Exhibit 10.3
INDENTURE AND SERVICING AGREEMENT
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CREDITRUST SPV99-1, LLC,
as Issuer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee and Backup Servicer of the Receivables
and
CREDITRUST CORPORATION,
as Servicer of the Receivables
Dated as of August 1, 1999
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CREDITRUST RECEIVABLES-BACKED NOTES, SERIES 1999-1
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS............................................................1
SECTION 1.01 Definitions...............................................1
SECTION 1.02 Interpretation............................................14
ARTICLE II CREATION OF TRUST ESTATE; CUSTODY OF RECEIVABLE
FILES..................................................................15
SECTION 2.01 Creation of Trust Estate.................................15
SECTION 2.02 Custody Of Receivable Files..............................16
SECTION 2.03 Acceptance By Trustee....................................17
SECTION 2.04 Representations and Warranties of Issuer as to the
Receivables........................................................17
SECTION 2.05 Repayment for Receivables Upon Breach....................18
SECTION 2.06 Duties of Servicer as Custodian..........................19
SECTION 2.07 Instructions; Authority to Act...........................20
SECTION 2.08 Indemnification by Custodian.............................21
SECTION 2.09 Effective Period and Termination.........................21
SECTION 2.10 Agent for Service........................................21
SECTION 2.11 Satisfaction and Discharge of Indenture..................21
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES....................22
SECTION 3.01 Duties of Servicer.......................................22
SECTION 3.02 Collection of Receivable Payments........................23
SECTION 3.03 Covenants of Servicer....................................24
SECTION 3.04 Repayment in Respect of Receivables Upon Breach and Other
Events.............................................................25
SECTION 3.05 Servicing Fee; Payment of Certain Expenses By
Servicer...........................................................25
SECTION 3.06 Monthly Servicer Report; Servicer's Remittance Date
Certificate........................................................26
SECTION 3.07 Annual Statement as to Compliance........................26
SECTION 3.08 Periodic Accountants Report..............................27
SECTION 3.09 Servicer's Compliance Report.............................27
SECTION 3.10 Access to Certain Documentation and Information..........28
SECTION 3.11 Reports to Noteholders, the Rating Agency and the Placement
Agent..............................................................28
SECTION 3.12 Tax Treatment............................................28
ARTICLE IV THE ACCOUNTS; PAYMENTS; STATEMENTS TO NOTEHOLDERS...............29
SECTION 4.01 Accounts..................................................29
SECTION 4.02 Collections...............................................30
SECTION 4.03 Additional Deposits.......................................30
SECTION 4.04 Allocations and Payments..................................30
SECTION 4.05 Reserve Account..........................................33
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SECTION 4.05A Note Payment Account....................................33
SECTION 4.06 Statements to Noteholders................................34
SECTION 4.07 Application of Trust Money...............................34
ARTICLE V THE NOTES.......................................................34
SECTION 5.01 The Notes................................................34
SECTION 5.02 Authentication and Delivery of the Notes.................35
SECTION 5.03 Registration of Transfer and Exchange of Notes...........35
SECTION 5.04 Mutilated, Destroyed, Lost or Stolen Notes...............38
SECTION 5.05 Persons Deemed Owners....................................38
SECTION 5.06 Access to List of Noteholders' Names and Addresses.......39
SECTION 5.07 Surrendering of Notes....................................39
SECTION 5.08 Maintenance of Office or Agency..........................39
ARTICLE VI THE ISSUER......................................................40
SECTION 6.01 Representations of Issuer................................40
SECTION 6.02 Repayment in Respect of Receivables Upon Breach..........46
SECTION 6.03 Liability of Issuer......................................47
SECTION 6.04 Merger or Consolidation of, or Assumption of the
Obligations of, the Issuer; Certain Limitations....................47
SECTION 6.05 Limitation on Liability of Issuer and Others.............48
SECTION 6.06 Issuer May Own Notes.....................................48
SECTION 6.07 Covenants of Issuer......................................49
ARTICLE VII THE SERVICER...................................................54
SECTION 7.01 Representations of Servicer..............................54
SECTION 7.02 Liability of Servicer; Indemnities.......................56
SECTION 7.03 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer.......................................57
SECTION 7.04 Limitation on Liability of Servicer and Others...........58
SECTION 7.05 Servicer Not to Resign...................................58
SECTION 7.06 Backup Servicing.........................................59
SECTION 7.07 General Covenants of Servicer............................60
ARTICLE VIII SERVICER DEFAULT; EVENTS OF DEFAULT SERVICER EVALUATION EVENT;
REMEDIES...............................................................65
SECTION 8.01 Servicer Default.........................................65
SECTION 8.02 Consequences of a Servicer Default.......................67
SECTION 8.03 Backup Servicer to Act; Appointment of Successor
Servicer...........................................................69
SECTION 8.04 Notification to Noteholders, Rating Agency and Placement
Agent..............................................................70
SECTION 8.05 Waiver of Past Servicer Defaults.........................71
SECTION 8.06 [Deleted]................................................71
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SECTION 8.07 Subservicers..............................................71
SECTION 8.08 Events of Default........................................72
SECTION 8.09 Acceleration of Maturity; Rescission and Annulment.......73
SECTION 8.10 Collection of Indebtedness and Suits for Enforcement by
Trustee............................................................74
SECTION 8.11 Remedies.................................................75
SECTION 8.12 Trustee May File Proofs of Claim.........................75
SECTION 8.13 Trustee May Enforce Claims without Possession of
Notes..............................................................76
SECTION 8.14 Application of Money Collected...........................76
SECTION 8.15 Limitation on Suits......................................77
SECTION 8.16 Unconditional Rights of Noteholders to Receive Principal and
Interest...........................................................77
SECTION 8.17 Restoration of Rights and Remedies.......................78
SECTION 8.18 Rights and Remedies Cumulative...........................78
SECTION 8.19 Delay or Omission Not Waiver.............................78
SECTION 8.20 Control by Controlling Party.............................78
SECTION 8.21 Waiver of Past Defaults..................................79
SECTION 8.22 Undertaking for Costs....................................79
SECTION 8.23 Waiver of Stay or Extension Laws.........................79
SECTION 8.24 Sale of Trust Estate.....................................80
SECTION 8.25 Action on Notes..........................................81
SECTION 8.26 No Recourse to Other Trust Estates or Other Assets of the
Issuer.............................................................81
SECTION 8.27 License..................................................82
ARTICLE IX THE TRUSTEE.....................................................82
SECTION 9.01 Duties of Trustee........................................82
SECTION 9.02 Trustee's Certificate....................................84
SECTION 9.03 Trustee's Release of Removed Receivables.................84
SECTION 9.04 Certain Matters Affecting the Trustee....................84
SECTION 9.05 Limitation on Trustee's Liability........................86
SECTION 9.06 Trustee May Own Notes....................................87
SECTION 9.07 Trustee's Fees and Expenses.............................87
SECTION 9.08 Indemnity of Trustee, Backup Servicers and Successor
Servicer...........................................................88
SECTION 9.09 Eligibility Requirements for Trustee.....................88
SECTION 9.10 Resignation or Removal of Trustee........................89
SECTION 9.11 Successor Trustee........................................89
SECTION 9.12 Merger or Consolidation of Trustee.......................90
SECTION 9.13 Appointment of Co-Trustee or Separate Trustee............90
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SECTION 9.14 Representations and Warranties of Trustee................92
SECTION 9.15 Tax Returns..............................................92
SECTION 9.16 [Deleted]................................................93
SECTION 9.17 Suit for Enforcement.....................................93
SECTION 9.18 Rights of Controlling Party to Direct Trustee............93
SECTION 9.19 Confidential Information.................................93
ARTICLE X REDEMPTION.........................................................94
SECTION 10.01 Redemption at the Option of the Issuer; Election to
Redeem.............................................................94
SECTION 10.02 Deposit of Redemption Amount............................95
SECTION 10.03 Notice of Redemption by the Trustee.....................95
ARTICLE XI MISCELLANEOUS PROVISIONS........................................95
SECTION 11.01 Amendment...............................................95
SECTION 11.02 Protection of Title to Trust Estate.....................97
SECTION 11.03 Limitation of Rights of Noteholders.....................98
SECTION 11.04 Governing Law...........................................99
SECTION 11.05 Notices.................................................99
SECTION 11.06 Severability of Provisions; Counterparts................99
SECTION 11.07 Assignment..............................................100
SECTION 11.08 No Petition.............................................100
SECTION 11.09 Noteholder Direction....................................100
SECTION 11.10 No Substantive Review of Compliance Documents...........100
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This Indenture and Servicing Agreement, dated as of August 1, 1999 (the
"Agreement") is executed by and among Creditrust SPV99-1, LLC, as issuer (the
"Issuer"), Norwest Bank Minnesota, National Association, as trustee (in such
capacity, the "Trustee"), and as backup servicer (in such capacity, the "Backup
Servicer"), and Creditrust Corporation, as servicer (the "Servicer").
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and the Noteholders to
the extent provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS.
Except as otherwise provided in this Agreement, whenever used herein,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Accounts" means the Collection Account, the Reserve Account and the
Note Payment Account.
"Accredited Investor" shall have the meaning assigned to such term in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Adverse Claim" means a lien, security interest, charge, encumbrance or
other right or claim of any Person.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control," when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the term "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this Indenture and Servicing Agreement, relating to
Creditrust Receivables-Backed Notes, Series 1999-1 dated as of August 1, 1999,
among Creditrust SPV99-1, LLC, as Issuer, Norwest Bank Minnesota, National
Association, as Trustee and Backup Servicer and Creditrust
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Corporation, as Servicer, as the same may be amended or supplemented from time
to time.
"Applicants" shall have the meaning specified in Section 5.06.
"Asset Sale Agreement" means each asset sale agreement or receivables
purchase agreement entered into between Creditrust Corporation and each
Originating Institution in connection with the purchase of Receivables from such
Originating Institution.
"Assignment Agreement" means the Assignment Agreement dated as of the
Closing Date by and between Creditrust Funding I LLC and the Issuer.
"Available Funds" means, with respect to any Payment Date and the next
preceding Determination Date, the sum of (i) the Net Proceeds recovered with
respect to each Receivable and received in the Collection Account during the
Collection Period then most recently concluded, plus (ii) all available funds on
deposit in the Collection Account (other than Net Proceeds of Receivables) as of
the opening of business of the Trustee on such Determination Date.
"Backup Servicer" means Norwest Bank Minnesota, National Association,
and its successors and assigns.
"Backup Servicing Fee" means the fee payable to the Backup Servicer on
each Payment Date for services rendered pursuant to this Agreement, which shall
be equal to the greater of (i) the product of one-twelfth of .15% and the Note
Balance as of the immediately preceding Payment Date (after giving effect to
payments in reduction of the Note Balance made on such immediately preceding
Payment Date, if any) and (ii) $1,000 per month; PROVIDED, HOWEVER, that with
respect to the initial Payment Date, the Backup Servicing Fee shall be prorated
based upon a fraction, the numerator of which is the number of days from and
including the Closing Date through September 30, 1999, and the denominator of
which is 30.
"Benefit Plan" means with respect to any Person any employee benefit
plan as defined in Section 3(3) of ERISA in respect of which such Person or any
ERISA Affiliate of such Person is, or at any time during the immediately
preceding six years was, an "employer" as defined in Section 3(5) of ERISA.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the State of Maryland, the State of Minnesota
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or the State of New York are required or authorized by law, regulation,
executive order or governmental decree to be closed.
"By-laws" means the bylaws of Issuer.
"Charged-Off Balance" means, with respect to each Receivable, the
original charged-off balance thereof as required to be set forth in the Schedule
of Receivables.
