SPREAD ACCOUNT AGREEMENT,
dated as of November 1, 1999,
by and among
FLAGSHIP AUTO RECEIVABLES OWNER TRUST 1999-2, as Issuer
MBIA INSURANCE CORPORATION
and
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as Indenture Trustee and as Collateral Agent
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions.........................................2
Section 1.02. Rules of Interpretation.............................8
ARTICLE II
THE COLLATERAL
Section 2.01. Grant of Security Interest by the Issuer............8
Section 2.02. Priority............................................9
Section 2.03. Issuer Remains Liable...............................9
Section 2.04. Delivery and Maintenance of Collateral..............9
Section 2.05. Termination and Release of Rights..................10
Section 2.06. Non-Recourse Obligations of Issuer.................11
ARTICLE III
SPREAD ACCOUNT
Section 3.01. Establishment of Spread Account; Initial Deposit into
Spread Account; Maintenance of Spread Account......12
Section 3.02. Investments........................................12
Section 3.03. Payments; Priority of Payments.....................13
Section 3.04. General Provisions Regarding Spread Accounts.......14
Section 3.05. Reports by the Collateral Agent....................15
ARTICLE IV
THE COLLATERAL AGENT
Section 4.01. Appointment and Powers.............................15
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Section 4.02. Performance of Duties..............................16
Section 4.03. Limitation on Liability............................16
Section 4.04. Reliance upon Documents............................17
Section 4.05. Successor Collateral Agent.........................17
Section 4.06. Indemnification....................................19
Section 4.07. Compensation and Reimbursement.....................19
Section 4.08. Representations and Warranties of the Collateral
Agent..............................................19
Section 4.09. Waiver of Setoffs..................................20
Section 4.10. Control by the Controlling Party...................20
ARTICLE V
COVENANTS OF THE ISSUER
Section 5.01. Preservation of Collateral.........................20
Section 5.02. Notices............................................20
Section 5.03. Waiver of Stay or Extension Laws; Marshalling of
Assets.............................................21
Section 5.04. Noninterference, etc...............................21
Section 5.05. Issuer Changes.....................................21
ARTICLE VI
CONTROLLING PARTY; INTERCREDITOR PROVISIONS
Section 6.01. Appointment of Controlling Party...................22
Section 6.02. Controlling Party's Authority......................22
Section 6.03. Rights of Secured Parties..........................23
Section 6.04. Degree of Care.....................................23
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ARTICLE VII
REMEDIES UPON DEFAULT
Section 7.01. Remedies upon a Default............................23
Section 7.02. Waiver of Default..................................24
Section 7.03. Restoration of Rights and Remedies.................24
Section 7.04. No Remedy Exclusive................................24
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Further Assurances.................................24
Section 8.02. Waiver.............................................24
Section 8.03. Amendments; Waivers................................25
Section 8.04. Severability.......................................25
Section 8.05. Nonpetition Covenant...............................25
Section 8.06. Notices............................................26
Section 8.07. Term of this Agreement.............................27
Section 8.08. Assignments; Third-Party Rights; Reinsurance.......28
Section 8.09. Consent of Controlling Party.......................28
Section 8.10. Consents to Jurisdiction...........................28
Section 8.11. Limitation of Liability............................29
Section 8.12. Determination of Adverse Effect....................29
Section 8.13. Headings...........................................29
Section 8.14. TRIAL BY JURY WAIVED...............................29
Section 8.15. Governing Law......................................29
Section 8.16. Counterparts.......................................29
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Section 8.17. Limitation of Liability............................30
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SPREAD ACCOUNT AGREEMENT
SPREAD ACCOUNT AGREEMENT, dated as of November 1, 1999 (this "Agreement"),
by and among Flagship Auto Receivables Owner Trust ▇▇▇▇-▇, ▇ ▇▇▇▇▇ (▇▇▇
"▇▇▇▇▇▇"), ▇▇▇▇ Insurance Corporation, a stock insurance company organized and
created under the laws of the State of New York, or its successors in interest
(the "Insurer") and ▇▇▇▇▇▇ Trust and Savings Bank, an Illinois banking
corporation, in its capacity as indenture trustee (the "Indenture Trustee") and
as collateral agent (the "Collateral Agent" or "Indenture Trustee and Collateral
Agent").
RECITALS
1. Flagship Auto Receivables Owner Trust 1999-2, (the "Issuer") was formed
pursuant to a Trust Agreement, dated as of November 1, 1999 (the "Trust
Agreement"), by and between Prudential Securities Secured Financing Corporation
("Prudential"), as depositor and First Union National Bank, as owner trustee.
2. Pursuant to the Sales and Servicing Agreement dated as of November 1,
1999 (the "Sales and Servicing Agreement") by and among Flagship Auto Loan
Funding LLC 1999-II, a Delaware limited liability company, as purchaser
("Flagship LLC"), Flagship Credit Corporation, as originator and servicer
("Flagship"), the Issuer, ▇▇▇▇▇▇ Trust and Savings Bank, an Illinois banking
corporation, as indenture trustee (the "Indenture Trustee") and Copelco
Financial Services Group, Inc., as Back-up Servicer (the "Back-up Servicer"),
Flagship sold to Flagship LLC all of its right, title and interest in and to the
Auto Loans (as defined therein) and Other Conveyed Property (as defined therein)
that comprise the Series Pool (as defined therein).
3. Pursuant to the Depositor Purchase Agreement dated as of November 1,
1999 (the "Depositor Purchase Agreement") by and between Flagship LLC, as seller
and Prudential, as purchaser, Flagship LLC sold to Prudential all of its right,
title and interest in and to the Auto Loans and the Other Conveyed Property that
comprise the Series Pool and the rights of Flagship LLC under the Sales and
Servicing Agreement.
4. Pursuant to the Owner Trust Purchase Agreement dated as of November 1,
1999 (the "Owner Trust Purchase Agreement") by and between Prudential, as seller
and the Issuer, as purchaser, Prudential sold to the Issuer all of its rights,
title and interest in and to the Auto Loans and the Other Conveyed Property that
comprise the Series Pool and all of the rights of Prudential under the Depositor
Purchase Agreement.
5. Pursuant to the Indenture dated as of November 1, 1999 (the "Indenture")
by and among the Issuer, the Indenture Trustee and Flagship, as servicer, the
Issuer pledged all of its right, title and interest in and to the Series Pool
(as defined in the Indenture) to the Indenture Trustee on behalf of the
Noteholders (as defined in the Indenture).
6. The Issuer and Flagship requested that the Insurer issue the Policy (as
defined
in the Indenture) to the Indenture Trustee to guarantee payment of the Insured
Payments (as defined in the Policy) on each Payment Date (as defined in the
Indenture), in respect of the Notes (as defined in the Indenture).
7. In partial consideration of the issuance of the Policy, the Issuer,
Flagship and the Servicer have agreed that the Insurer shall have certain rights
as Controlling Party, to the extent set forth in the Transaction Documents, with
respect to the Series Pool.
AGREEMENTS
In consideration of the premises, and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless defined in this Agreement, capitalized
terms used in this Agreement shall have the meaning assigned to such terms in
the Sales and Servicing Agreement or the Indenture, as identifiable from the
context in which such term is used. The following terms shall have the following
respective meanings:
"Actual Recovery Amounts" with respect to a Charged-off Auto Loan, proceeds
from the sale of the related Financed Vehicle, proceeds of the related insurance
policy, proceeds from any dealer agreements and any other recoveries with
respect to such Charged-off Auto Loan and the related Financed Vehicle, net of
reasonable and customary out-of-pocket expenses and amounts so received that are
required to be refunded to the Obligor on such Auto Loan.
"Authorized Officer" has the meaning assigned to such term in the
Indenture.
"Charged-off Auto Loan" means, with respect to an Auto Loan, the earliest
to occur of the following: (i) 10% or more of any Scheduled Payment on such Auto
Loan is 123 days or more delinquent as of the end of such Collection Period,
(ii) the related vehicle has been repossessed and sold or (iii) substantially
all of the payments thereunder are deemed uncollectible by the Servicer.
"Collateral" has the meaning assigned to such term in Section 2.01 hereof.
"Collateral Agent" means, initially ▇▇▇▇▇▇ Trust and Savings Bank, in its
capacity as collateral agent on behalf of the Secured Parties, including its
successors in interest, until a successor Person shall have become the
Collateral Agent pursuant to Section 4.05 hereof, and thereafter "Collateral
Agent" shall mean such successor Person.
"Collection Account" has the meaning assigned to such term in the
Indenture.
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"Controlling Party" means the Person designated as the Controlling Party at
such time pursuant to Section 6.01 hereof.
"Cram Down Loss" means with respect to an Auto Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on an Auto Loan or otherwise modifying or restructuring
payments to be made on an Auto Loan, an amount equal to such reduction in
principal balance of such Auto Loan or the reduction in the net present value
(using as the discount rate the lower of the contract rate or the rate of
interest specified by the court in such order) of the payments as so modified or
restructured. A Cram Down Loss shall be deemed to have occurred on the date such
order is entered.
