner Trustee in its
individual capacity 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 Sales and Servicing Agreement
or the Transaction Documents. In addition, this Certificate is not guaranteed by
any governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Auto Loans, all as more specifically set
forth herein and in the Trust Agreement and the Sales and Servicing Agreement. A
copy of each of the Sales and Servicing Agreement and the Trust Agreement may be
examined during normal business hours at the principal office of the Servicer,
and at such other places, if any, designated by the Servicer, 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 Flagship
and the rights of the Certificateholder(s) under the Trust Agreement at any time
by Flagship, and the Owner Trustee with the consent of Holders of Certificates
evidencing not less than a majority of the outstanding Certificate Percentage
Interest of the Certificates. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and on all future holders of this
Certificate and of any 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 Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained in
the City of Wilmington, State of Delaware, 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 Certificates in authorized
denominations evidencing the same aggregate interest in the Issuer 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, Certificates are exchangeable for new Certificates in
authorized denominations evidencing the same aggregate denomination, as
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
A-6
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trust or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar, nor any such agent shall be affected
by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and the
Sales and Servicing Agreement and the Trust created by the Trust Agreement shall
terminate upon the final distribution of all moneys or other property or
proceeds of the Owner Trust Estate in accordance with the terms of the Indenture
and the Sales and Servicing Agreement.
The Certificates may not be purchased by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding this
Certificate, the Holder hereof shall be deemed to have represented and warranted
that it is not a Benefit Plan.
The recitals contained herein shall be taken as the statements of Flagship
or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Certificate or of any
Auto Loan or related document.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Owner Trustee, by manual or facsimile signature,
this Certificate shall not entitle the holder hereof to any benefit under the
Trust Agreement or the Sales and Servicing Agreement or be valid for any
purpose.
A-7
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)
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the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________ Attorney to transfer said Certificate on the
books of the Certificate Registrar, with full power of substitution in the
premises.
Dated:
*
-------------------------
Signature Guaranteed:
*
-------------------------
------------------
* NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within 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-8
EXHIBIT B
FLAGSHIP AUTO RECEIVABLES OWNER TRUST 1999-2
Direction of the Depositor and the Company to the Owner Trustee
Pursuant to Amended and Restated Trust Agreement
November 24, 1999
First Union National Bank, as Owner Trustee of
Flagship Auto Receivables Owner Trust ▇▇▇▇-▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Ladies and Gentlemen:
We refer to the Amended and Restated Trust Agreement of Flagship Auto
Receivables Owner Trust 1999-2 (the "Trust"), dated as of November 1, 1999 (the
"Trust Agreement"), by and among Prudential Securities Secured Financing
Corporation, Flagship Credit Corporation, and First Union National Bank (the
"Bank"). Capitalized terms used but not otherwise defined in this letter have
the meanings assigned thereto in the Trust Agreement.
The undersigned hereby authorize, empower, and direct the Owner Trustee to
execute, authenticate, and deliver to Flagship Auto Loan Funding LLC 1999-II
Certificate(s) No(s). _________________ in an aggregate Certificate Percentage
Interest of 100%, and to execute and deliver each of the Transaction Documents
to which the Owner Trustee is to be a party and any and all documents and
instruments as may be necessary, advisable, or convenient in connection
therewith or incidental thereto, each in the respective form furnished to the
Owner Trustee. The undersigned hereby certify and confirm that such execution
and delivery (a) are consistent with the purposes of the Trust, are permitted by
and consistent with the Trust Agreement and the Transaction Documents, and do
not violate and are not contrary to any of such documents, and (b) are covered
by the indemnification provided under the Trust Agreement, and the Owner Trustee
and the Bank shall be fully protected in following such direction.
[Signature page follows.]
B-1
IN WITNESS WHEREOF, each of the undersigned has duly executed and delivered
this letter as of the date first set forth above.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:
----------------------------
Name:
Title:
FLAGSHIP CREDIT CORPORATION
By:
----------------------------
Name:
Title:
B-2