"Closing Date" means August 31, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" means the segregated account or accounts, each of
which shall be an Eligible Account, established and maintained pursuant to
Section 4.01 and entitled "Norwest Bank Minnesota, National Association, as
Trustee for Creditrust Receivables-Backed Notes, Series 1999-1 Collection
Account."
"Collection Period" means, with respect to any Remittance Date,
Determination Date or Payment Date, the period beginning on the first day of the
calendar month immediately preceding the month in which such Remittance Date,
Determination Date or Payment Date occurs and ending on the last day of such
calendar month; PROVIDED, HOWEVER, that the initial Collection Period begins on
the Closing Date.
"Consumer Account" means any receivable generated on a credit card
account, revolving account, or installment account.
"Controlling Party" means the Noteholders with Voting Interests in
excess of 50% of all outstanding Voting Interests.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Agreement is located
at Sixth Street and Marquette Avenue, MAC N9311-161, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Trust Services/Asset-Backed Administration.
"Customary Procedures" means the customary practices, policies,
standards and procedures of the Servicer relating to the acquisition and
collection of comparable defaulted consumer receivables that it services for
itself or others, in each case as in effect on the Closing Date (or, in the case
of a
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Successor Servicer, the date such Successor Servicer becomes the Servicer)
(which include backup servicing files and disaster recovery plans), as the same
may be modified by the Servicer from time to time thereafter with, in each case,
prompt notice to the Trustee.
"Cut-Off Date" means July 31, 1999.
"Determination Date" means, with respect to any Payment Date, the
second Business Day next preceding such Payment Date.
"Eligible Account" means (A) a segregated account or accounts
maintained with an institution the deposits of which are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
unsecured and uncollateralized debt obligations of which shall be rated "A" or
better by the Required Rating Agencies then providing a long term debt rating
for such institution and in the highest available short term rating category by
the Required Rating Agencies then providing a short term debt rating for such
institution, and that is (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) a banking or savings and loan association duly organized, validly existing
and in good standing under the applicable laws of any state, (iii) a national
banking association duly organized, validly existing and in good standing under
the federal banking laws, or (iv) a principal subsidiary of a bank holding
company, or (B) a segregated trust account (which shall be a "special deposit
account") maintained in the trust department of a federal or state chartered
depository institution or trust company, having capital and surplus of not less
than $50,000,000, acting in its fiduciary capacity. Any Eligible Accounts
maintained with the Trustee shall conform to the preceding clause (B). Any
Account maintained at an institution other than the Trustee must be subject to
an agreement with such institution among Servicer, Issuer and Trustee,
substantially similar to the Securities Account Control Agreement (Collection
Account) dated as of the Closing Date, among the Issuer, the Trustee, and
Norwest Bank Minnesota, National Association, as Securities Intermediary.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means with respect to any Person (a) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as such Person; (b) a trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with such Person, or (c) a member of the same
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affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person, any corporation described in clause (a) above or any trade or
business described in clause (b) above.
"Event of Default" shall have the meaning specified in Section 8.08.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation, and its
successors.
"Final Payment Date" shall mean the earlier of August 15, 2004 or (ii)
the Payment Date which follows the Payment Date on which all proceeds of a sale
of the Trust Estate pursuant to Section 8.24 were distributed.
"FNMA" means the Federal National Mortgage Association, and its
successors.
"GAAP" means generally accepted accounting principles that are (i)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time,
and (ii) consistently applied with past financial statements of the Servicer and
its subsidiaries; provided that a certified public accountant would, insofar as
the use of such accounting principles is pertinent, be in a position to deliver
an unqualified opinion (other than a qualification regarding changes in
generally accepted accounting principles) as to financial statements in which
such principles have been properly applied.
"Independent Member" means a member of the Issuer which is a
corporation and (a) which is not (i) an Affiliate of the Seller or the Servicer
or (ii) a holder (directly or indirectly) of any voting securities of any
Affiliate of the Issuer, and (b) which is a wholly owned Affiliate of a company
that provides, in the ordinary course of its business, advisory, management or
placement services to issuers of securitization or structured finance
instruments, agreements or securities.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing 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 bankruptcy, insolvency or other similar
law now or hereafter in effect, or the filing of a petition against such Person
in an involuntary case under any applicable bankruptcy, insolvency or other
similar
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law now or hereafter in effect, which case remains unstayed and undismissed
within 30 days of such filing, or the appointing of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for such Person
or for any substantial part of its property, or the ordering of the winding-up
or liquidation of such Person's business; or (b) the commencement by such Person
of a voluntary case under any applicable 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 admission
by such Person of its inability to pay its debts generally as they become due.
"Insolvency Proceeding" means any proceeding of the sort described in
the definition of Insolvency Event.
"Interest Carryover Shortfall" means, with respect to any Payment Date,
the excess, if any, of (i) the Interest Distributable Amount for such Payment
Date and all prior Payment Dates, over (ii) the amount of interest, if any,
actually paid to Noteholders on such Payment Date and all prior Payment Dates.
"Interest Distributable Amount" means, with respect to any Payment
Date, the product of (A) one-twelfth of the Note Rate and (B) the Note Balance
as of the immediately preceding Payment Date (after giving effect to payments in
reduction of the Note Balance made on such immediately preceding Payment Date,
if any) or, in the case of the initial Payment Date, the Original Note Balance;
provided, however, that with respect to the initial Payment Date, the amount
calculated in accordance with the preceding clause shall be multiplied by a
fraction, the numerator of which is the number of days from and including the
Closing Date to but not including the initial Payment Date and the denominator
of which is 30.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Issuer" means Creditrust SPV99-1, LLC, in its capacity as issuer of
the Notes pursuant to this Agreement, and each successor thereto (in the same
capacity) pursuant to Section 6.04.
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"Lien" means any security interest, lien, charge, pledge, equity or
encumbrance of any kind.
"LLC Agreement" means the limited liability company agreement of
Issuer.
"Monthly Servicer Report" means an Officer's Certificate of the
Servicer completed and executed pursuant to Section 3.06(a), substantially in
the form attached hereto as Exhibit A.
"Nationally Recognized Statistical Rating Agency" means each of Duff &
▇▇▇▇▇▇ Credit Rating Co., Fitch IBCA, Inc., ▇▇▇▇▇'▇ Investors Service, Inc. and
Standard & Poor's Ratings Services, or any successor thereto.
"Net Proceeds" means, with respect to a Receivable, all monies in
available funds collected, received or otherwise recovered from or for the
account of the related Obligor on such Receivable. Third-Party Fees and court
costs incurred in connection with collecting a Receivable will be deducted from
collections on such Receivable by such third parties or by the Servicer on their
behalf and will not constitute Net Proceeds.
"Note" means one of the 9.43% Creditrust Receivables-Backed Notes,
Series 1999-1 executed by the Issuer and authenticated by the Trustee in
substantially the form attached hereto as Exhibit C.
"Note Balance" shall initially equal, on the Closing Date, the Original
Note Balance and, as of any subsequent date of determination, shall equal the
Original Note Balance less all amounts paid to Noteholders on previous Payment
Dates and applied in reduction of the Note Balance pursuant to the terms hereof.
"Note Payment Account" means the segregated account or accounts, each
of which shall be an Eligible Account, established and maintained pursuant to
Section 4.01 and entitled "Norwest Bank Minnesota, National Association, as
Trustee for Creditrust Receivables-Backed Notes, Series 1999-1, Note Payment
Account."
"Note Rate" means 9.43% per annum, calculated on the basis of a 360-day
year consisting of twelve 30-day months.
"Note Register" means the register maintained pursuant to Section 5.03.
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"Note Registrar" means the Trustee unless a successor thereto is
appointed pursuant to Section 5.03. The Note Registrar initially designates its
offices at Sixth Street and Marquette Avenue, MAC N9311-161, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as its offices for purposes of Section 5.07.
"Noteholder" means the Person in whose name a Note is registered in the
Note Register, except that, solely for the purposes of giving certain consents,
waivers, requests or demands pursuant to this Agreement the interests evidenced
by any Note registered in the name of, or in the name of a Person or entity
holding for the benefit of, the Issuer, the Servicer or any Person actually
known to a Responsible Officer of the Trustee to be an Affiliate of the Issuer
or the Servicer, shall not be taken into account in determining whether the
requisite percentage necessary to effect any such consent, waiver, request or
demand shall have been obtained.
"Obligor" on a Receivable means any Person who owes or may be liable
for payments under such Receivable.
"Officer's Certificate" means a certificate signed by a Responsible
Officer of the Issuer or the Servicer, as the case may be, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or outside counsel to the Person responsible for providing such
opinion, and which opinion shall be reasonably acceptable to the Trustee and the
other recipients thereof.
"Original Note Balance" means $40,000,000.
"Originating Institution" means any of the banking institutions or
merchants that originated any of the Receivables and their assignees.
"Payment Date" means the fifteenth day of each calendar month or, if
such day is not a Business Day, the next succeeding Business Day, commencing
October 15, 1999.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"Permitted Investments" means, at any time, any one or more of the
following obligations and securities:
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(i) obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency thereof, provided such obligations are backed by the full faith
and credit of the United States;
(ii) general obligations of, or obligations guaranteed by,
FNMA or any state of the United States or the District of Columbia,
which are then rated the highest available credit rating for such
obligations by the Required Rating Agencies then providing such a
rating;
(iii) certificates of deposit issued by any depository
institution or trust company (including the Trustee) incorporated under
the laws of the United States or of any state thereof, the District of
Columbia and subject to supervision and examination by banking
authorities of one or more of such jurisdictions, provided that the
short-term unsecured debt obligations of such depository institution or
trust company are then rated the highest available credit rating for
such obligations by the Required Rating Agencies then providing such a
rating;
(iv) repurchase obligations held by the Trustee that are
acceptable to the Trustee with respect to any security described in
clauses (i) or (ii) hereof or any other security issued or guaranteed
by any other agency or instrumentality of the United States, in either
case entered into with a federal agency or a depository institution or
trust company (acting as principal) described in clause (iii) above,
provided that the party agreeing to repurchase such obligations shall
have the highest available short-term debt rating from the Required
Rating Agencies then providing such a rating; and
(v) freely redeemable shares in money market funds (including
such funds for which the Trustee or an Affiliate of the Trustee serves
as an investment advisor, administrator, shareholder, servicing agent
and/or custodian or subcustodian) which invest solely in the types of
instruments and obligations described in clauses (i) through (iv)
above, so long as such funds are then rated in the highest available
rating category for money market funds by the Required Rating Agencies
then providing such a rating and notwithstanding that (i) the Trustee
or an Affiliate of the Trustee may charge and collect fees and expenses
from such funds for services rendered, (ii) the Trustee charges and
collects fees and expenses for services rendered pursuant to this
Agreement and (iii) services performed for such funds and pursuant to
this Agreement
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may converge at any time. Each of the Issuer and the Servicer hereby
specifically authorizes the Trustee or an Affiliate of the Trustee to
charge and collect all fees and expenses from such funds for services
rendered to such funds, in addition to any fees and expenses the
Trustee may charge and collect for services rendered pursuant to this
Agreement;
PROVIDED that each of the foregoing investments shall mature no later than the
Business Day prior to the Payment Date immediately following the date of
purchase thereof (other than in the case of the investment of monies in
instruments of which the entity at which the related Account is located is the
obligor, which may mature on the related Payment Date), and shall be required to
be held to such maturity; and provided further that each of the Permitted
Investments may be purchased by the Trustee through an Affiliate of the Trustee.