"Cumulative Net Loss Rate" means, as of any Determination Date, the
quotient of the aggregate amount of Net Losses with respect to the Auto Loans
from the Cutoff Date to the last day of the related Collection Period, divided
by the Initial Portfolio Balance.
"Default" means (i) if the Insurer is then the Controlling Party, any
Insurance Agreement Indicator and (ii) if the Indenture Trustee is then the
Controlling Party, any Event of Default under Section 7.01 of the Indenture.
"Deficiency Claim Amount" has the meaning assigned to such term in the
Indenture.
"Deficiency Notice" has the meaning assigned to such term in the Indenture.
"Delinquency Ratio"means the aggregate Principal Balance of Auto Loans with
part or all of one or more contractual payments 31 days or more past due as of
the last day of the related Collection Period (other than Charged-off Auto Loans
and, from and after the 25th Collection Period, Auto Loans for which the related
Obligor has paid during the preceding six Collection Periods an aggregate amount
not less than the sum of six monthly payments) expressed as a percentage of the
Outstanding Portfolio Balance as of the last day of the related Collection
Period.
"Delivery" has the meaning assigned to such term in the Sales and Servicing
Agreement.
"Draw Date" means with respect to any Payment Date, the third Business Day
immediately preceding such Payment Date.
"Eligible Account" has the meaning assigned to such term in the Indenture.
"Eligible Investments" has the meaning assigned to such term in the
Indenture.
"Final Termination Date" means the date that is the later of (i) the
Insurer Termination Date and (ii) the Indenture Trustee Termination Date.
"Holder" shall have the meaning specified in the Indenture.
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"Indenture" means the Indenture dated as of November 1, 1999, among the
Issuer, the Servicer and the Indenture Trustee.
"Indenture Trustee" means ▇▇▇▇▇▇ Trust and Savings Bank, not in its
individual capacity but as Indenture Trustee under the Indenture, or any
successor Indenture Trustee under the Indenture.
"Indenture Trustee and Collateral Agent Fee" has the meaning assigned to
such term in the Indenture.
"Indenture Trustee Secured Obligations" means all amounts and obligations
which the Issuer may at any time owe to or on behalf of the Indenture Trustee or
the Noteholders under the Indenture.
"Indenture Trustee Termination Date" means the date which is the latest of
(i) the date on which the Indenture Trustee shall have received, as Indenture
Trustee for the holders of the Notes, payment and performance in full of all
Indenture Trustee Secured Obligations and (ii) the date on which all payments in
respect of the Notes shall have been made and the Indenture shall have been
satisfied and discharged pursuant to the terms of Article VI of the Indenture.
"Initial Portfolio Balance" means the aggregate Principal Balance of Auto
Loans included in the Series Pool as of the Closing Date.
"Initial Spread Account Amount" means an amount equal to 3% of the Initial
Portfolio Balance.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian
trustee, sequestrator or similar official for such Person or for any substantial
part of its property, or ordering the winding-up or liquidation or such Person's
affairs, and such petition, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by, a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the foregoing.
"Insurance Agreement Indicator" has the meaning set forth in the Insurance
Agreement.
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"Insurer Secured Obligations" means all amounts and obligations which may
at any time be owed to or on behalf of the Insurer (or any agents, accountants
or attorneys for the Insurer) under the Insurance Agreement or under any
Transaction Document, regardless of whether such amounts are owed now or in the
future, whether liquidated or unliquidated, contingent or noncontingent.
"Insurer Termination Date" means the date which is the latest of (i) the
date of the expiration of the Policy and the cancellation and return thereof to
the Insurer, (ii) the date on which the Insurer shall have received payment and
performance in full of all Insurer Secured Obligations and (iii) the latest date
on which any payment referred to above could be avoided as a preference or
otherwise under the United States Bankruptcy Code or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, as specified in an Opinion of Counsel delivered to the
Collateral Agent, the Insurer and the Indenture Trustee.
"Issuer" means Flagship Auto Receivables Owner Trust 1999-2.
"Level I Cumulative Net Loss Test" means, for any Collection Period
specified below, a Cumulative Net Loss Rate greater than or equal to the
percentage set forth opposite such Collection Period:
Collection Period Cumulative Net Loss
----------------- Percentage Level
----------------
Sixth through Eighth 1.35
Ninth through Eleventh 1.70
Twelfth through Fourteenth 3.05
Fifteenth through Seventeenth 4.40
Eighteenth through Twentieth 5.60
Twenty-First through Twenty-Third 6.60
Twenty-Fourth through Twenty-Sixth 7.50
Twenty-Seventh through Twenty-Ninth 8.30
Thirtieth through Thirty-Second 8.90
Thirty-Third and thereafter 9.30
"Level I Delinquency Test" means, for any Determination Date, the
arithmetic average of the monthly Delinquency Ratios for the four previous
Collection Periods is greater than or equal to 6.65%.
"Level I Net Loss Test" means, for any Determination Date, the arithmetic
average monthly Net Loss Rates for the four previous Collection Periods is
greater than or equal to 8%.
"Level I Portfolio Performance Indicator" means any violation of any of the
Level I Delinquency Test, the Level I Cumulative Net Loss Test or the Level I
Net Loss Test.
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"Level I Portfolio Performance Tests" means the Level I Delinquency Test,
the Level I Cumulative Net Loss Test and the Level I Net Loss Test.
"Level II Cumulative Net Loss Test" means, for any Collection Period
specified below, a Cumulative Net Loss Rate greater than the percentage set
forth opposite such Collection Period:
Collection Period Cumulative Net Loss
----------------- Percentage
----------
Sixth through Eighth 1.75
Ninth through Eleventh 2.40
Twelfth through Fourteenth 3.70
Fifteenth through Seventeenth 5.35
Eighteenth through Twentieth 6.85
Twenty-First through Twenty-Third 8.05
Twenty-Fourth through Twenty-Sixth 9.15
Twenty-Seventh through Twenty-Ninth 10.05
Thirtieth through Thirty-Second 10.75
Thirty-Third and thereafter 11.30
"Level II Delinquency Test" means, for any Determination Date, the
arithmetic average of the monthly Delinquency Ratios for the four previous
Collection Periods is greater than 8.08%.
"Level II Net Loss Test" means, for any Determination Date, the arithmetic
average monthly Net Loss Rates for the four previous Collection Periods is
greater than 10%.
"Level II Portfolio Performance Tests" means, collectively, the Level II
Delinquency Test, the Level II Cumulative Net Loss Test and the Level II Net
Loss Test.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that may attach to a Financed Vehicle by operation of law.
"Net Losses" means, for any Collection Period, the amount, if any, by which
(a) the sum of (i) the aggregate Principal Balance of all Auto Loans which
became Charged-off Auto Loans during such Collection Period, plus accrued and
unpaid interest thereon to the end of the related Collection Period, plus (ii)
the aggregate of all Cram Down Losses that occurred during the related
Collection Period, exceeds (b) the Actual Recovery Amounts received during the
related Collection Period in respect of all Charged-off Auto Loans.
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"Net Loss Rate" means, with respect to any Collection Period, the product,
expressed as a percentage, of (i) twelve and (ii) a fraction, the numerator of
which equals Net Losses for such Collection Period and the denominator of which
equals the Outstanding Portfolio Balance on the last day of the preceding
Collection Period.
"Non-Controlling Party" means, at any time, the Secured Party that is not
the Controlling Party at such time.
"Notes Target Amount" has the meaning assigned to that term in the
Indenture.
"Opinion of Counsel" means a written opinion of counsel (which may be
in-house counsel) addressed to and reasonably acceptable, as to form, substance
and issuing counsel, to the Controlling Party and the Indenture Trustee and
Collateral Agent.
"Overcollateralization Amount" means, as of any Payment Date, the excess of
the Outstanding Portfolio Balance as of the end of the preceding Collection
Period over the outstanding principal balance of the Notes (after giving effect
to all payments on the Notes on such Payment Date).
"Policy" has the meaning assigned to such term in the Indenture.
"Preference Amount" means any amount previously distributed to a Noteholder
on the Notes that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the Bankruptcy Code in
accordance with a final nonappealable order of a court having competent
jurisdiction.
"Preference Claim" shall have the meaning specified in Section 5.02(b) of
the Indenture.
"Released Funds Principal Payment Amount" shall have the meaning assigned
to such term in the Indenture.
"Requisite Spread Account Amount" will equal the Initial Spread Account
Amount on the Closing Date, and thereafter, as of any Determination Date, after
giving effect to all payments to be made on the related Payment Date, will be an
amount equal to the greater of (a) the lesser of (i) 3% of the Initial Portfolio
Balance and (ii) 5% of the Outstanding Portfolio Balance as of the end of the
preceding Collection Period, and (b) the greater of (i) 1% of the Initial
Portfolio Balance and (ii) an amount such that the sum of (A) the funds on
deposit in the Spread Account (after all payments and withdrawals from the
Spread Account on such Payment Date) and (B) the Overcollateralization Amount is
greater than 2% of the Initial Portfolio Balance.
"Sales and Servicing Agreement" means the Sales and Servicing Agreement
dated as of the date hereof by and among Flagship as originator and servicer,
Flagship LLC, as purchaser, the Issuer, the Indenture Trustee, and Copelco
Financial Services Group, Inc as back- up servicer.
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"Secured Obligations" means, collectively, the Insurer Secured Obligations
and the Indenture Trustee Secured Obligations.
"Secured Parties" means, with respect to the Collateral, each of the
Indenture Trustee, in respect of the Indenture Trustee Secured Obligations, and
the Insurer, in respect of the Insurer Secured Obligations.
"Security Interests" means the security interests and Liens in the
Collateral granted pursuant to Section 2.01 hereof.
"Series Pool" has the meaning assigned to such term in the Indenture.
"Special Member" has the meaning assigned to that term in the Indenture.
"Spread Account" means the account designated as such, established and
maintained pursuant to Article III of this Agreement.
"Transaction Documents" has the meaning assigned to such term in the
Indenture.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code in
effect in the relevant jurisdiction, as the same may be amended from time to
time.
Section 1.02. Rules of Interpretation. The terms "hereof," "herein" or
"hereunder," unless otherwise modified by more specific reference, shall refer
to this Agreement in its entirety. Unless otherwise indicated in context, the
terms "Article," "Section," "Appendix," "Exhibit" or "Annex" shall refer to an
Article or Section of, or Appendix, Exhibit or Annex to, this Agreement. The
definition of a term shall include the singular, the plural, the past, the
present, the future, the active and the passive forms of such term.
ARTICLE II
THE COLLATERAL
Section 2.01. Grant of Security Interest by the Issuer. In order to secure
the performance of Secured Obligations, to the extent provided herein, the
Issuer hereby pledges, assigns, grants, transfers and conveys to the Collateral
Agent, on behalf of and for the benefit of the Secured Parties, a lien on and
security interest in (which lien and security interest is intended to be prior
to all other Liens), all of its right, title and interest in and to the
following (all being collectively referred to herein as the "Collateral" and
constituting Collateral hereunder):
(a) the Spread Account established pursuant to Section 3.01 hereof, and
each other account owned by the Issuer and maintained by the Collateral Agent
(including, without limitation, the Initial Spread Account Deposit related
thereto and all additional monies, checks, securities, investments and other
documents from time to time held in or evidencing any such accounts);
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(b) all of the Issuer's right, title and interest in and to investments
made with proceeds of the property described in clause (a) above, or made with
amounts on deposit in the Spread Account; and
(c) all distributions, revenues, products, substitutions, benefits, profits
and proceeds, in whatever form, of any of the foregoing whether now owned or
hereafter acquired.
Section 2.02. Priority. The Issuer intends the security interests in favor
of the Secured Parties to be prior to all other Liens in respect of the
Collateral, and the Issuer shall take all actions necessary to obtain and
maintain, in favor of the Collateral Agent, for the benefit of the Secured
Parties, a first lien on and a first priority, perfected security interest in
the Collateral including, without limitation, the filing of a UCC-1 financing
statement relating to the Collateral. Subject to the provisions hereof
specifying the rights and powers of the Collateral Agent at the direction of the
Controlling Party from time to time to control certain specified matters
relating to the Collateral, each Secured Party shall have all of the rights,
remedies and recourse with respect to the Collateral afforded a secured party
under the Uniform Commercial Code, and all other applicable law in addition to,
and not in limitation of, the other rights, remedies and recourse granted to
such Secured Parties by this Agreement or any other law relating to the creation
and perfection of liens on, and security interests in, the Collateral.
Section 2.03. Issuer Remains Liable. The Security Interests are granted as
security only and shall not (i) transfer or in any way affect or modify, or
relieve either the Issuer from, any obligation to perform or satisfy, any term,
covenant, condition or agreement to be performed or satisfied by the Issuer
under or in connection with this Agreement, the Insurance Agreement or any other
Transaction Document to which it is a party or (ii) impose any obligation on any
of the Secured Parties or the Collateral Agent to perform or observe any such
term, covenant, condition or agreement or impose any liability on any of the
Secured Parties or the Collateral Agent for any act or omission on its part
relative thereto or for any breach of any representation or warranty on its part
contained therein or made in connection therewith, except, in each case, to the
extent provided herein and in the other Transaction Documents.
Section 2.04. Delivery and Maintenance of Collateral.
(a) Safekeeping. The Collateral Agent agrees to maintain the Collateral
received by it (or evidence thereof, in the case of book-entry securities in the
name of the Collateral Agent) and all records and documents relating thereto at
the office of the Collateral Agent specified in Section 8.06 hereof or such
other address within the State of Illinois as may be approved by the Controlling
Party. The Collateral Agent shall keep all Collateral and related documentation
in its possession separate and apart from all other property that it is holding
in its possession and from its own general assets and shall maintain accurate
records pertaining to the Eligible Investments and Spread Account included in
the Collateral in such a manner as shall enable the Collateral Agent and the
Secured Parties to verify the accuracy of such record-keeping. The Collateral
Agent's books and records shall at all times show that the Collateral is held by
the Collateral Agent as agent of the Secured
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Parties and is not the property of the Collateral Agent. The Collateral Agent
will promptly report to each Secured Party and the Issuer any failure on its
part to hold the Collateral as provided in this Section 2.04(a) and will
promptly take appropriate action to remedy any such failure.
(b) Access. The Collateral Agent shall permit each of the Secured Parties,
or their respective duly authorized representatives, attorneys, auditors or
designees, to inspect the Collateral in the possession of or otherwise under the
control of the Collateral Agent pursuant hereto at such reasonable times during
normal business hours as any such Secured Party may reasonably request upon not
less than one Business Day's prior written notice. The costs and expenses
associated with any such inspection will be paid by the party making such
inspection.
(c) All Collateral shall be transferred to the Collateral Agent on behalf
of the Secured Party in a manner consistent with the definition of "Delivery"
set forth in the Sales and Servicing Agreement.
(d) Notwithstanding anything to the contrary herein, the Collateral Agent:
(A) is and will be acting on behalf of the Secured Parties as a securities
intermediary under Article 8 of the UCC and a "bailee" (as such term is used in
Section 9-305 of the UCC) in connection herewith; (B) shall establish and
maintain the Spread Account for the benefit of the Secured Parties as a holder
of a security interest in the Collateral and the Spread Account; (C) shall treat
all of the assets in the Spread Account (other than cash) as financial assets
under Article 8 of the UCC; (D) shall not hold, or exercise control (within the
meaning of Article 8 of the UCC) over, the Collateral and/or the Spread Account
for the benefit of any person or entity other than the Secured Parties; (E) has
received notice of the Secured Parties' interest in the assets contained and/or
to be contained in the Spread Account; (F) shall take instructions only from the
Secured Party constituting the Controlling Party hereunder (without any consent
of and notwithstanding any alternate direction of the Issuer) with respect to
the Spread Account and/or the Collateral, including, without limitation, all
instructions with respect to the acquisition, transfer and disposition of assets
in the Spread Account and the proceeds thereof.
Section 2.05. Termination and Release of Rights
(a) On the Insurer Termination Date, the rights, remedies, powers, duties,
authority and obligations conferred upon the Insurer pursuant to this Agreement
in respect of the Collateral shall terminate and be of no further force and
effect and all rights, remedies, powers, duties, authority and obligations of
the Insurer with respect to such Collateral shall be automatically released;
provided that any indemnity provided to the Insurer herein shall survive such
Insurer Termination Date. If the Insurer is acting as Controlling Party on the
related Insurer Termination Date, the Insurer agrees, at the expense of the
Issuer, to execute and deliver such instruments as the successor Controlling
Party may reasonably request to effectuate such release, and any such
instruments so executed and delivered shall be fully binding on the Insurer and
any Person claiming by, through or under the Insurer.
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(b) On the Indenture Trustee Termination Date, the rights, remedies,
powers, duties, authority and obligations, if any, conferred upon the Indenture
Trustee pursuant to this Agreement in respect of the Collateral shall terminate
and be of no further force and effect and all such rights, remedies, powers,
duties, authority and obligations of the Indenture Trustee with respect to such
Collateral shall be automatically released; provided that any indemnity provided
to the Indenture Trustee herein shall survive such Indenture Trustee Termination
Date. If the Indenture Trustee is acting as Controlling Party on the related
Indenture Trustee Termination Date, the Indenture Trustee agrees, at the expense
of the Issuer, to execute and deliver such instruments as the Issuer may
reasonably request to effectuate such release, and any such instruments so
executed and delivered shall be fully binding on the Indenture Trustee.
(c) On the Final Termination Date, the rights, remedies, powers, duties,
authority and obligations conferred upon the Collateral Agent and each Secured
Party pursuant to this Agreement shall terminate and be of no further force and
effect and all rights, remedies, powers, duties, authority and obligations of
the Collateral Agent and each Secured Party with respect to the Collateral shall
be automatically released. On the Final Termination Date, the Collateral Agent
agrees, and each Secured Party agrees, at the expense of the Issuer, to execute
such instruments of release, in recordable form if necessary, in favor of the
Issuer as the Issuer may reasonably request, to deliver any Collateral in its
possession to the Issuer, and to otherwise release the lien of this Agreement
and release and deliver to the Issuer the Collateral.