Notwithstanding anything to the contrary contained in this definition,
(a) no Permitted Investment may be purchased at a premium, (b) any of the
foregoing which constitutes a certificated security shall not be considered a
Permitted Investment unless it is registered in the name of the Trustee in its
capacity as such, and (c) any of the foregoing which constitutes an
uncertificated security shall not be considered a Permitted Investment unless
(i) it is registered in the name of the Trustee in its capacity as such or in
the name of its Financial Intermediary, (ii) no notation of the right of the
issuer thereof to a Lien thereon is contained in the initial transaction
statement therefor sent to the Trustee, (iii) a Responsible Officer of the
Trustee does not have notice or actual knowledge of (A) any restriction on the
transfer thereof imposed by the issuer thereof, or (B) any adverse claims, and
in each such case no notation of any such restriction or of any specific adverse
claim as to which the Issuer has a duty under the law of the state in which the
Corporate Trust Office is located at the time of registration is contained in
the initial transaction statement therefor sent to the Trustee; and (iv) to the
actual knowledge of a Responsible Officer of the Trustee, no creditor has served
legal process upon the issuer thereof at its chief executive office in the
United States which legal process attempts to place a Lien thereon prior to the
registration thereof in the name of the Trustee.
"Person" means any legal person, including any individual, corporation,
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Placement Agent" means Rothschild Inc.
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"Proprietary Information" shall have the meaning specified in Section
9.19.
"Purchaser" means Creditrust SPV99-1, LLC, in its capacity as
transferee or permitted assignee of the Receivables transferred, sold and
assigned under the Receivables Contribution Agreement.
"Purchase Agreement" means the Purchase Agreement signed by the
Noteholders.
"Qualified Institutional Buyer" have the meaning assigned to such term
in Rule 144A under the Securities Act.
"Rating Agency" means Standard & Poor's Rating Services, a division of
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and any successor thereto.
"Receivable" means any receivable in connection with a Consumer Account
identified in the Schedule of Receivables.
"Receivable File" means the documents described in Section 2.02
pertaining to a particular Receivable.
"Receivables Contribution Agreement" means, the Receivables
Contribution Agreement, dated as of the Closing Date, between the Seller and the
Purchaser.
"Record Date" means, with respect to each Payment Date, the last
Business Day of the calendar month immediately preceding the month in which such
Payment Date occurs. Any amount stated "as of a Record Date" or "on a Record
Date" shall give effect to all applications of collections, and all payments to
any party under this Agreement or to the related Obligor, as the case may be, in
each case as determined as of the opening of business of the Note Registrar on
the related Record Date.
"Redemption Amount" means, with respect to a redemption of the Notes by
the Issuer pursuant to Section 10.01, an amount equal to the sum of (i) the Note
Balance as of the date the Issuer elects to redeem the Notes, (ii) all accrued
and unpaid interest on the Notes through the end of the Collection Period
immediately preceding the Payment Date as of which such redemption will occur,
and (iii) any other amounts owed to the Noteholders hereunder or under the
Purchase Agreement.
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"Release Payment" means, with respect to any Removed Receivable in
respect of which a payment is made by the Issuer or the Servicer under this
Agreement and as of the Remittance Date on which the "Release Payment" must be
made, the excess, if any, of (i) the product of the Original Note Balance and a
fraction, the numerator of which is the Charged-Off Balance of such Receivable
and the denominator of which is the Charged-Off Balance of all the Receivables
over (ii) the product of the aggregate amount of all Net Proceeds collected,
received or otherwise recovered on and after the Closing Date with respect to
such Removed Receivable, and a factor equal to .80 in each case determined as of
such Remittance Date.
"Remittance Date" means, with respect to any Payment Date, the third
Business Day next preceding such Payment Date.
"Removed Receivable" means a Receivable which the Servicer is obligated
to acquire pursuant to Section 3.04, or which the Issuer is obligated to make a
payment in respect of pursuant to Section 2.05 or 6.02, or in the event the
Issuer has elected to make a redemption pursuant to Section 10.01, all of the
Receivables.
"Required Rating Agencies" means with respect to any debtor or
indebtedness, the Rating Agency and one other Nationally Recognized Statistical
Rating Agency; PROVIDED that none of the other such Nationally Recognized
Statistical Rating Agencies has given a lower rating to the relevant debtor or
indebtedness than the Rating Agency and such other Nationally Recognized
Statistical Rating Agency (in which case, for the avoidance of doubt, such other
Nationally Recognized Statistical Rating Agency giving the lower rating shall be
one of the "Required Rating Agencies").
"Required Reserve Amount" means the amount required to be deposited in
the Reserve Account on the Closing Date and thereafter maintained in the Reserve
Account for so long as the Notes are outstanding. The amount is $2,400,000.
"Reserve Account" means the segregated account or accounts, each of
which shall be an Eligible Account, established and maintained pursuant to
Section 4.01 and entitled "Norwest Bank Minnesota, National Association, as
Trustee for Creditrust Receivables-Backed Notes, Series 1999-1, Reserve
Account."
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"Reserve Fund Reimbursement Amount" means, with respect to any Payment
Date, the excess of the Required Reserve Amount over the amount then on deposit
in the Reserve Account.
"Responsible Officer" means,
(i) when used with respect to the Trustee, any officer within
the Corporate Trust Office of the Trustee, including any vice
president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's
knowledge of and familiarity with such particular subject, and
(ii) when used with respect to the Issuer or the Servicer, the
president, the chief financial officer, the chief legal officer, the
chief recovery officer or the chief acquisitions officer of the Issuer
or the Servicer, as the case may be.
"Sale" shall have the meaning specified in Section 8.24.
"Schedule of Receivables" means the CD-ROM containing a true and
complete list of all of the Receivables, delivered to the Trustee and
incorporated by reference herein as Schedule A.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Account Control Agreement" means an agreement among Issuer,
Trustee and Norwest Bank Minnesota, National Association as securities
intermediary, dated as of the Closing Date, relating to an Account.
"Seller" means Creditrust Corporation, in its capacity as transferor of
the Receivables transferred, sold and assigned under the Receivables
Contribution Agreement.
"Servicer" means Creditrust Corporation, in its capacity as servicer of
the Receivables pursuant to this Agreement, and each successor thereto (in the
same capacity) appointed pursuant to Section 8.03.
"Servicer Default" shall have the meaning specified in Section 8.01.
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"Servicer's Remittance Date Certificate" means an Officer's Certificate
of the Servicer completed and executed pursuant to Section 3.06(b) and delivered
to the Trustee, in each case specifying Removed Receivables in respect of which
the making of a Release Payment is required hereunder, prepared by the Servicer
as of the opening of business of the Trustee on each applicable Remittance Date.
"Servicing Fee" means the fee payable to the initial Servicer on each
Payment Date, calculated pursuant to Section 3.05, for services rendered during
the related Collection Period, which shall be, for any Payment Date, equal to
twenty percent (20%) of all Net Proceeds collected, received or otherwise
recovered from or for the account of the Obligors during such Collection Period.
The term "Servicing Fee" for a Successor Servicer shall mean the fee payable to
a Successor Servicer for servicing pursuant to Section 8.03.
"Subservicers" shall have the meaning specified in Section 8.07.
"Successor Servicer" means any entity appointed as a successor to the
Servicer pursuant to Section 8.03.
"Third-Party Fees" means, with respect to a Receivable and any
Collection Period, the amount of any fees or compensation paid or owed to
unrelated third-parties (generally, contingency fee lawyers) retained or
otherwise engaged by the Servicer under fee or compensation arrangements that
are contingent upon, and determined by reference to, amounts recovered in
respect of the related Receivable, and which must be commercially reasonable.
"Transaction Documents" means, collectively, this Agreement, the
Receivables Contribution Agreement, the Assignment Agreement, the Notes, the
Purchase Agreement, Securities Account Control Agreements, and each of the other
documents, instruments and agreements entered into in connection with any of the
foregoing or the transactions contemplated thereby.
"Transferee Certificate" means a certificate in the form of Exhibit D-2
or D-3.
"Transition Fees" shall have the meaning specified in Section 8.02.
"Trust Estate" or "Creditrust Receivables-Backed Notes, Series 1999-1
Trust Estate" means the trust estate established under this Agreement for the
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benefit of the Noteholders, which consists of the property described in Section
2.01(b).
"Trust Property" means the property, or interests in property,
constituting the Trust Estate from time to time.
"Trustee" means Norwest Bank Minnesota, National Association, and any
successor trustee appointed pursuant to Section 9.11.
"Trustee Fee" means the fee payable to the Trustee on each Payment Date
for services rendered under this Agreement, which shall be equal to the greater
of (i) the product of .05% per annum and the Note Balance as of the immediately
preceding Payment Date (after giving effect to payments in reduction of the Note
Balance made on such immediately preceding Payment Date, if any) and (ii) $500
per month, PROVIDED, HOWEVER, that with respect to the initial Payment Date, the
Trustee Fee shall be prorated based upon a fraction, the numerator of which is
the number of days from and including the Closing Date through September 30,
1999, and the denominator of which is 30.
"Trustee's Certificate" means a certificate completed and executed by a
Responsible Officer of the Trustee pursuant to Section 9.02 or 9.03,
substantially in the form attached hereto as Exhibit B.
"UCC" means the Uniform Commercial Code as in effect in the State of
Maryland.
"United States" means the United States of America.
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
"Voting Interests" means the aggregate voting power evidenced by the
Notes, corresponding to the outstanding Note Balance of the Notes held by
individual Noteholders; PROVIDED, HOWEVER, that where the Voting Interests are
relevant in determining whether the vote of the requisite percentage of
Noteholders necessary to effect any consent, waiver, request or demand shall
have been obtained, the Voting Interests shall be deemed to be reduced by the
amount equal to the Voting Interests (without giving effect to this provision)
represented by the interests evidenced by any Note registered in the name of, or
in the name of a Person or entity holding for the benefit of, the Issuer, the
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Servicer or any Person actually known to a Responsible Officer of the Trustee to
be an Affiliate of either or both of the Issuer and the Servicer.
"Year 2000 Compliant" shall have the meaning set forth in section
7.01(i).
SECTION 1.02 INTERPRETATION.
Unless otherwise indicated in this Agreement:
(a) reference to and the definition of any document (including this
Agreement) shall be deemed a reference to such document as it may be amended or
modified from time to time;
(b) all references to an "Article," "Section," "Schedule" or "Exhibit"
are to an Article or Section hereof or to a Schedule or an Exhibit attached
hereto;
(c) defined terms in the singular shall include the plural and vice
versa, and the masculine, feminine or neuter gender shall include all genders;
(d) the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement;
(e) in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding";
(f) periods of days referred to in this Agreement shall be counted in
calendar days unless Business Days are expressly prescribed and references in
this Agreement to months and years shall be to calendar months and calendar
years unless otherwise specified;
(g) accounting terms not otherwise defined herein and accounting terms
partly defined herein to the extent not defined, shall have the respective
meanings given to them under GAAP; and
(h) the headings in this Agreement are for the purpose of reference
only and do not limit or affect its meaning.
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ARTICLE II
CREATION OF TRUST ESTATE; CUSTODY OF RECEIVABLE FILES
SECTION 2.01 CREATION OF TRUST ESTATE.
(a) Upon the execution of this Agreement by the parties hereto, there
is hereby created for the benefit of the Noteholders the Creditrust
Receivables-Backed Notes, Series 1999-1 Trust Estate. The Issuer, pursuant to
the mutually agreed upon terms contained in this Agreement, shall grant a
security interest to the Trustee on behalf of the Noteholders in all of its
right, title and interest in and to the Trust Estate, including, without
limitation, the Receivables and any proceeds related thereto, and such other
items as shall be specified in this Agreement.