Section 2.06. Non-Recourse Obligations of Issuer. Notwithstanding anything
herein or in the other Transaction Documents to the contrary, the parties hereto
agree that the obligations of the Issuer hereunder shall be recourse only to the
extent of amounts released to the Issuer pursuant to priority SECOND of Section
3.03 (b) of this Agreement and retained by the Issuer in accordance with the
next sentence. The Issuer agrees that it shall not declare or make any payment
to Flagship LLC or Flagship except in accordance with the Transaction Documents.
Nothing contained herein shall be deemed to limit the rights of the Noteholders
under any other Transaction Document.
ARTICLE III
SPREAD ACCOUNT
Section 3.01. Establishment of Spread Account; Initial Deposit into Spread
Account; Maintenance of Spread Account.
(a) On or prior to the Closing Date, the Collateral Agent shall establish,
at its office or at another depository institution or trust company an Eligible
Account, designated, "Spread Account -- ▇▇▇▇▇▇ Trust and Savings Bank, as
Collateral Agent for MBIA Insurance Corporation and ▇▇▇▇▇▇ Trust and Savings
Bank, as Indenture Trustee Re: Flagship Auto Receivables Owner Trust 1999-2,
Asset-Backed Notes Series 1999-2" (the "Spread Account"). The Spread Account
shall be maintained by the Collateral Agent at all times separate and apart from
any other account of Flagship, the Servicer or the Issuer. The Spread Account
shall be maintained at the same depository
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institution (which depository institution may be changed from time to time in
accordance with this Agreement). If the Spread Account ceases to be an Eligible
Account, the Collateral Agent shall, within five Business Days, establish a new
Eligible Account.
(b) No withdrawals may be made of funds in the Spread Account except as
provided in Section 3.03 of this Agreement. Except as specifically provided in
this Agreement, funds in the Spread Account shall not be commingled with any
other moneys. All moneys deposited from time to time in the Spread Account and
all investments made with such moneys shall be held by the Collateral Agent as
part of the Collateral.
(c) On the Closing Date, the Seller shall provide to the Collateral Agent
for deposit into the Spread Account an amount equal to the Initial Spread
Account Amount.
(d) On each Payment Date, after giving effect to all payments to be made on
the related Payment Date, the Collateral Agent shall cause to be maintained in
the Spread Account an amount equal to the Requisite Spread Account Amount in
accordance with Article IV of the Indenture.
Section 3.02. Investments.
(a) Funds which may at any time be held in the Spread Account shall be
invested and reinvested by the Collateral Agent, at the written direction (which
may include, subject to the provisions hereof, general standing instructions) of
the Issuer (unless a Default shall have occurred and be continuing, in which
case at the written direction of the Controlling Party if it so elects) or its
designee received by the Collateral Agent by 1:00 P.M. New York City time on the
Business Day prior to the date on which such investment shall be made, in one or
more Eligible Investments in the manner specified in Section 3.02(b) and (c). If
no written direction with respect to any portion of such Spread Account is
received by the Collateral Agent, the Collateral Agent shall invest such funds
overnight in Eligible Investments listed in paragraph (f) of Eligible
Investments, provided that the Collateral Agent shall not be liable for any loss
or absence of income resulting from such investments.
(b) Each investment made pursuant to this Section 3.02 on any date shall
mature not later than the Business Day immediately preceding the Payment Date
next succeeding the day such investment is made or payable on demand, provided
that any investment of funds in the Spread Account maintained with the
Collateral Agent in any investment as to which the Collateral Agent is the
obligor, if otherwise qualified as an Eligible Investment may mature on the
Payment Date next succeeding the date of such investment.
(c) Subject to the other provisions hereof, the Collateral Agent shall have
sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Collateral Agent or its agent, together with each
document of transfer, if any, necessary to transfer title to such investment
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to the Collateral Agent in a manner which complies with Section 2.04 and the
requirements of the definition of "Eligible Investments."
(d) If amounts on deposit in any Spread Account are at any time invested in
an Eligible Investment payable on demand, the Collateral Agent shall (i)
consistent with any notice required to be given thereunder, demand that payment
thereon be made on the last day such Eligible Investment is permitted to mature
under the provisions hereof and (ii) demand payment of all amounts due
thereunder promptly upon receipt of written notice from the Controlling Party to
the effect that such investment does not constitute an Eligible Investment.
(e) All moneys on deposit in a Spread Account, together with any deposits
or securities in which such moneys may be invested or reinvested, and any gains
from such investments, shall constitute Collateral hereunder subject to the
Security Interests of the Secured Parties.
(f) Subject to Section 4.03 hereof, the Collateral Agent shall not be
liable by reason of any insufficiency in Spread Account resulting from any loss
on any Eligible Investment included therein except for losses attributable to
the Collateral Agent's failure to make payments on Eligible Investments as to
which the Collateral Agent, in its commercial capacity, is obligated. All income
or loss on investments of funds in the Spread Account shall be reported by
Flagship as taxable income or loss.
Section 3.03. Payments; Priority of Payments.
(a) On or before each Draw Date, the Collateral Agent will make the
following calculations on the basis of information (including, without
limitation, the amount of any Deficiency Claim Amount) received pursuant to
Article V of the Indenture from the Servicer, provided, however, that if the
Collateral Agent receives written notice from the Insurer, the Indenture
Trustee, the Issuer or the Servicer of the occurrence of an Insurance Agreement
Indicator, such notice shall be determinative for the purposes of determining
the Requisite Spread Account Amount:
First, determine the amounts to be on deposit in the Spread Account on
the next succeeding Payment Date which will be available to satisfy any
Deficiency Claim Amount;
Second, determine (i) the amounts, if any, to be paid from the Spread
Account with respect to the Deficiency Claim Amount and (ii) whether,
following payment from the Spread Account to the Indenture Trustee for
deposit into the Collection Account, a Deficiency Claim Amount will
continue to exist;
Third, if a Deficiency Claim Amount will continue to exist following
the payment from the Spread Account contemplated by paragraph second above,
determine the amount, if any, to be distributed to the Indenture Trustee.
This determination shall be made in accordance with the payment priority
scheme set forth in Section 3.03(b) below.
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On such Draw Date, the Collateral Agent shall deliver a certificate to the
Indenture Trustee with respect to the Deficiency Notice, stating the amount, if
any, to be distributed to the Indenture Trustee on the next Payment Date in
respect of such Deficiency Claim Amount.
(b) On each Payment Date, if the Indenture Trustee has received a
Deficiency Notice, the Collateral Agent shall make the following payments in the
following order of priority:
FIRST, if there exists a Deficiency Claim Amount, from the Spread
Account, to the Indenture Trustee for deposit in the Collection Account the
amount of such Deficiency Claim Amount (to the extent available in such
Spread Account); and
SECOND, any funds in the Spread Account in excess of the Requisite
Spread Account Amount, after making the withdrawals therefrom required by
priority FIRST of this Section 3.03(b) will be applied in the following
order of priority:
(i) to the payment of the Released Funds Principal Payment
Amount;
(ii) to the payment of any Re-▇▇▇▇▇▇▇ Expenses, to the extent not
paid by the Servicer or by Copelco pursuant to the Guaranty Agreement;
(iii) to any successor servicer, the Insurer, the Indenture
Trustee and Collateral Agent, any items payable to them that were not
paid under clauses (i) and (vi) of Section 4.07(a) of the Indenture;
and
(iv) to the holder(s) of the Certificates, any remaining funds in
the Spread Account in excess of the Requisite Spread Account Amount.
The Released Funds Principal Payment Amount will be paid to the Noteholders,
sequentially first to holders of the Class A-1 Notes until the Class A-1 Notes
are paid in full, then to the holders of the Class A-2 Notes until the Class A-2
Notes are paid in full, then to the holders of the Class A-3 Notes until the
Class A-3 Notes are paid in full and thereafter to the holders of the Class A-4
Notes until the Class A-4 Notes are paid in full.
Section 3.04. General Provisions Regarding Spread Accounts.
(a) Promptly upon the establishment (initially or upon any relocation) of
the Spread Account hereunder, the Collateral Agent shall advise the Issuer and
each Secured Party in writing of the name and address of the depository
institution or trust company where the Spread Account has been established (if
not at ▇▇▇▇▇▇ Trust and Savings Bank or any successor Collateral Agent in its
commercial banking capacity), the name of the officer of the depository
institution who is responsible for overseeing the Spread Account, the account
number and the individuals whose names appear on the signature cards for the
Spread Account. The Issuer shall cause each such depository institution or trust
company to execute a written agreement, in form and substance reasonably
satisfactory to the Controlling Party, waiving, and the Collateral Agent by its
execution of this Agreement hereby waives (except to the extent expressly
provided herein), in each case to the extent permitted under applicable law, (i)
any banker's or other statutory or similar Lien, and (ii) any right of set-off
or other similar right under applicable law with respect to the Spread Account
and agreeing, and the Collateral Agent by its execution of this
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Agreement hereby agrees to notify the Issuer and each Secured Party of any
charge or claim against or with respect to such Spread Account. The Collateral
Agent shall give the Issuer and each Secured Party at least ten Business Days'
prior written notice of any change in the location of the Spread Account or in
any related account information. Anything herein to the contrary
notwithstanding, unless otherwise consented to by the Controlling Party in
writing, the Collateral Agent shall have no right to change the location of the
Spread Account
(b) Upon the written request of the Controlling Party or the Issuer and at
the expense of the Issuer, the Collateral Agent shall cause, at the expense of
the Issuer, the depository institution at which any Spread Account is located to
forward to the requesting party copies of all monthly account statements for the
Spread Account.
(c) If at any time the Spread Account ceases to be an Eligible Account, the
Collateral Agent shall notify the Controlling Party of such fact and shall
establish within 5 Business Days of such determination, in accordance with
paragraph (a) of this Section, a successor Spread Account thereto, which shall
be an Eligible Account, at another depository institution acceptable to the
Controlling Party
(d) No passbook, certificate of deposit or other similar instrument
evidencing a Spread Account shall be issued, and all contracts, receipts and
other papers, if any, governing or evidencing the Spread Account shall be held
by the Collateral Agent.
Section 3.05. Reports by the Collateral Agent. The Collateral Agent shall
report to the Issuer, the Insurer, the Indenture Trustee (unless the Indenture
Trustee is the same party as the Collateral Agent) and the Servicer on a monthly
basis no later than each Payment Date with respect to the amount on deposit in
the Spread Account and the identity of the investments included therein as of
the last day of the related Collection Period, and shall provide accountings of
deposits into and withdrawals from the Spread Account, and of the investments
made therein, upon the request of the Issuer, the Insurer or the Servicer.
ARTICLE IV
THE COLLATERAL AGENT
Section 4.01. Appointment and Powers. Subject to the terms and conditions
hereof, each of the Secured Parties hereby appoints ▇▇▇▇▇▇ Trust and Savings
Bank as the Collateral Agent with respect to the Collateral, and ▇▇▇▇▇▇ Trust
and Savings Bank hereby accepts such appointment and agrees to act as Collateral
Agent with respect to the Collateral, for the Secured Parties, to maintain
custody and possession of such Collateral (except as otherwise provided
hereunder) and to perform
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the other duties of the Collateral Agent in accordance with the provisions of
this Agreement. Each Secured Party hereby authorizes the Collateral Agent to
take such action on its behalf, and to exercise such rights, remedies, powers
and privileges hereunder, as the Controlling Party may direct and as are
specifically authorized to be exercised by the Collateral Agent by the terms
hereof, together with such actions, rights, remedies, powers and privileges as
are reasonably incidental thereto. The Collateral Agent shall act (and shall be
completely protected in so acting) upon and in compliance with the written
instructions of the Controlling Party delivered pursuant to this Agreement
promptly following receipt of such written instructions; provided that the
Collateral Agent shall not act in accordance with any instructions (i) which are
not authorized by, or in violation of the provisions of, this Agreement, (ii)
which are in violation of any applicable law, rule or regulation or (iii) for
which the Collateral Agent has not received reasonable indemnity. Receipt of
such instructions shall not be a condition to the exercise by the Collateral
Agent of its express duties hereunder, except where this Agreement provides that
the Collateral Agent is permitted to act only following and in accordance with
such instructions.
Section 4.02. Performance of Duties. The Collateral Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and the other Transaction Documents to which the Collateral Agent is a party or
as directed by the Controlling Party in accordance with this Agreement. The
Collateral Agent shall not be required to take any discretionary actions
hereunder except at the written direction and with indemnification satisfactory
to it from the Controlling Party.
Section 4.03. Limitation on Liability. Neither the Collateral Agent nor any
of its directors, officers or employees, shall be liable for any action taken or
omitted to be taken by it or them hereunder, or in connection herewith, except
that the Collateral Agent shall be liable for its negligence, bad faith or
willful misconduct; nor shall the Collateral Agent be responsible for the
validity, effectiveness, value, sufficiency or enforceability against the Issuer
of this Agreement or any of the Collateral (or any part thereof).
Notwithstanding any term or provision of this Agreement, the Collateral Agent
shall incur no liability to the Issuer or the Secured Parties for any action
taken or omitted by the Collateral Agent in connection with the Collateral,
except for the negligence or willful misconduct on the part of the Collateral
Agent, and, further, shall incur no liability to the Secured Parties except for
negligence or willful misconduct in carrying out its duties to the Secured
Parties. Subject to Section 4.04, the Collateral Agent shall be completely
protected and shall incur no liability to any such party in relying upon the
accuracy, acting in reliance upon the contents, and assuming the genuineness of
any notice, demand, certificate, signature, instrument or other document
reasonably believed by the Collateral Agent to be genuine and to have been duly
executed by the appropriate signatory, and (absent actual knowledge to the
contrary) the Collateral Agent shall not be required to make any independent
investigation with respect thereto. The Collateral Agent shall at all times be
free independently to establish to its reasonable satisfaction, but shall have
no duty to independently verify, the existence or nonexistence of facts that are
a condition to the exercise or enforcement of any right or remedy hereunder or
under any of the Transaction Documents. The Collateral Agent may consult with
counsel selected by it with due care, and shall not be liable for any action
taken or omitted to be taken by it hereunder in good faith and in accordance
with the
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written advice of such counsel. The Collateral Agent shall not be under any
obligation to exercise any of the remedial rights or powers vested in it by this
Agreement or to follow any direction from the Controlling Party unless it shall
have received reasonable security or indemnity satisfactory to the Collateral
Agent against the costs, expenses and liabilities which might be incurred by it.
Section 4.04. Reliance upon Documents. In the absence of bad faith or
negligence on its part, the Collateral Agent shall be entitled to rely on any
communication, instrument, paper or other document reasonably believed by it to
be genuine and correct and to have been signed or sent by the proper Person or
Persons and shall have no liability in acting, or omitting to act, where such
action or omission to act is in reasonable reliance upon any statement or
opinion contained in any such document or instrument.
Section 4.05. Successor Collateral Agent. (a) Merger. Any Person into which
the Collateral Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its trust business and assets
as a whole, or substantially as a whole, or any Person resulting from any such
conversion, merger, consolidation, sale or transfer to which the Collateral
Agent is a party, shall (provided it is otherwise qualified to serve as the
Collateral Agent hereunder and is acceptable to the Insurer) be and become a
successor Collateral Agent hereunder and be vested with all of the title to and
interest in the Collateral and all of the trusts, powers, discretions,
immunities, privileges and other matters as was its predecessor without the
execution or filing of any instrument or any further act, deed or conveyance on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding, except to the extent, if any, that any such action is necessary
to perfect, or continue the perfection of, the security interest of the Secured
Parties in the Collateral.
(b) Resignation. The Collateral Agent and any successor Collateral Agent
may resign only (i) upon a determination that by reason of a change in legal
requirements the performance of its duties under this Agreement would cause it
to be in violation of such legal requirements in a manner which would result in
a material adverse effect on the Collateral Agent as evidenced by an opinion of
Counsel delivered to the Insurer, and the Controlling Party does not elect to
waive the Collateral Agent's obligation to perform those duties which render it
legally unable to act or elect to delegate those duties to another Person, or
(ii) with the prior written consent of the Controlling Party. The Collateral
Agent shall give not less than 60 days' prior written notice of any such
permitted resignation by registered or certified mail to the other Secured Party
and the Issuer; provided, that such resignation shall take effect only upon the
date which is the latest of (i) the effective date of the appointment of a
successor Collateral Agent acceptable to the Insurer (provided that an Insurer
Default has not occurred and is continuing) and the acceptance in writing by
such successor Collateral Agent of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions hereof, (ii)
delivery of the Collateral to such successor to be held in accordance with the
procedures specified in Article II hereof, and (iii) receipt by the Controlling
Party of an Opinion of Counsel to the effect described in Section 5.05.
Notwithstanding the preceding sentence, if by the contemplated date of
resignation specified in the written notice of resignation delivered as
described above no successor Collateral Agent or temporary successor
17
Collateral Agent has been appointed Collateral Agent or becomes the Collateral
Agent pursuant to subsection (d) hereof, the resigning Collateral Agent may
petition a court of competent jurisdiction in New York, New York for the
appointment of a successor acceptable to the Insurer (provided that an Insurer
Default has not occurred and is continuing). Notwithstanding anything herein to
the contrary, if the Indenture Trustee and Collateral Agent are the same party
and the Indenture Trustee resigns under the Indenture, the Collateral Agent may
resign in accordance with the procedures for resignation of the Indenture
Trustee under the Indenture.
(c) Removal. The Collateral Agent may be removed by the Controlling Party
at any time, with or without cause, by an instrument or concurrent instruments
in writing delivered to the Collateral Agent, the other Secured Party and the
Issuer. A temporary successor may be removed at any time to allow a successor
Collateral Agent to be appointed pursuant to subsection (d) below. Any removal
pursuant to the provisions of this subsection (c) shall take effect only upon
the date which is the latest of (i) the effective date of the appointment of a
successor Collateral Agent acceptable to the Insurer (provided that an Insurer
Default has not occurred and is continuing) and the acceptance in writing by
such successor Collateral Agent of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions hereof, (ii)
delivery of the Collateral to such successor to be held in accordance with the
procedures specified in Article II hereof and (iii) receipt by the Controlling
Party of an Opinion of Counsel to the effect described in Section 5.05.