(b) In consideration of the Trustee's delivery to the Issuer of
authenticated Notes, in authorized denominations, in an aggregate amount equal
to the Original Note Balance, the Issuer does hereby grant a security interest
to the Trustee, in trust for the benefit of the Noteholders, in the following
property and rights in property, whether now owned or existing or hereafter
acquired or arising, whether tangible or intangible, and wheresoever located:
(i) all right, title and interest of the Issuer in and to the
Receivables and all monies due thereon or paid thereunder or in respect thereof
(including any fees and charges paid by the Obligors) on and after the Closing
Date (including any Release Payments made with respect to Removed Receivables
for which payment is made by the Issuer pursuant to Section 2.05 or 6.02 or
Removed Receivables acquired by the Servicer pursuant to Section 3.04), net of
any Third-Party Fees;
(ii) the rights of the Issuer as Purchaser under the
Receivables Contribution Agreement to enforce the obligations of the Seller
thereunder;
(iii) the Collection Account, the Note Payment Account and the
Reserve Account, and all monies, "securities," "instruments," "accounts,"
"general intangibles," "chattel paper," "financial assets," "investment
property" (the terms in quotations are defined in the UCC) and other property on
deposit or credited to the Collection Account, the Note Payment Account, and the
Reserve Account from time to time (whether or not constituting or derived from
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payments, collections or recoveries received, made or realized in respect of the
Receivables);
(iv) all right, title and interest of the Purchaser related to
the Receivables in, to and under each Asset Sale Agreement, and all related
documents, instruments and agreements pursuant to which the Seller acquired, or
acquired an interest in, any of the Receivables from an Originating Institution;
(v) all right, title and interest of the Issuer in all books,
records and documents relating to the Receivables in any medium, including
without limitation paper, tapes, disks and other electronic media;
(vi) all other monies, securities, reserves and other property
now or at any time in the possession of the Trustee or its bailee, agent or
custodian and relating to any of the foregoing; and
(vii) all proceeds, products, rents and profits of any of the
foregoing and all other amounts payable in respect of the foregoing, including,
without limitation, proceeds of insurance policies insuring any of the foregoing
or any indemnity or warranty payable by reason of loss or damage to or otherwise
in respect of any of the foregoing.
(c) The parties hereto intend that the security interest granted under
this Agreement shall give the Trustee on behalf of the Noteholders a first
priority perfected security interest in, to and under the Receivables, and all
other property described in this Section 2.01 as a part of the Trust Estate and
all proceeds of any of the foregoing in order to secure the obligations of the
Issuer to the Trustee and the Noteholders, under the Notes, this Agreement, the
Purchase Agreement, and all other Transaction Documents. The Trustee on behalf
of the Noteholders shall have all the rights, powers and privileges of a secured
party under the UCC. The Issuer agrees to execute and file all filings
(including filings under the UCC) and take all other actions reasonably
necessary in any jurisdiction to provide third parties with notice of the
security interest granted pursuant to this Agreement and to perfect such
security interest under the UCC.
(d) The Issuer shall ensure that, from and after the time of the grant
of the security interest in the Trust Estate, the master computer records
(including any back-up archives) maintained by or on behalf of the Issuer that
refer to any Receivable indicate clearly the interest of the Trustee in such
Receivable and that the Receivable is subject to a security interest in favor of
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the Trustee. Indication of the interest of the Trustee in a Receivable shall be
deleted from or modified on such computer records when, and only when, the
Receivable has been paid in full or has been acquired, assigned or released
pursuant to this Agreement.
SECTION 2.02 CUSTODY OF RECEIVABLE FILES.
In order to assure uniform quality in servicing the Receivables and to
reduce administrative costs, the Trustee on behalf of the Noteholders, upon the
execution and delivery of this Agreement, revocably appoints the Servicer, and
the Servicer accepts such appointment, to act as the agent of the Trustee as
custodian of the following documents relating to each Receivable:
(i) the related Asset Sale Agreement;
(ii) any other documents received from or made available by
the related Originating Institution in respect of such Receivable;
(iii) a copy of the marked computer records indicating the
interest of the Trustee on behalf of the Noteholders, as evidenced by the
Schedule of Receivables; and
(iv) any and all other documents that the Issuer or the
Servicer, as the case may be, shall keep on file, in accordance with its
customary procedures, relating to such Receivable or the related Obligor.
SECTION 2.03 ACCEPTANCE BY TRUSTEE.
The Trustee hereby acknowledges its acceptance, on behalf of the
Noteholders, pursuant to this Agreement, of the security interest in and to the
Receivables and the other Trust Property granted by the Issuer pursuant to this
Agreement, and declares and shall declare from and after the date hereof that
the Trustee on behalf of the Noteholders holds and shall hold such security
interest, pursuant to the terms set forth in this Agreement.
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SECTION 2.04 REPRESENTATIONS AND WARRANTIES OF ISSUER AS TO THE
RECEIVABLES.
The Issuer does hereby make the following representations and
warranties as of the Closing Date on which (i) the Trustee is relying in
accepting a grant of a security interest in the Receivables and the other Trust
Property and authenticating the Notes; (ii) the Noteholders are relying in
purchasing the Notes; and (iii) the Rating Agency is relying in providing its
rating of the Notes:
(a) Characteristics of Receivables. Each Receivable is payable in
United States dollars, has been purchased by Creditrust Corporation from the
related Originating Institution under an Asset Sale Agreement with such
Originating Institution in accordance with the Customary Procedures of
Creditrust Corporation, and has been subsequently transferred, assigned and
conveyed by Creditrust Corporation, or a wholly-owned subsidiary of Creditrust
Corporation, to the Issuer.
(b) Schedule of Receivables. The information set forth in the Schedule
of Receivables is true and correct in all material respects as of the close of
business on the Cut-Off Date, and the Issuer owned no other Receivables as of
the Cut-Off Date.
(c) No Government Obligors. None of the Receivables are due from the
United States or any state or local government, or from any agency, department
or instrumentality of the United States or any state or local government.
(d) Employee Obligors. None of the Receivables are due from any
employee of the Seller, the Issuer or any of their respective Affiliates.
(e) Good Title. No Receivable has been transferred, assigned, conveyed
or pledged by the Issuer to any Person other than the Trustee. The Issuer has
good and marketable title to each Receivable, free and clear of all Liens and
rights of others; the Trustee on behalf of the Noteholders has a first priority
perfected security interest in each Receivable, free and clear of all Liens and
rights of others; and such security interest has been perfected under the UCC
and any other applicable law.
(f) No Impairment of Rights. As of the Closing Date, the Issuer has not
taken any action that, or failed to take any action the omission of which, would
impair the rights of the Trustee or the Noteholders with respect to any
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Receivable; PROVIDED, HOWEVER, that the writing down of any Receivable balance
in accordance with Customary Procedures shall not be deemed an impairment of the
rights of any of the Trustee or the Noteholders.
(g) No Fraudulent Use. As of the Closing Date, no Receivable has been
identified by the Issuer or reported to the Issuer by the related Originating
Institution as having resulted from fraud perpetrated by any Person with respect
to the related account.
(h) All Filings Made. All filings (including UCC filings) necessary in
any jurisdiction to provide third parties with notice of the security interest
granted herein, and to give the Trustee on behalf of the Noteholders a first
priority perfected security interest in the Trust Estate, including the
Receivables, shall have been made.
(i) UCC Status. No Receivable is secured by "real property" or
"fixtures" or evidenced by an "instrument" under and as defined in the UCC. Each
Receivable is either an "account" or a "general intangible" as defined in the
UCC.
(j) Location of Receivable Files. As of the Closing Date each
Receivable File is kept by the Servicer at its offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
SECTION 2.05 REPAYMENT FOR RECEIVABLES UPON BREACH.
Upon discovery by the Issuer or the Servicer or upon the actual
knowledge of a Responsible Officer of the Trustee of a breach of any of the
representations and warranties of the Issuer set forth in Section 2.04, the
party discovering such breach shall give prompt written notice to the others.
If, as a result of such breach, any Receivable is rendered uncollectible or the
Trustee's rights in, to or under such Receivable or the proceeds thereof are
impaired or such proceeds are not available for any reason to the Trustee free
and clear of any Lien, the Issuer shall pay an amount equal to the Release
Payment related to such Receivable and, if necessary, the Issuer shall enforce
the obligation of the Seller under the Receivables Contribution Agreement to
reacquire such Receivable from the Issuer, unless such breach (and any resulting
uncollectibility, impairment of rights or availability of proceeds) shall have
been cured within 30 days after the earlier to occur of the discovery of such
breach by the Issuer or receipt of written notice of such breach by the Issuer,
such that the relevant representation and warranty shall be true and correct in
all
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material respects as if made on such day, and the Issuer shall have delivered to
the Trustee and each Noteholder an Officer's Certificate describing the nature
of such breach and the manner in which the relevant representation and warranty
became true and correct. This repayment obligation shall pertain to all
representations and warranties of the Issuer contained in Section 2.04, whether
or not the Issuer has knowledge of the breach at the time of the breach or at
the time the representations and warranties were made. The Issuer will be
obligated to make the repayment related to the Receivable as set forth above on
the Remittance Date following the date on which such repayment obligation
arises. In consideration of the release of any such Receivable, on the
Remittance Date immediately following the date on which such repayment
obligation arises, the Issuer shall remit the Release Payment of such Receivable
to the Collection Account in the manner specified in Section 4.03.
Upon any such repayment, the Trustee on behalf of the Noteholders
shall, without further action, be deemed to release its security interest in, to
and under the Removed Receivable so released, all monies due or to become due
with respect thereto after the aforementioned Remittance Date and all proceeds
thereof. The Trustee shall execute such documents and instruments of release and
take such other actions as shall be reasonably requested by the Issuer to effect
the security interest release pursuant to this Section. The sole remedies of the
Trustee and the Noteholders with respect to a breach of the Issuer's
representations and warranties pursuant to Section 2.04 shall be to require the
Issuer to make repayment for the related Receivable pursuant to this Section and
to enforce the Issuer's obligation hereunder to enforce the obligation of the
Seller under the Receivables Contribution Agreement to reacquire such Receivable
from the Issuer. The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repayment for
any Receivable pursuant to this Section, except as otherwise provided in Section
9.02.
SECTION 2.06 DUTIES OF SERVICER AS CUSTODIAN.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall hold
the Receivable Files in its possession from time to time on behalf of the
Trustee for the use and benefit of all present and future Noteholders, and
maintain such accurate and complete accounts, records and computer systems
pertaining to each Receivable File as shall enable the Trustee to comply with
this Agreement. In performing its duties as custodian, the Servicer shall act
with reasonable care, using that degree of skill and attention that it exercises
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with respect to the receivable files of comparable defaulted receivables that
the Servicer services for itself or others. The Servicer shall conduct, or cause
to be conducted, periodic examinations of the files of receivables owned or
serviced by it, which shall include the Receivable Files held by it under this
Agreement, and of the related accounts, records and computer systems, in such a
manner as shall enable the Trustee to verify the accuracy of the Servicer's
record keeping; PROVIDED, HOWEVER, that the Trustee shall be under no obligation
to verify the accuracy of the Servicer's record-keeping unless requested to do
so in writing by the Noteholders with Voting Interest in excess of 25% or the
Rating Agency. Any such written request shall specify in detail the procedures
to be employed by the Trustee. The Servicer shall promptly report to the Trustee
any failure on its part to hold the Receivable Files and maintain its accounts,
records and computer systems as herein provided and promptly take appropriate
action to remedy any such failure.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at its offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
or at such other office as shall be specified to the Trustee by 30 days' prior
written notice, PROVIDED THAT the Servicer shall have taken all actions
necessary or reasonably requested by the Trustee to amend any existing financing
statements and continuation statements, and file additional financing statements
and take any other steps reasonably requested by the Trustee to further perfect
or evidence the rights, claims or security interests of the Trustee under any of
the Transaction Documents. The Servicer shall make available to the Trustee and
the Noteholders or their duly authorized representatives, attorneys or auditors
the Receivable Files and the accounts, records and computer systems maintained
by the Servicer with respect thereto, and will make available for discussion
about the Receivables, Responsible Officers of the Servicer having knowledge of
such matters, upon not less than two Business Days' prior written notice for
examination during normal business hours.