(d) Acceptance by Successor. The Controlling Party shall have the sole
right to appoint each successor Collateral Agent. Every temporary or permanent
successor Collateral Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and to each Secured Party and the Issuer an
instrument in writing accepting such appointment hereunder and the relevant
predecessor shall execute, acknowledge and deliver such other documents and
instruments as will effectuate the delivery of all Collateral to the successor
Collateral Agent to be held in accordance with the procedures specified in
Article II hereof, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, duties and obligations of its predecessor. Such predecessor shall,
nevertheless, on the written request of either Secured Party or the Issuer,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights and powers of such predecessor hereunder. In the
event that any instrument in writing from the Issuer or a Secured Party is
reasonably required by a successor Collateral Agent to more fully and certainly
vest in such successor the estates, properties, rights, powers, duties and
obligations vested or intended to be vested hereunder in the Collateral Agent,
any and all such written instruments shall, at the request of the temporary or
permanent successor Collateral Agent, be forthwith executed, acknowledged and
delivered by the Issuer. The designation of any successor Collateral Agent and
the instrument or instruments removing any Collateral Agent and appointing a
successor hereunder, together with all other instruments provided for herein,
shall be maintained with the records relating to the Collateral and, to the
extent required by applicable law, filed or recorded by the successor Collateral
Agent in each place where such filing or recording is necessary to effect the
transfer of the Collateral to the successor Collateral Agent or to protect or
continue the perfection of the security interests granted hereunder.
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Section 4.06. Indemnification. To the extent set forth in Section 4.07(a)
of the Indenture, the Issuer shall fully indemnify the Collateral Agent, its
directors, officers, employees and agents for, and hold the Collateral Agent,
its directors, officers, employees and agents completely harmless against, any
loss, liability or expense (including the reasonable costs and expenses of
defending against any claim of liability) arising out of or in connection with
the Collateral Agent's acting as Collateral Agent hereunder, except such loss,
liability or expense as shall result from the negligence, bad faith or willful
misconduct of the Collateral Agent or its officers or agents. The obligation of
the Issuer under this Section shall survive the termination of this Agreement
and the resignation or removal of the Collateral Agent. The Collateral Agent
covenants and agrees that the obligations of the Issuer hereunder and under
Section 4.07 shall be limited to the extent provided in Section 2.06, and
further covenants not to take any action to enforce its rights to
indemnification hereunder with respect to the Issuer and to payment under
Section 4.07 except in accordance with the provisions of Section 8.05, or
otherwise to assert any Lien or take any other action in respect of the
Collateral or the Auto Loans and Other Conveyed Property that comprise the
Series Pool until the Final Termination Date.
Section 4.07. Compensation and Reimbursement. To the extent set forth in
Section 4.07(a) of the Indenture, the Issuer agrees for the benefit of the
Secured Parties and as part of the Secured Obligations to pay to the Collateral
Agent, on each Payment Date, the Indenture Trustee and Collateral Agent Fee for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a collateral trustee)
and to reimburse the Collateral Agent pursuant to Section 4.07(b) of the
Indenture for any reasonable and out of pocket expenses (including reasonable
legal fees and expenses) incurred in connection with the duties contemplated
herein.
Section 4.08. Representations and Warranties of the Collateral Agent. The
Collateral Agent represents and warrants to the Issuer and to each Secured Party
as follows:
(a) Due Organization. The Collateral Agent is a banking corporation, duly
organized, validly existing and in good standing under the laws of Illinois and
is duly authorized and licensed under applicable law to conduct its business as
presently conducted.
(b) Corporate Power. The Collateral Agent has all requisite right, power
and authority to execute and deliver this Agreement and to perform all of its
duties as Collateral Agent hereunder.
(c) Due Authorization. The execution and delivery by the Collateral Agent
of this Agreement and the other Transaction Documents to which it is a party,
and the performance by the Collateral Agent of its duties hereunder and
thereunder, have been duly authorized by all necessary corporate proceedings and
no further approvals or filings, including any governmental approvals, are
required for the valid execution and delivery by the Collateral Agent, or the
performance by the Collateral Agent, of this Agreement and such other
Transaction Documents.
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(d) Valid and Binding Agreement. The Collateral Agent has duly executed and
delivered this Agreement and each other Transaction Document to which it is a
party, and each of this Agreement and each such other Transaction Document
constitutes the legal, valid and binding obligation of the Collateral Agent,
enforceable against the Collateral Agent in accordance with its terms, except as
(i) such enforceability may be limited by bankruptcy, insolvency, reorganization
and similar laws relating to or affecting the enforcement of creditors' rights
generally and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
Section 4.09. Waiver of Setoffs. The Collateral Agent hereby expressly
waives any and all rights of set off that the Collateral Agent may otherwise at
any time have under applicable law with respect to any Spread Account and agrees
that amounts in the Spread Accounts shall at all times be held and applied
solely in accordance with the provisions hereof.
Section 4.10. Control by the Controlling Party. The Collateral Agent shall
comply with notices and instructions given by the Issuer only if accompanied by
the written consent of the Controlling Party, except that if any Default shall
have occurred and be continuing, the Collateral Agent shall act upon and comply
with notices and instructions given by the Controlling Party alone in the place
and stead of the Issuer.
ARTICLE V
COVENANTS OF THE ISSUER
Section 5.01. Preservation of Collateral. Subject to the rights, powers and
authorities granted to the Collateral Agent and the Controlling Party in this
Agreement, the Issuer shall take such action as is necessary and proper with
respect to the Collateral in order to preserve and maintain such Collateral and
to cause (subject to the rights of the Secured Parties) the Collateral Agent to
perform its obligations with respect to such Collateral as provided herein
including, without limitation, filing UCC-1's on the Spread Account and
investments therein. The Issuer will do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, such instruments of
transfer or take such other steps or actions as may be necessary, or required by
the Controlling Party, to perfect the Security Interests granted hereunder in
the Collateral, to ensure that such Security Interests rank prior to all other
Liens and to preserve the priority of such Security Interests and the validity
and enforceability thereof. Upon any delivery or substitution of Collateral, the
Issuer shall be obligated to execute such documents and perform such actions as
are necessary to create in the Collateral Agent for the benefit of the Secured
Parties a valid first Lien on, and valid and perfected, first priority security
interest in, the Collateral so delivered and to deliver such Collateral to the
Collateral Agent, free and clear of any other Lien, together with satisfactory
assurances thereof, and to pay any reasonable costs incurred by any of the
Secured Parties or the Collateral Agent (including its agents) or otherwise in
connection with such delivery.
Section 5.02. Notices. In the event that the Issuer acquires knowledge of
the occurrence and continuance of any Insurance Agreement Indicator or Event of
Default under the Indenture or of any
20
event of default or like event, howsoever described or called, under any of the
Transaction Documents, the Issuer shall immediately give notice thereof to the
Collateral Agent and each Secured Party.
Section 5.03. Waiver of Stay or Extension Laws; Marshalling of Assets. The
Issuer covenants, to the fullest extent permitted by applicable law, that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any appraisement, valuation, stay, extension
or redemption law wherever enacted, now or at any time hereafter in force, in
order to prevent or hinder the enforcement of this Agreement or any absolute
sale of the Collateral or any part thereof, or the possession thereof by any
purchaser at any sale under Article VII of this Agreement; and the Issuer, to
the fullest extent permitted by applicable law, for itself and all who may claim
under it, hereby waives the benefit of all such laws, and covenants that it will
not hinder, delay or impede the execution of any power herein granted to the
Collateral Agent, but will suffer and permit the execution of every such power
as though no such law had been enacted. The Issuer, for itself and all who may
claim under it, waives, to the fullest extent permitted by applicable law, all
right to have the Collateral marshaled upon any foreclosure or other disposition
thereof.
Section 5.04. Noninterference, etc. The Issuer shall not (i) waive or alter
any of its rights under the Collateral (or any agreement or instrument relating
thereto) without the prior written consent of the Controlling Party; or (ii)
fail to pay any tax, assessment, charge or fee levied or assessed against the
Collateral, or to defend any action, if such failure to pay or defend may
adversely affect the priority or enforceability of the Issuer's right, title or
interest in and to the Collateral or the Collateral Agent's lien on, and
security interest in, the Collateral for the benefit of the Secured Parties; or
(iii) take any action, or fail to take any action, if such action or failure to
take action will interfere with the enforcement of any rights under the
Transaction Documents.
Section 5.05. Issuer Changes.
(a) Change in Name, Structure, etc. The Issuer shall not change its name,
identity or corporate structure unless it shall have given each Secured Party
and the Collateral Agent a least 60 days' prior written notice thereof, shall
have effected any necessary or appropriate assignments or amendments thereto an
filings of financing statements or amendments thereto.
(b) Relocation of the Issuer. The Issuer shall not change its principal
executive office unless it gives each Secured Party and the Collateral Agent at
least 90 days' prior written notice of any relocation of its principal executive
office. If the Issuer relocates its principal executive office or principal
place of business from Delaware, the Issuer shall give prior notice thereof to
the Controlling Party and the Collateral Agent and shall effect whatever
appropriate recordations and filings are necessary and shall provide an Opinion
of Counsel to the Controlling Party and the Collateral Agent, to the effect
that, upon the recording of any necessary assignments or amendments to
previously-recorded assignments and filing of any necessary amendments to the
previously filed financing or continuation statements or upon the filing of one
or more specified new financing
21
statements, and the taking of such other actions as may be specified in such
opinion, the security interests in the Collateral shall remain, after such
relocation, valid and perfected.
ARTICLE VI
CONTROLLING PARTY; INTERCREDITOR PROVISIONS
Section 6.01. Appointment of Controlling Party. From and after the Closing
Date until the Insurer Termination Date, the Insurer shall be the Controlling
Party and shall be entitled to exercise all the rights given the Controlling
Party hereunder. From and after the Insurer Termination Date until the Indenture
Trustee Termination Date, the Indenture Trustee shall be the Controlling Party.
Notwithstanding the foregoing, in the event that an Insurer Default shall have
occurred and be continuing, the Indenture Trustee shall be the Controlling Party
until the applicable Indenture Trustee Termination Date. If prior to an Insurer
Termination Date the Indenture Trustee shall have become the Controlling Party
as a result of the occurrence of an Insurer Default and either such Insurer
Default is cured or for any other reason ceases to exist or the Indenture
Trustee Termination Date occurs, then upon such cure or other cessation or on
such Indenture Trustee Termination Date, as the case may be, the Insurer shall,
upon notice thereof being duly given to the Collateral Agent, again be the
Controlling Party.
Section 6.02. Controlling Party's Authority.
(a) The Issuer hereby irrevocably appoints the Collateral Agent, and any
successor to the Collateral Agent appointed pursuant to Section 4.05, its true
and lawful attorney, with full power of substitution, in the name of the Issuer,
the Secured Parties or otherwise, but (subject to Section 2.06) at the expense
of the Issuer, to the extent permitted by law to exercise, at any time and from
time to time while any Insurance Agreement Indicator has occurred but at all
such times at the direction of the Controlling Party, any or all of the
following powers with respect to all or any of the Collateral: (i) to demand,
▇▇▇ for, collect, receive and give acquittance for any and all monies due or to
become due upon or by virtue thereof, (ii) to settle, compromise, compound,
prosecute or defend any action or proceeding with respect thereto, (iii) to
sell, transfer, assign or otherwise deal with the same or the proceeds thereof
as fully and effectively as if the Collateral Agent were the absolute owner
thereof, and (iv) to extend the time of payment of any or all thereof and to
make any allowance or other adjustments with respect thereto.
(b) With respect to the Notes and the related Collateral, each Secured
Party hereby irrevocably and unconditionally constitutes and appoints the
Collateral Agent, and any successor to such Collateral Agent appointed pursuant
to Section 4.05 from time to time, as the true and lawful attorney-in-fact of
the Secured Parties, with full power of substitution, to execute, acknowledge
and deliver any notice, document, certificate, paper, pleading or instrument and
to do in the name of the Collateral Agent as well as in the name, place and
stead of such Secured Party such acts, things and deeds for and on behalf of and
in the name of the Secured Parties under this Agreement which the Secured
Parties could or might do or which may be necessary, desirable or convenient in
the
22
Collateral Agent's sole discretion with the prior written consent of the
Controlling Party or at the direction of the Controlling Party to effect the
purposes contemplated hereunder and, without limitation, exercise full right,
power and authority to take, or defer from taking, any and all acts with respect
to the administration of the Collateral, and the enforcement of the rights of
the Secured Parties hereunder, on behalf of and for the benefit of the Secured
Parties, as their interests may appear.
Section 6.03. Rights of Secured Parties. With respect to the Notes and the
related Collateral, the Non-Controlling Party at any time expressly agrees that
it shall not assert any rights that it may otherwise have, as a Secured Party
with respect to the Collateral, to direct the maintenance, sale or other
disposition of the Collateral or any portion thereof, notwithstanding the
occurrence and continuance of any Default or any non-performance by the Issuer
of any obligation owed to such Secured Party hereunder or under any other
Transaction Document, and each party hereto agrees that the Collateral Agent, at
the direction of the Controlling Party shall be the only Person entitled to
assert and exercise such rights.
Section 6.04. Degree of Care.
(a) Controlling Party. Notwithstanding any term or provision of this
Agreement, the Collateral Agent shall incur no liability to the Issuer for any
action taken or omitted by the Collateral Agent in connection with the
Collateral, except for any negligence, bad faith or willful misconduct on the
part of the Collateral Agent and, further, shall incur no liability to the Non-
Controlling Party except for a breach of the terms of this Agreement or for
negligence, bad faith or willful misconduct in carrying out its duties, if any,
to the Non-Controlling Party. The Collateral Agent shall be completely protected
and shall incur no liability to any such party in relying upon the accuracy,
acting in reliance upon the contents and assuming the genuineness of any notice,
demand, certificate, signature, instrument or other document believed by the
Collateral Agent to be genuine and to have been duly executed by the appropriate
signatory, and (absent manifest error or actual knowledge to the contrary) the
Collateral Agent shall not be required to make any independent investigation
with respect thereto. The Collateral Agent shall, at all times, be free
independently to establish to its reasonable satisfaction the existence or
nonexistence, as the case may be, of any fact the existence or nonexistence of
which shall be a condition to the exercise or enforcement of any right or remedy
under this Agreement or any of the Transaction Documents.
(b) The Non-Controlling Party. The Non-Controlling Party shall not be
liable to the Issuer for any action or failure to act by the Controlling Party
or the Collateral Agent in exercising, or failing to exercise, any rights or
remedies hereunder.
23
ARTICLE VII
REMEDIES UPON DEFAULT
24
Section 7.01. Remedies upon a Default. If a Default has occurred, the
Collateral Agent shall, at the direction of the Controlling Party, take whatever
action at law or in equity as may appear necessary or desirable in the judgment
of the Controlling Party to collect and satisfy all Secured Obligations,
including, but not limited to, foreclosure upon the Collateral and all other
rights available to secured parties under applicable law or to enforce
performance and observance of any obligation, agreement or covenant under any of
the Transaction Documents.
Section 7.02. Waiver of Default. The Controlling Party shall have the sole
right, to be exercised in its complete discretion, to waive any Default by a
writing setting forth the terms, conditions and extent of such waiver signed by
the Controlling Party and delivered to the Collateral Agent, the other Secured
Party and the Issuer. Any such waiver shall be binding upon the Non-Controlling
Party and the Collateral Agent. Unless such writing expressly provides to the
contrary, any waiver so granted shall extend only to the specific event or
occurrence which gave rise to the Default so waived and not to any other similar
event or occurrence which occurs subsequent to the date of such waiver.
Section 7.03. Restoration of Rights and Remedies. If the Collateral Agent
has instituted any proceeding to enforce any right or remedy under this
Agreement, and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Collateral Agent, then and in
every such case the Issuer, the Collateral Agent and each of the Secured Parties
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Secured Parties shall continue as though no such proceeding
had been instituted.
Section 7.04. No Remedy Exclusive. No right or remedy herein conferred upon
or reserved to the Collateral Agent, the Controlling Party or either of the
Secured Parties is intended to be exclusive of any other right or remedy, and
every right or remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law, in equity or otherwise (but, in each case, shall be subject to
the provisions of this Agreement limiting such remedies), and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Controlling Party, and the exercise of or the beginning
of the exercise of any right or power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Further Assurances. Each party hereto shall take such action
and deliver such instruments to any other party hereto, in addition to the
actions and instruments specifically provided for herein, as may be reasonably
requested or required to effectuate the purpose or provisions of this Agreement
or to confirm or perfect any transaction described or contemplated herein.
25
Section 8.02. Waiver. Any waiver by any party of any provision of this
Agreement or any right, remedy or option hereunder shall only prevent and stop
such party from thereafter enforcing such provision, right, remedy or option if
such waiver is given in writing and only as to the specific instance and for the
specific purpose for which such waiver was given. The failure or refusal of any
party hereto to insist in any one or more instances, or in a course of dealing,
upon the strict performance of any of the terms or provisions of this Agreement
by any party hereto or the partial exercise of any right, remedy or option
hereunder shall not be construed as a waiver or relinquishment of any such term
or provision, but the same shall continue in full force and effect.
Section 8.03. Amendments; Waivers. No amendment, modification, waiver or
supplement to this Agreement or any provision of this Agreement shall in any
event be effective unless the same shall have been made or consented to in
writing by each of the parties hereto and each Rating Agency shall have
confirmed in writing that such amendment will not cause a reduction or
withdrawal of a rating on the Notes without regard to the Policy; provided,
however, that, notwithstanding the foregoing, for so long as the Insurer shall
be the Controlling Party, any amendments, modifications, waivers or supplements
hereto, or to the Collateral or Spread Account or to any requirement hereunder
to deposit or retain any amounts in such Spread Account or to distribute any
amounts therein as provided in Section 3.03 shall be effective if made or
consented to in writing by the Insurer, the Issuer and the Collateral Agent (the
consent of which shall not be withheld or delayed with respect to any amendment
that does not adversely affect the Collateral Agent) but shall in no
circumstances require the consent of the Indenture Trustee or the Noteholders.