(c) Release of Documents. Upon written instruction from the Trustee,
the Servicer shall release any document in the Receivable Files to the Trustee
or its agent or designee, as the case may be, at such place or places as the
Trustee may designate, as soon as practicable. Nothing in this Section shall
impair the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, which obligation shall be
evidenced by an Opinion of Counsel to such effect, and the failure of the
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section. The Servicer shall not
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be responsible for any loss occasioned by the failure of the Trustee to return
any document or any delay in doing so.
SECTION 2.07 INSTRUCTIONS; AUTHORITY TO ACT.
The Servicer shall be deemed to have received proper instructions with
respect to the Receivable Files upon its receipt of written instructions signed
by a Responsible Officer of the Trustee. A certified copy of a bylaw or of a
resolution of the board of directors of the Trustee shall constitute conclusive
evidence of the authority of any such Responsible Officer to act and shall be
considered in full force and effect until receipt by the Servicer of written
notice to the contrary given by the Trustee.
SECTION 2.08 INDEMNIFICATION BY CUSTODIAN.
The Servicer, as custodian of the Receivable Files, shall indemnify the
Trustee and the Noteholders for any and all liabilities, obligations, losses,
compensatory damages, payments, costs or expenses of any kind whatsoever
(including reasonable attorney's fees and expenses incurred in connection with
defending against any such claim) that may be imposed on, incurred or asserted
against the Trustee as the result of any improper act or omission in any way
relating to the maintenance and custody of the Receivable Files by the Servicer,
as custodian; PROVIDED, HOWEVER, that the Servicer shall not be liable for any
portion of any such amount resulting from the willful misfeasance, bad faith or
negligence of the Trustee.
SECTION 2.09 EFFECTIVE PERIOD AND TERMINATION.
The Servicer's appointment as custodian of the Receivable Files shall
become effective as of the Closing Date and shall continue in full force and
effect so long as it is the Servicer under this Agreement. If the Servicer shall
resign as Servicer pursuant to Section 7.05 or if all of the rights and
obligations of the Servicer have been terminated pursuant to Section 8.02, the
appointment of the Servicer as custodian of the Receivable Files shall
immediately terminate. As soon as practicable after any termination of such
appointment, the Servicer shall deliver the Receivable Files to the Trustee or
its agent at such place or places as the Trustee may reasonably designate.
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SECTION 2.10 AGENT FOR SERVICE.
The agent for service for the Issuer shall be its President whose
address is ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the agent for
service for the Servicer shall be its Chairman and Chief Executive Officer,
whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 2.11 SATISFACTION AND DISCHARGE OF INDENTURE.
Whenever the following conditions shall have been satisfied:
(a) an amount sufficient to pay and discharge the outstanding Note
Balance, plus accrued and unpaid interest on the Notes, has been paid to the
Noteholders;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(c) the Issuer has delivered to the Trustee an Officers' Certificate of
the Issuer and an Opinion of Counsel from outside counsel to the Issuer each
stating that all conditions precedent herein provided for the satisfaction and
discharge of this Agreement with respect to the Notes have been complied with;
then this Agreement and the lien, rights and interests created hereby shall
cease to be of further effect with respect to the Notes, and the Trustee shall,
at the expense of the Issuer, (i) execute and deliver all such instruments as
may be necessary to acknowledge the satisfaction and discharge of this Agreement
with respect to the Notes and (ii) pay, or assign or transfer and deliver, to
the Issuer, all cash, securities and other property held by it as part of the
Trust Estate or other assets remaining after satisfaction of the conditions
specified in clauses (a) and (b) above.
Notwithstanding the satisfaction and discharge of this Agreement with
respect to the Notes, the obligations of the Issuer to the Trustee under Section
9.07, the obligations of the Trustee to the Issuer, the Servicer and the
Noteholders under Section 4.04, the obligations of the Trustee to the
Noteholders under Section 4.07, and the rights, privileges and immunities of the
Trustee under Article IX, shall survive.
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ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.01 DUTIES OF SERVICER.
The Servicer, as agent for the Trustee, shall manage, service,
administer and make collections on and in respect of the Receivables with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable defaulted consumer receivables that it
services for itself or others (whether or not the Servicer shall then be
servicing comparable defaulted consumer receivables for itself or others). The
Servicer's duties shall include collecting and posting all payments, responding
to inquiries of Obligors or by federal, state or local government authorities
with respect to the Receivables, investigating delinquencies, implementation of
payment plans, sending payment information to Obligors, reporting tax
information to Obligors in accordance with its customary practices, accounting
for collections, publishing monthly and annual statements to the Trustee with
respect to payments, generating federal income tax information and performing
the other duties specified herein. In performing the above-referenced services,
the Servicer shall perform in accordance with Customary Procedures and shall
have full power and authority, acting alone, to do any and all things in
connection with such managing, servicing, administration and collection that it
may deem necessary or desirable.
Without limiting the generality of the foregoing, the Servicer shall be
authorized and empowered by the Trustee to execute and deliver, on behalf of
itself, the Trustee, the Noteholders, or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Receivables. The Servicer is
hereby authorized to commence, in its own name or in the name of the Issuer or
the Trustee, a legal proceeding to enforce a Receivable or to commence or
participate in a legal proceeding (including without limitation a bankruptcy
proceeding) relating to or involving a Receivable. If the Servicer commences or
participates in such a legal proceeding in its own name, the Trustee and the
Issuer shall thereupon be deemed to have automatically assigned, solely for the
purpose of collection on behalf of the party retaining an interest in such
Receivable, such Receivable and the other property conveyed as part of the Trust
Estate pursuant to Section 2.01 with respect to such Receivable to the Servicer
for purposes of commencing or participating in any such proceeding as a party or
claimant, and the Servicer is authorized and empowered by the
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Trustee and the Issuer to execute and deliver in the Servicer's name any
notices, demands, claims, complaints, responses, affidavits or other documents
or instruments in connection with any such proceeding. If in any enforcement
suit or legal proceeding it shall be held that the Servicer may not enforce a
Receivable on the grounds that it shall not be a real party in interest or a
holder entitled to enforce such Receivable, the Trustee on behalf of the
Noteholders shall, at the Servicer's expense and written direction, take
reasonable steps to enforce such Receivable. The Servicer shall deposit or cause
to be deposited into the Collection Account, within one Business Day of its
receipt thereof, all Net Proceeds realized in connection with any such action
pursuant to Section 4.02. The Trustee and the Issuer shall furnish the Servicer
with any powers of attorney and other documents and take any other steps which
the Servicer may deem reasonably necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties under this Agreement.
SECTION 3.02 COLLECTION OF RECEIVABLE PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments due
and payable in connection with the Receivables, and shall at all times follow
the Customary Procedures in so doing. The Servicer shall be authorized to write
down the balance of any Receivable in accordance with the Customary Procedures
without the prior consent of the Trustee; PROVIDED HOWEVER, that such write-down
will not affect the rights of the Noteholders to any amounts thereafter
collected with respect to such Receivable. The Servicer may, in accordance with
the Customary Procedures, waive any charges or fees that otherwise may be
collected in the ordinary course of servicing the Receivables.
SECTION 3.03 COVENANTS OF SERVICER.
The Servicer hereby makes the following covenants with respect to each
Receivable on which the Trustee is relying in accepting the Receivables in trust
and authenticating the Notes and on which the Noteholders are relying in
purchasing the Notes:
(a) Fulfillment of Obligations. The Servicer shall duly fulfill all
obligations on its part to be fulfilled under or in connection with the
Receivables pursuant to this Agreement, shall perform such obligations in
accordance with the Customary Procedures, and shall maintain in effect all
licenses and qualifications required in order to service the Receivables and
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shall comply in all respects with all other requirements of law in connection
with servicing the Receivables, the failure to comply with which would have a
material adverse effect on the rights or interests of the Noteholders.
(b) No Rescission or Cancellation. The Servicer shall not permit any
rescission or cancellation of the Receivables except as ordered by a court of
competent jurisdiction or other governmental authority; PROVIDED, HOWEVER, that
the writing down of a Receivables balance in accordance with Customary
Procedures shall not be deemed a rescission or cancellation of such Receivables.
(c) No Impairment. The Servicer shall do nothing to impair the rights
of the Trustee, the Trust Estate or the Noteholders with respect to the
Receivables; PROVIDED, HOWEVER, that the writing down of a Receivable balance in
accordance with Customary Procedures shall not be deemed an impairment of the
rights of the Trustee or the Noteholders. The Servicer shall not engage in any
pattern of conduct under which it intentionally elects (i) to write down a
Receivable balance from an Obligor rather than writing down a Consumer Account
due from the same Obligor which is not a part of the Receivables, or (ii) to
apply a payment received from an Obligor to a Consumer Account which is not a
Receivable rather than to a Receivable (unless expressly instructed to do so by
an Obligor) if the Servicer has actual knowledge that such write-downs or
payment applications discriminate against the Noteholders, or with knowledge
that the effect of such intentional election is to discriminate against the
Noteholders.
(d) No Instruments. Except in connection with its enforcement or
collection of the Receivables, the Servicer shall take no action to cause any
Receivables to be evidenced by any instruments (as defined in the UCC), and if
any Receivable is so evidenced (whether or not in connection with such
enforcement or collection), it shall be assigned to the Servicer as provided in
Section 3.04.
SECTION 3.04 REPAYMENT IN RESPECT OF RECEIVABLES UPON BREACH AND OTHER
EVENTS.
Upon discovery by the Issuer or the Servicer or upon the actual
knowledge of a Responsible Officer of the Trustee of a breach of any of the
covenants of the Servicer set forth in Section 3.03 that materially and
adversely affects the rights or interests of the Noteholders, the party
discovering such breach shall give prompt written notice to the others. If, as a
result of such
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breach, any Receivables are rendered uncollectible or the Trustee's rights in,
to or under such Receivables or the proceeds thereof are impaired or such
proceeds are not available for any reason to the Trustee free and clear of any
Lien, the Servicer shall acquire from the Issuer such Receivables, unless such
breach shall have been cured within 30 days after the earlier to occur of the
discovery of such breach by the Servicer or receipt of written notice of such
breach by the Servicer, such that the Servicer shall be in compliance with the
relevant covenant in all material respects and the material adverse effect shall
be cured, and the Servicer shall have delivered to the Trustee a certificate of
a Responsible Officer of the Servicer describing the nature of such breach and
the manner in which the relevant covenant was complied with. The Servicer will
be obligated to accept the assignment of such Receivables as set forth above on
the Remittance Date following the date on which such assignment obligation
arises. In consideration of the acquisition of any such Receivables, on the
Remittance Date immediately following the date on which such acquisition
obligation arises, the Servicer shall remit the Release Payment of such
Receivables to the Collection Account in the manner specified in Section 4.03.
Upon any such acquisition, and the remitting of the Release Payment to the
Collection Account, the Trustee on behalf of the Noteholders shall, without
further action, be deemed to have released its security interest in, to and
under such Removed Receivables, all monies due or to become due with respect
thereto after the aforementioned Remittance Date and all proceeds thereof. The
Trustee shall execute such documents and take such other actions as shall be
reasonably requested by the Servicer to further evidence such release. The sole
remedy of the Trustee and the Noteholders with respect to a breach pursuant to
Section 3.03 shall be to require the Servicer to acquire the related Receivables
pursuant to this Section, except as otherwise provided in Section 7.02, 8.01 or
8.02. The Trustee shall have no duty to conduct any affirmative investigation as
to the occurrence of any condition requiring the acquisition of any Receivable
pursuant to this Section except as otherwise provided in Section 9.02.
SECTION 3.05 SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY SERVICER.
As compensation for the performance of its obligations hereunder, the
Servicer shall be entitled to receive on each Payment Date the Servicing Fee as
provided in Section 4.04. Except to the extent otherwise provided herein, the
Servicer shall be required to pay from its servicing compensation all expenses
incurred in connection with servicing the Receivables including, without
limitation, recovery and collection expenses related to the enforcement of the
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Receivables (other than those specified in the following proviso), payment of
the fees and disbursements of the Rating Agency and independent accountants and
all other fees and expenses that are not expressly stated in this Agreement to
be payable by the Trustee, the Noteholders or the Issuer; PROVIDED, HOWEVER,
that the Servicer shall not be liable for any liabilities, costs or expenses of
the Trustee or the Noteholders arising under any tax law, including without
limitation any federal, state or local income or franchise taxes or any other
tax imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith), except as otherwise
expressly provided in this Agreement.
SECTION 3.06 MONTHLY SERVICER REPORT; SERVICER'S REMITTANCE DATE
CERTIFICATE.
(a) On or before 11:00 a.m. New York, New York time on each
Determination Date, the Servicer shall deliver to the Trustee a Monthly Servicer
Report executed by a Responsible Officer of the Servicer substantially in the
form attached hereto as Exhibit A (and setting forth such additional information
as requested by the Trustee, the Rating Agency or any Noteholder from time to
time, which information the Servicer is able to reasonably provide) containing
all information necessary to make the payments required by Section 4.04 in
respect of the Collection Period immediately preceding the date of such Monthly
Servicer Report and all information necessary for the Trustee to send statements
to Noteholders pursuant to Section 4.06(a).
(b) On or before 11:00 a.m. New York, New York time on each Remittance
Date on which the Issuer or the Servicer, as applicable, shall be obligated
hereunder to make a payment in respect of, or to acquire, a Removed Receivable,
the Servicer shall deliver to the Trustee a Servicer's Remittance Date
Certificate identifying each such Removed Receivable by reference to the related
Obligor's account number (as specified in the Schedule of Receivables), and the
amount of the Release Payment with respect thereto.
SECTION 3.07 ANNUAL STATEMENT AS TO COMPLIANCE.
(a) The Servicer shall deliver to the Trustee, on or before March 31 of
each calendar year, beginning in March 2000, an Officer's Certificate executed
by the chief financial officer of the Servicer, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period ended December
31 (or, in the case of the first such statement, from the Closing Date
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through December 31, 1999) and of its performance under this Agreement has been
made under the supervision of the officer executing the Officer's Certificate,
and (ii) to such officer's knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement in all material respects
throughout such period or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof.
(b) The Servicer shall deliver to the Noteholders and the Trustee,
promptly after having obtained knowledge thereof, but in no event later than
three Business Days thereafter, an Officer's Certificate specifying the nature
and status of any Servicer Default, or Event of Default, or other occurrence
which would have a material adverse effect on the right or interests of the
Noteholders.
SECTION 3.08 PERIODIC ACCOUNTANTS REPORT.
The Servicer, at its own expense, shall cause ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or
another firm of nationally recognized independent public accountants acceptable
to the Controlling Party (who may also render other services to the Servicer or
to the Issuer) to deliver to the Trustee a report of agreed upon procedures
substantially in the form attached hereto as Exhibit F with respect to the
Servicer's accounting for matters regarding the Trust Estate including cash
receipts, account posting and remittances to the Accounts during the preceding
reporting period. The first reporting period is from the Closing Date through
December 31, 1999, and thereafter the reporting period shall be every four (4)
months, commencing April 30, 2000. Each such report must be delivered within
forty-five (45) days after the end of each reporting period. Such report shall
also indicate that the firm of accountants is independent with respect to the
Issuer and the Servicer within the meaning of the Code of Professional Ethics of
the American Institute of Certified Public Accountants. In the event such
independent public accountants require the Trustee to agree to the procedures to
be performed by such firm in any of the reports required to be prepared pursuant
to this Section 3.08, the Servicer shall direct the Trustee in writing to so
agree; it being understood and agreed that the Trustee will deliver such letter
of agreement in conclusive reliance upon the direction of the Servicer, and the
Trustee has not made any independent inquiry or investigation as to, and shall
have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
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SECTION 3.09 SERVICER'S COMPLIANCE REPORT.
The Servicer, at its own expense, shall cause ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or
another firm of nationally recognized independent public accountants (who may
also render other services to the Servicer or to the Issuer) to deliver to the
Trustee, within forty-five days after the end of each reporting period,
beginning with the period ending December 31, 1999, a report concerning the
activities of the Servicer during the preceding period to the effect that such
accountants have performed agreed-upon procedures substantially as set forth in
Exhibit F with respect to each of the Monthly Servicer Reports for the period
under review. Thereafter, the reporting period shall be every four (4) months.
The report should specify the procedures performed on such Monthly Servicer
Reports (which procedures should include recalculating all calculations
contained in such Monthly Servicer Reports and taking other pertinent
information from supporting schedules of the Servicer) and any exceptions, if
any, shall be set forth therein. Such report shall also indicate that the firm
of accountants is independent with respect to the Issuer and the Servicer within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants. In the event such independent public accountants
require the Trustee to agree to the procedures to be performed by such firm in
any of the reports required to be prepared pursuant to this Section 3.09, the
Servicer shall direct the Trustee in writing to so agree; it being understood
and agreed that the Trustee will deliver such letter of agreement in conclusive
reliance upon the direction of the Servicer, and the Trustee has not made any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures.
SECTION 3.10 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION.
The Servicer shall provide the Trustee and the Noteholders with access
to the documentation relating to the Receivables as provided in Section 2.06(b).
In each case, access to documentation relating to the Receivables shall be
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer. Nothing in this Section shall
impair the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, which obligation shall be
evidenced by an Opinion of Counsel to such effect, and the failure of the
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
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SECTION 3.11 REPORTS TO NOTEHOLDERS, THE RATING AGENCY AND THE
PLACEMENT
AGENT.
The Trustee shall provide to each Noteholder, the Rating Agency and the
Placement Agent, a copy of each (i) Servicer's Remittance Date Certificate, (ii)
Monthly Servicer Report, (iii) Officer's Certificate of annual statement as to
compliance described in Section 3.07, (iv) an Officer's Certificate with respect
to Servicer Defaults and Events of Default, (v) accountants' report described in
Section 3.08, (vi) accountants' report described in Section 3.09, (vii)
statement to Noteholders pursuant to Section 4.06(a), and (viii) Trustee's
Certificate delivered pursuant to Section 9.02 or 9.03. The Trustee shall
provide to each Noteholder a copy of any notice, report or other document
provided by the Trustee to the Rating Agency.
SECTION 3.12 TAX TREATMENT.
Notwithstanding anything to the contrary set forth herein, the Issuer
has entered into this Agreement with the intention that for federal, state and
local income and franchise tax purposes (i) the Notes, which are characterized
as indebtedness at the time of their issuance, will qualify as indebtedness
secured by the Receivables and (ii) the Trust Estate shall not be treated as an
association or publicly traded partnership taxable as a corporation. The Issuer,
by entering into this Agreement, each Noteholder, by its acceptance of a Note
and each purchaser of a beneficial interest therein, by accepting such
beneficial interest, agree to treat such Notes as debt for federal, state and
local income and franchise tax purposes. The Trustee shall treat the Trust
Estate as a security device only, and shall not file tax returns or obtain an
employer identification number on behalf of the Trust Estate. The provisions of
this Agreement shall be construed in furtherance of the foregoing intended tax
treatment.
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ARTICLE IV
THE ACCOUNTS; PAYMENTS;
STATEMENTS TO NOTEHOLDERS
SECTION 4.01 ACCOUNTS.
The Trustee shall establish and maintain, or cause to be established
and maintained, the Collection Account, the Reserve Account and the Note Payment
Account, each of which shall be an Eligible Account, for the benefit of the
Noteholders. All amounts held in the Collection Account, the Reserve Account or
the Note Payment Account shall, to the extent permitted by this Agreement and
applicable laws, rules and regulations, be invested in Permitted Investments by
the depository institution or trust company then maintaining such Account only
upon written direction of the Issuer, PROVIDED, HOWEVER, in the event the Issuer
fails to provide such written direction to the Trustee, and until the Issuer
provides such written direction, the Trustee shall invest in Permitted
Investments satisfying the requirements of clause (v) of the definition thereof.
Investments held in Permitted Investments in the Accounts shall not be sold or
disposed of prior to their maturity except as otherwise provided herein.
Earnings on investment of funds in the Collection Account and Reserve Account
shall remain in such Accounts for disposition in accordance with this Agreement.
Earnings on investment of funds in the Note Payment Account shall be remitted by
the Trustee to the Collection Account promptly upon receipt thereof in the Note
Payment Account. Any losses and investment expenses relating to any investment
of funds in any of the Accounts shall be for the account of the Issuer, which
shall deposit or cause to be deposited the amount of such loss (to the extent
not offset by income from other investments of funds in the related Account) in
the related Account immediately upon the realization of such loss. The taxpayer
identification number associated with each of the Accounts shall be that of the
Issuer and the Issuer will report for federal, state and local income tax
purposes the income, if any, earned on funds in the relevant Account. The Issuer
hereby acknowledges that all amounts on deposit in each Account (including
investment earnings thereon) are held in trust by the Trustee for the benefit of
the Noteholders, subject to any express rights of the Issuer set forth herein,
and shall remain at all times during the term of this Agreement under the sole
dominion and control of the Trustee. Payments from the Collection Account shall
be made only on the Business Day prior to the Payment Date and only to the Note
Payment Account.
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SECTION 4.02 COLLECTIONS.
Each of the Servicer and the Issuer shall remit to the Collection
Account all Net Proceeds it receives or otherwise obtains from or on behalf of
the Obligors from or in respect of the Receivables on the next Business Day
after receipt thereof, by automatic clearing house ("ACH") transfer from the
account into which payments from or on behalf of the Obligors are initially
deposited. Other than as specifically contemplated pursuant to Section 4.03, the
Servicer shall not remit to the Collection Account, and shall take all
reasonable actions to prevent other Persons from remitting to the Collection
Account, amounts which do not constitute payments, collections or recoveries
received, made or realized in respect of the Receivables, and the Trustee will
return to Issuer any such amounts upon receiving written evidence reasonably
satisfactory to the Trustee that such amounts are not a part of the Trust
Estate.
SECTION 4.03 ADDITIONAL DEPOSITS.
(a) The following additional deposits shall be made to the Collection
Account, as applicable: (i) the Issuer shall remit the aggregate Release
Payments with respect to Removed Receivables for which a payment is to be made
pursuant to Section 2.05 or 6.02; and (ii) the Servicer shall remit the
aggregate Release Payments with respect to Removed Receivables for which payment
is to be made pursuant to Section 3.04.
(b) The following deposits shall be made to the Note Payment Account,
as applicable: (i) the Issuer shall remit the Redemption Amount, if any,
pursuant to Section 10.02; and (ii) the Trustee shall transfer all Available
Funds from the Collection Account to the Note Payment Account on the Business
Day prior to each Payment Date.
(c) All deposits required to be made pursuant to this Section by the
Issuer or the Servicer, as the case may be, may be made in the form of a single
deposit.
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SECTION 4.04 ALLOCATIONS AND PAYMENTS.