Section 8.04. Severability. In the event that any provision of this
Agreement or the application thereof to any party hereto or to any circumstance
or in any jurisdiction governing this Agreement shall, to any extent, be invalid
or unenforceable under any applicable statute, regulation or rule of law, then
such provision shall be deemed inoperative to the extent that it is invalid or
unenforceable and the remainder of this Agreement, and the application of any
such invalid or unenforceable provision to the parties, jurisdictions or
circumstances other than to whom or to which it is held invalid or
unenforceable, shall not be affected thereby nor shall the same affect the
validity or enforceability of any other provision of this Agreement. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by the Collateral Agent, or any of the Secured Parties,
hereunder is unavailable or unenforceable shall not affect in any way the
ability of the Collateral Agent or any of the Secured Parties to pursue any
other remedy available to it or them (subject, however, to the provisions of
this Agreement limiting such remedies).
Section 8.05. Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement, each of the parties hereto agrees that it shall not, prior to
one year and one day after the Final Scheduled Maturity Date, acquiesce,
petition or otherwise invoke or cause the Issuer, Flagship LLC, the Depositor or
the Special Member to invoke the process of the United States of America, any
State or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government for the purpose of commencing or sustaining a case by or against
the Issuer, Flagship LLC, the Depositor or the Special Member under a Federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
26
liquidator, assignee, Indenture Trustee, custodian, sequestrator or other
similar official of the Issuer, Flagship LLC, the Depositor or the Special
Member or all or any part of its respective property or assets or ordering the
winding up or liquidation of the affairs of the Issuer, Flagship LLC, the
Depositor or the Special Member. The parties agree that damages will be an
inadequate remedy for breach of this covenant and that this covenant may be
specifically enforced.
Section 8.06. Notices. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Issuer:
Flagship Auto Receivables Owner Trust 1999-2
c/o First Union National Bank
One ▇▇▇▇▇▇ Square
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to
General Counsel of Flagship Credit Corporation
▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(ii) If to the Insurer:
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Insured Portfolio Management - Structured
Finance (Flagship Auto Receivables Owner
Trust 1999-2)
(in each case in which notice or other communication to the
Insurer refers to a Default or a claim on the Policy or in which
failure on the part of the Insurer to respond shall be deemed to
constitute consent or acceptance, then with a copy to the
attention of the General Counsel marked to reflect "Urgent
Materials Enclosed")
27
(iii) If to the Indenture Trustee:
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Indenture Trust Administration
(iv) If to the Collateral Agent:
▇▇▇▇▇▇ Trust and Savings Bank,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Document Custody Unit
(v) If to Moody's:
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇
Attention: ABS Monitoring Department
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Services
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇
Attention: Asset-Backed Surveillance Department
(vii) If to Duff & ▇▇▇▇▇▇:
Duff & ▇▇▇▇▇▇ Credit Rating Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇
Attention: Asset-Backed Monitoring Group
A copy of each notice given hereunder to any party hereto shall also
be given to (without duplication) the Insurer, the Issuer, the
Indenture Trustee and the Collateral Agent. Each party hereto may, by
notice given in accordance herewith to each of the other parties
hereto, designate any further or different address to which subsequent
notices shall be sent.
Section 8.07. Term of this Agreement. This Agreement shall take effect on
the Closing Date and shall continue in effect until the Final Termination Date.
On the Final Termination Date, this Agreement shall terminate, all obligations
of the parties hereunder shall cease and terminate and
28
the Collateral, if any, held hereunder and not to be used or applied in
discharge of any obligations of the Issuer in respect of the Secured Obligations
or otherwise under this Agreement, shall be released to and in favor of the
Issuer, provided that the provisions of Sections 4.06, 4.07 and 8.05 shall
survive any termination of this Agreement and the release of any Collateral upon
such termination.
Section 8.08. Assignments; Third-Party Rights; Reinsurance.
(a) This Agreement shall be a continuing obligation of the parties hereto
and shall (i) be binding upon the parties and their respective successors and
assigns, and (ii) inure to the benefit of and be enforceable by each Secured
Party and the Collateral Agent, and by their respective successors, transferees
and assigns. The Issuer may not assign this Agreement, or delegate any of its
duties hereunder, without the prior written consent of the Controlling Party.
(b) The Insurer shall have the right to give participations in its rights
under this Agreement and to enter into contracts of reinsurance with respect to
the Policy issued in connection with the Notes, upon such terms and conditions
as the Insurer in its discretion determines, and each such participant or
reinsurer shall be entitled to the benefit of any representation, warranty,
covenant and obligation of each party (other than the Insurer) hereunder as if
such participant or reinsurer was a party hereto and, subject only to such
agreement regarding such reinsurance or participation, shall have the right to
enforce the obligations of each such other party directly hereunder; provided,
however, that no such reinsurance or participation agreement or arrangement
shall relieve the Insurer of its obligations hereunder, under the Transaction
Documents to which it is a party or under the Policy. In addition, nothing
contained herein shall restrict the Insurer from assigning to any Person
pursuant to any liquidity facility or credit facility any rights of the Insurer
under this Agreement or with respect to any real or personal property or other
interests pledged to the Insurer, or in which the Insurer has a security
interest, in connection with the transactions contemplated hereby.
Section 8.09. Consent of Controlling Party. In the event that the
Controlling Party's consent is required under the terms hereof or under the
terms of any Transaction Document, it is understood and agreed that, except as
otherwise provided expressly herein, the determination whether to grant or
withhold such consent shall be made solely by the Controlling Party in its sole
discretion.
Section 8.10. Consents to Jurisdiction. Each of the parties hereto
irrevocably submits to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York, any court in the state of
New York located in the city and county of New York, and any appellate court
from any thereof, in any action, suit or proceeding brought against it and
related to or in connection with this Agreement, the other Transaction Documents
or the transactions contemplated hereunder or thereunder or for recognition or
enforcement of any judgment and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such suit or action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action, suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. To the extent permitted by applicable law,
each of the parties hereby waives and agrees not to assert by way of motion, as
a defense or otherwise in
29
any such suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or any of the other Transaction
Documents or the subject matter hereof or thereof may not be litigated in or by
such courts. The Issuer hereby irrevocably appoints and designates ▇▇▇▇▇▇ Trust
and Savings Bank, as its true and lawful attorney and duly authorized agent for
acceptance of service of legal process. The Issuer agrees that service of such
process upon such Person shall constitute personal service of such process upon
it. Subject to Section 8.05, nothing contained in this Agreement shall limit or
affect the rights of any party hereto to serve process in any other manner
permitted by law or to start legal proceedings relating to any of the
Transaction Documents against the Issuer or its property in the courts of any
jurisdiction.
Section 8.11. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) ▇▇▇▇▇▇ Trust and Savings Bank is executing
this Agreement not in its individual capacity but solely in its capacities as
collateral agent and trustee of the Issuer pursuant to the Indenture and (b) in
no case whatsoever shall ▇▇▇▇▇▇ Trust and Savings Bank be personally liable on,
or for any loss in respect of, any of the statements, representations,
warranties, covenants, agreements or obligations of the Issuer hereunder, all
such liability, if any, being expressly waived by the parties hereto.
Section 8.12. Determination of Adverse Effect. Any determination of an
adverse effect on the interest of the Secured Parties or the Noteholders shall
be made without consideration of the availability of funds under the Policy.
Section 8.13. Headings. The headings of sections and paragraphs and the
Table of Contents contained in this Agreement are provided for convenience only.
They form no part of this Agreement and shall not affect its construction or
interpretation.
Section 8.14. TRIAL BY JURY WAIVED. EACH OF THE PARTIES HERETO WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER TRANSACTION DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER. EACH OF THE PARTIES
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY, BY AMONG OTHER THINGS, THIS
WAIVER.
Section 8.15. Governing Law. This agreement shall be construed in
accordance with the laws of the state of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
30
Section 8.16. Counterparts. This Agreement may be executed in two or more
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 8.17. Limitation of Liability. Notwithstanding any other provision
herein or elsewhere, this Agreement has been executed and delivered by First
Union National Bank, not in its individual capacity, but solely in its capacity
as Owner Trustee of the Issuer, and in no event shall First Union National Bank
have any liability (except with respect to its own grossly negligent action or
failure to act) in respect of the representations, warranties, or obligations of
the Issuer or the Owner Trustee hereunder or under any other document, as to all
of which recourse shall be had solely to the assets of the Issuer, and for all
purposes of this Agreement and each other document, First Union National Bank
shall be entitled to the benefits of the Amended and Restated Trust Agreement of
the Issuer.
31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth on the first page hereof.
FLAGSHIP AUTO RECEIVABLES OWNER
TRUST 1999-2
as Issuer
By: FIRST UNION NATIONAL BANK, not in
its individual capacity, but solely as Owner
Trustee
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
S-1
IN WITNESS WHEREOF, the undersigned officers have caused this Spread
Account Agreement to be executed as of the day and year first above written.
MBIA INSURANCE CORPORATION,
as Insurer
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
S-2
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as Indenture Trustee
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as Collateral Agent
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
S-3