(a) On each Determination Date, the Servicer shall calculate, (i) the
amount of funds on deposit in each of the Accounts and the amount of Available
Funds, and (ii) as applicable, the Trustee Fee, the Backup Servicing Fee, the
Servicing Fee, the Interest Distributable Amount, the Required Reserve Amount,
the Reserve Fund Reimbursement Amount, and the amount to be paid to Noteholders
in respect of principal, which amounts shall be set forth in the Monthly
Servicer Report for the related Payment Date. The Servicer shall send the
Monthly Servicer Report to the Trustee by 11:00 a.m. New York, New York time on
each such Determination Date.
(b) On each Payment Date, the Trustee shall make the following payments
from the applicable Accounts in the following order of priority and in the
amounts set forth in the Monthly Servicer Report for such Payment Date; PROVIDED
HOWEVER, that such payments shall be made only to the extent of funds then on
deposit in the applicable Account, and provided, further that payments from the
Note Payment Account shall be made only on the Payment Date:
(i) to the Trustee (A) from Available Funds transferred from
the Collection Account to the Note Payment Account, an amount equal to the sum
of the Trustee Fee for such Payment Date, plus all accrued and unpaid Trustee
Fees, if any, for prior Payment Dates, plus all reasonable out of pocket
expenses (but only up to $200,000 during the term of this Agreement) to which
the Trustee is entitled to payment (to the extent expressly set forth under this
Agreement) provided that (B) if Available Funds transferred from the Collection
Account to the Note Payment Account are insufficient to pay the amount described
in clause (A) above, the Trustee will withdraw from the Reserve Account an
amount equal to the lesser of the amount then on deposit in the Reserve Account
and the amount of such shortfall for disbursement to the Trustee in reduction of
such shortfall;
(ii) from Available Funds transferred from the Collection
Account to the Note Payment Account, to the Servicer, an amount equal to the sum
of the Servicing Fee for the related Collection Period, plus all accrued and
unpaid Servicing Fees, if any, for prior Collection Periods, plus an amount
equal to any Transition Fees then owing to the Successor Servicer, if any,
(which expenses and costs, including any amount reimbursed, will not exceed
$100,000 for any Successor Servicer (including the Backup Servicer) during the
term of this Agreement);
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(iii) to the Backup Servicer (A) from Available Funds
transferred from the Collection Account to the Note Payment Account, the Backup
Servicer Fee for such Payment Date, plus all accrued and unpaid Backup Servicer
Fees, if any, for prior Payment Dates, plus all reasonable out of pocket
expenses (but only up to $100,000 during the term of this Agreement) to which
the Backup Servicer is entitled to payment (to the extent expressly set forth
under this Agreement) provided that (B) if Available Funds transferred from the
Collection Account to the Note Payment Account are insufficient to pay the
amount described in clause (A) above, the Trustee will withdraw from the Reserve
Account an amount equal to the lesser of the amount then on deposit in the
Reserve Account and the amount of such shortfall for disbursement to the Backup
Servicer in reduction of such shortfall;
(iv) to the Noteholders, pro rata, based on their respective
Note Balances (A) from Available Funds transferred from the Collection Account
to the Note Payment Account, an amount equal to the sum of the Interest
Distributable Amount for such Payment Date plus any outstanding amount of
Interest Carryover Shortfall, if any, for prior Payment Dates provided that (B)
if Available Funds transferred from the Collection Account to the Note Payment
Account, are insufficient to pay the amount described in clause (A) above, the
Trustee will withdraw from the Reserve Account an amount equal to the lesser of
the amount then on deposit in the Reserve Account and the amount of such
interest shortfall for disbursement to the Noteholders in reduction of such
shortfall;
(v) from Available Funds transferred from the Collection
Account to the Note Payment Account, to the Reserve Account, an amount equal to
the lesser of remaining Available Funds and the Reserve Fund Reimbursement
Amount for such Payment Date, if applicable;
(vi) to the Noteholders, pro rata, based on their respective
Note Balances (A) any remaining Available Funds transferred from the Collection
Account to the Note Payment Account in reduction of the Note Balance of the
Notes, until the Note Balance is reduced to zero, (B) if such Payment Date is
the Payment Date on which the Issuer is effecting an optional redemption of the
Notes pursuant to Section 10.01, and there is an outstanding Note Balance after
payment of the amounts described in clause (A) above, the Trustee will disburse
to the Noteholders for payment on the Note Balance any amounts deposited in the
Note Payment Account by the Issuer in respect of the Redemption Amount pursuant
to Section 10.02, (C) if such Payment Date is the Final Payment Date or the
Payment Date on which the Issuer is effecting an
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optional redemption of the Notes pursuant to Section 10.01, and there is an
outstanding Note Balance (after payment of the amounts described in clauses (A)
and (B) above), the Trustee will withdraw from all remaining funds on deposit in
the Collection Account and remit to the Note Payment Account, an amount equal to
the lesser of the amount then on deposit in the Collection Account and the
amount of the outstanding Note Balance and remit such lesser amount to the
Noteholders in reduction of the outstanding Note Balance and (D) if on the Final
Payment Date there is an outstanding Note Balance (after payment of the amounts
described in clauses (A), (B) and (C) above), the Trustee will withdraw from the
Reserve Account an amount equal to the lesser of the amount then on deposit in
the Reserve Account and the amount of the outstanding Note Balance and remit
such lesser amount to the Noteholders in reduction of the outstanding Note
Balance; and
(vii) remaining amounts in the following order of priority:
(A) any of the Trustee's reasonable out of pocket expenses to which the Trustee
is entitled to payment (to the extent expressly set forth in this Agreement)
which have exceeded $200,000 in the aggregate during the term of this Agreement;
then to (B) any of the Backup Servicer's reasonable out of pocket expenses to
which the Backup Servicer is entitled to payment (to the extent expressly set
forth in this Agreement) which have exceeded $100,000 in the aggregate during
the term of this Agreement; and then to (C) to the Issuer.
(c) The Servicer shall on each Payment Date instruct the Trustee to
distribute to each Noteholder of record on the related Record Date by wire
transfer of immediately available funds, the amount to be paid to such
Noteholder in respect of the related Note on such Payment Date.
SECTION 4.05 RESERVE ACCOUNT.
(a) Pursuant to Section 4.01, the Trustee shall establish and maintain
the Reserve Account which shall be an Eligible Account, for the benefit of the
Noteholders. On or prior to the Closing Date, the Issuer shall deposit an amount
equal to the Required Reserve Amount into the Reserve Account. Thereafter, on
each Payment Date, to the extent of funds then on deposit in the Note Payment
Account an amount equal to the lesser of (x) Available Funds remaining on such
Payment Date after required payments pursuant to Section 4.04(b)(i) through
(iv), and (y) the Reserve Fund Reimbursement Amount, shall be deposited into the
Reserve Account.
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(b) Consistent with the limited purposes for which the Reserve Account
is to be established, (x) on each Payment Date, an amount equal to the aggregate
of amounts described in Sections 4.04(b)(iv)(B) and (vii)(D), if any, shall be
withdrawn from the Reserve Account by the Trustee and remitted to the
Noteholders for payment as described in those Sections and (y) upon payment of
all sums payable hereunder with respect to the Notes, any amounts then on
deposit in the Reserve Account shall be released from the lien of the Trust
Estate and paid to the Issuer.
(c) Amounts held in the Reserve Account shall be invested in Permitted
Investments at the direction of the Issuer as provided in Section 4.01. Such
investments shall not be sold or disposed of prior to their maturity.
(d) The Trustee shall pay to the Issuer on each Payment Date the amount
by which the amount in the Reserve Account exceeds the Required Reserve Amount,
after giving effect to all distributions required to be made from the Reserve
Account or the Note Payment Account on such date.
SECTION 4.05A NOTE PAYMENT ACCOUNT.
(a) Pursuant to Section 4.01, the Trustee shall establish and maintain
the Note Payment Account which shall be an Eligible Account, for the benefit of
the Noteholders. The Note Payment Account shall be funded to the extent that (x)
the Issuer shall remit the Redemption Amount pursuant to Section 10.02 or (y)
the Trustee shall remit the Available Funds from the Collection Account pursuant
to Section 4.03.
(b) On each Payment Date, an amount equal to the aggregate of amounts
described in Section 4.04(b) shall be withdrawn from the Note Payment Account by
the Trustee and remitted to the Noteholders and other persons or Accounts
described therein for payment as described in that Section, and upon payment of
all sums payable hereunder with respect to the Notes, any remaining amounts then
on deposit in the Note Payment Account shall be released from the lien of the
Trust Estate and paid to the Issuer.
(c) Amounts held in the Note Payment Account shall be invested in
Permitted Investments at the direction of the Issuer as provided in Section
4.01. Such investments shall not be sold or disposed of prior to their maturity.
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SECTION 4.06 STATEMENTS TO NOTEHOLDERS.
(a) On each Payment Date, the Trustee shall include with each payment
to each Noteholder of record the Monthly Servicer Report furnished pursuant to
Section 3.06, setting forth for the related Collection Period the information
provided in Exhibit A.
(b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Trustee shall
mail a statement or statements prepared by the Servicer to each Person who at
any time during such calendar year shall have been a Noteholder that provides
the information that the Servicer actually knows is necessary under applicable
law for the preparation of income tax returns.
SECTION 4.07 APPLICATION OF TRUST MONEY.
All money deposited pursuant to Sections 4.02 and 4.03 shall be held in
trust and applied, in accordance with the provisions of the Notes and this
Agreement to the payment, to the Persons entitled thereto, of the principal,
interest, fees, costs and expenses for whose payment such money has been
deposited with the Trustee.
ARTICLE V
THE NOTES
SECTION 5.01 THE NOTES.
(a) The Notes shall be non-recourse obligations of the Issuer and the
Trust Estate shall be the sole source of payments of principal thereof and
interest thereon. Notwithstanding anything else to the contrary contained
herein, the Notes shall not be considered a general obligation of the Issuer for
any purpose.
(b) The Notes shall be issued on the Closing Date and the Note Balance
shall accrue interest at the Note Rate from and including the Closing Date.
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(c) The Notes shall be substantially in the form attached hereto as
Exhibit C, and shall be issuable in minimum denominations of $1,000,000 and
integral multiples of $1,000 in excess thereof. The Notes shall each be executed
by the Issuer and authenticated by the Trustee by the manual or facsimile
signature of a Responsible Officer of the Trustee. Notes bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
were affixed, authorized to sign on behalf of the Issuer or the Trustee shall be
valid and binding obligations of the Issuer, notwithstanding that such
individuals or any of them have ceased to be so authorized prior to the
authentication and delivery of such Notes or did not hold such offices at the
date of such Notes. The Notes shall be dated the date of their authentication.
SECTION 5.02 AUTHENTICATION AND DELIVERY OF THE NOTES.
The Trustee shall cause to be authenticated and delivered to or upon
the order of the Issuer, in consideration of the grant by the Issuer of a
security interest in the Receivables and the other property included in the
Trust Estate to the Trustee and the constructive delivery to the Trustee on
behalf of the Noteholders of the Receivable Files and the other components of
the Trust Estate, the Notes duly authenticated by the Trustee, in authorized
denominations equaling in the aggregate the Note Balance. No Note shall be
entitled to any benefit under this Agreement or be valid for any purpose, unless
there appears thereon a certificate of authentication substantially in the form
set forth in the form of such Note attached hereto as Exhibit C, executed by the
Trustee by manual or facsimile signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered under this Agreement.
SECTION 5.03 REGISTRATION OF TRANSFER AND EXCHANGE OF NOTES.
(a) The Note Registrar shall maintain a Note Register in which, subject
to such reasonable regulations as it may prescribe, the Note Registrar shall
provide for the registration of the Notes and transfers and exchanges thereof as
provided in this Agreement. The Trustee is hereby initially appointed Note
Registrar for the purpose of registering the Notes and transfers and exchanges
thereof as provided in this Agreement. In the event that, subsequent to the
Closing Date, the Trustee notifies the Servicer that it is unable to act as Note
Registrar, the Servicer shall appoint another bank or trust company, agreeing to
act in accordance with the provisions of this Agreement applicable to it, and
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otherwise acceptable to the Trustee, to act as successor Note Registrar under
this Agreement.
(b) Upon surrender for registration of transfer of any Note at the
Corporate Trust Office, the Issuer shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes in authorized denominations of a like
aggregate principal amount.
(c) Notes may be exchanged for other Notes of authorized denominations
of a like aggregate principal amount, at the option of the related Noteholder
upon surrender of the Note to be exchanged at any such office or agency.
Whenever any Note is so surrendered for exchange, the Issuer shall execute and
the Trustee shall authenticate and deliver the Note that the Noteholder making
the exchange is entitled to receive. Every Note presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Note
Registrar duly executed by the Noteholder thereof or its attorney duly
authorized in writing.
(d) No service or other charge shall be made for any registration of
transfer or exchange of Notes by the Trustee or the Servicer, but the Trustee
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Notes.
(e) Any Notes surrendered for registration of transfer or exchange
shall be canceled and subsequently destroyed by the Trustee.
(f) Each purchaser of a Note or of a beneficial interest therein shall
be deemed to have represented and warranted, by accepting such Note or
beneficial interest as follows:
(i) it is acquiring the Notes for its own account or for an
account with respect to which it exercises sole investment discretion, and that
it or such account is a Qualified Institutional Buyer or an Accredited Investor
acquiring the Notes for investment purposes and not for distribution;
(ii) it acknowledges that the Notes have not been registered
under the Securities Act and may not be sold except as permitted below;
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(iii) it understands and agrees that such Notes are being
offered only in a transaction not involving any public offering within the
meaning of the Securities Act, such Notes may be resold, pledge or transferred
only (1) to a person who has certified that it is a Qualified Institutional
Buyer that purchases for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A or (2) to an institution that is an
Accredited Investor who has certified to the Issuer and the Trustee that such
transferee is an institutional Accredited Investor;
(iv) it understands that the notification requirements
referred to in clause (iii) above will be satisfied by virtue of the fact that
the following legend will be placed on the Notes, unless otherwise agreed by the
Issuer:
"THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS. THE TRANSFER OF THIS NOTE IS SUBJECT
TO CERTAIN RESTRICTIONS AND CONDITIONS SET FORTH IN THE INDENTURE AND
SERVICING AGREEMENT UNDER WHICH THIS NOTE IS ISSUED (A COPY OF WHICH IS
AVAILABLE FROM THE TRUSTEE UPON REQUEST)."
(v) it (x) has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
prospective investment in the Notes; and (y) has the ability to bear the
economic risks of its prospective investment and can afford the complete loss of
such investment; and
(vi) it understands that the Issuer, the Placement Agent, and
others will rely upon the truth and accuracy of the foregoing acknowledgments,
representations, warranties and agreements and agrees that if any of the
acknowledgments, representations, warranties and agreements deemed to have been
made by it by its purchase of the Notes are no longer accurate, it shall
promptly notify the Issuer and the Placement Agent. If it is acquiring the Notes
as a fiduciary or agent for one or more investor accounts, it represents that it
has sole investment discretion with respect to each such account and it has full
power to make the foregoing acknowledgments, representations, warranties and
agreements on behalf of each such account.
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(g) No transfer of any Notes shall be made unless that transfer is made
pursuant to an effective registration statement under the Securities Act, and
effective registration or qualification under applicable state securities laws,
or is made in a transaction that does not require such registration or
qualification. If such a transfer is made without registration under the
Securities Act (other than in connection with the initial issuance thereof by
the Issuer), then the Note Registrar shall refuse to register such transfer
unless it receives (and upon receipt, may conclusively rely upon) either: (i) a
certificate from the Noteholder desiring to effect such transfer substantially
in the form attached as Exhibit D-1 hereto, and a certificate from such
Noteholder's prospective transferee substantially in the form attached as either
Exhibit D-2 hereto or as Exhibit D-3 hereto; or (ii) an Opinion of Counsel
reasonably satisfactory to the Note Registrar to the effect that such transfer
may be made without registration under the Securities Act (which Opinion of
Counsel shall not be an expense of the Trust Estate or of the Issuer, the
Servicer, the Trustee or the Note Registrar in their respective capacities as
such), together with the written certification(s) as to the facts surrounding
such transfer from the Noteholder desiring to effect such transfer and/or such
Noteholder's prospective transferee on which such Opinion of Counsel is based.
None of the Issuer, the Trustee or the Note Registrar is obligated to register
or qualify the Notes under the Securities Act or any other securities law or to
take any action not otherwise required under this Agreement to permit the
transfer of any Note without registration or qualification. Any holder of a Note
desiring to effect such a transfer shall, and upon acquisition of such a Note
shall be deemed to have agreed to, indemnify the Trustee, the Note Registrar and
the Issuer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws. In
connection with the transfer of the Notes, the Issuer shall furnish upon request
of a Noteholder to such holder and any prospective purchaser designated by such
Noteholder the information required to be delivered under paragraph (d)(4) of
Rule 144A of the Securities Act.
(h) To the extent permitted under applicable law, the Trustee shall be
under no liability to any Person for any registration of transfer of any Note
that is in fact not permitted by this Section 5.03 or for making any payments
due to the Noteholder thereof or taking any other action with respect to such
Noteholder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the requirements of this Agreement.
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SECTION 5.04 MUTILATED, DESTROYED, LOST OR STOLEN NOTES.
If (i) any mutilated Note is surrendered to the Note Registrar, or the
Note Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the Note Registrar, the Issuer
and the Trustee such security or indemnity as may be required by them to save
each of them harmless (the general obligation of an institutional investor that
is investment grade rated being sufficient indemnity), then, in the absence of
notice that such Note has been acquired by a bona fide purchaser, the Issuer
shall execute and the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of
like tenor and denomination or ownership interest, as applicable. In connection
with the issuance of any new Note under this Section, the Issuer or the Trustee
may require the payment by the Noteholder thereof of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto.
If, after the delivery of such replacement Note or payment with respect
to a destroyed, lost or stolen Note, a bona fide purchaser of the original Note
in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of any such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Trustee in connection therewith.
SECTION 5.05 PERSONS DEEMED OWNERS.
Prior to due presentation of a Note for registration of transfer, the
Trustee, the Note Registrar and any of their respective agents may treat the
Person in whose name any Note is registered as the owner of such Note for the
purpose of receiving payments pursuant to Section 4.04 and for all other
purposes whatsoever, and neither the Trustee, the Note Registrar nor any of
their respective agents shall be affected by any notice to the contrary.
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SECTION 5.06 ACCESS TO LIST OF NOTEHOLDERS' NAMES AND ADDRESSES.
The Note Registrar shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Note Registrar of a written
request therefor from the Servicer, a list of the names and addresses of the
Noteholders as of the most recent Record Date. If three or more Noteholders, or
one or more Noteholders evidencing not less than 25% of the Voting Interests
(hereinafter referred to as "Applicants"), apply in writing to the Trustee, and
such application states that the Applicants desire to communicate with other
Noteholders with respect to their rights under this Agreement or under the Notes
and such application is accompanied by a copy of the communication that such
Applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, afford such Applicants access,
during normal business hours, to the current list of Noteholders as reflected in
the Note Register. Every Noteholder, by receiving and holding a Note, agrees
with the Servicer and the Trustee that neither the Servicer nor the Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Noteholders under this Agreement, regardless
of the source from which such information was derived.
SECTION 5.07 SURRENDERING OF NOTES.
Each Noteholder shall surrender its Note within 14 days after receipt
of the final payment received in connection therewith, whether by optional
redemption by the Issuer or otherwise. Each Noteholder, by its acceptance of the
final payment of principal with respect to its Note, will be deemed to have
relinquished any further right to receive payments under this Agreement and any
interest in the Trust Estate. Each Noteholder shall indemnify and hold harmless
the Issuer, the Trustee and any other Person against whom a claim is asserted in
connection with such Noteholder's failure to tender the Note to the Trustee for
cancellation.
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SECTION 5.08 MAINTENANCE OF OFFICE OR AGENCY.
The Trustee shall maintain in the City of Minneapolis, Minnesota, an
office or offices or agency or agencies where Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustee in respect of the Notes and this Agreement may be served. The
Trustee initially shall designate the Corporate Trust Office as its office for
such purposes. The Trustee shall give prompt written notice to the Issuer, the
Servicer and the Noteholders of any change in the location of the Note Register
or any such office or agency.
ARTICLE VI
THE ISSUER
SECTION 6.01 REPRESENTATIONS OF ISSUER.
The Issuer hereby makes the following representations on which the
Trustee is relying in accepting the grant of a security interest in the
Receivables and authenticating the Notes, and on which the Noteholders are
relying in purchasing the Notes. The representations shall speak as of the
execution and delivery of this Agreement and shall survive the grant of a
security interest in the Receivables to the Trustee.
(a) Organization and Good Standing. The Issuer is duly organized and
validly existing as a limited liability company in good standing under the laws
of the State of Delaware, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own, hold, transfer, assign and convey the
Receivables.
(b) Due Qualification. The Issuer is duly qualified to do business as a
foreign limited liability company in good standing, and has obtained all
necessary licenses and approvals in Maryland and in all other jurisdictions in
which the ownership or lease of property or the conduct of its business requires
such qualifications, licenses or approvals.
(c) Power and Authority. The Issuer has the power and authority to
execute and deliver this Agreement and the other Transaction Documents to
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which it is a party, and to carry out their respective terms; the Issuer has
full power and authority to grant a security interest in the Trust Estate and
has duly authorized such grant to the Trustee by all necessary action; and the
execution, delivery and performance by the Issuer of this Agreement and each of
the other Transaction Documents to which it is a party has been duly authorized
by all necessary action of the Issuer.
(d) Valid Grant; Binding Obligations. This Agreement evidences a valid
grant of a first priority perfected security interest under the UCC in the
Receivables, and such other of the Trust Estate as to which a security interest
may be perfected under UCC, which is effective for so long as the Notes remain
outstanding, enforceable against creditors of and purchasers from the Issuer,
and each of the Transaction Documents to which the Issuer is a party constitutes
a legal, valid and binding obligation of the Issuer enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally or by general equity principles.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Transaction Documents and the fulfillment of the
terms of this Agreement and the other Transaction Documents do not conflict
with, result in any breach of any of the terms or provisions of, nor constitute
(with or without notice or lapse of time) a default under, the LLC Agreement or
Bylaws of the Issuer or any indenture, agreement or other instrument to which
the Issuer is a party or by which it shall be bound, nor result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other than this Agreement),
nor violate any law, order, rule or regulation applicable to the Issuer of any
court or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Issuer or its
properties, which breach, default, conflict, Lien or violation would have a
material adverse effect on the rights or interests of the Noteholders.
(f) No Proceedings. There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now pending, or
to the Issuer's knowledge, threatened, against or affecting the Issuer: (i)
asserting the invalidity of this Agreement, the Notes or any of the other
Transaction Documents to which the Issuer is a party, (ii) seeking to prevent
the issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the other Transaction Documents, (iii)
seeking any determination or ruling that might materially and adversely
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affect the performance by the Issuer of its obligations under, or the validity
or enforceability of, this Agreement, the Notes or any of the other Transaction
Documents, or (iv) relating to the Issuer and which might adversely affect the
federal income tax attributes of the Notes.
(g) No Subsidiaries. The Issuer has no subsidiaries.
(h) Not an Investment Company. Neither the Issuer nor the Trust Estate
is an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act, and none of the issuance of
the Notes, the execution and delivery of the Transaction Documents to which the
Issuer is a party, or the performance by the Issuer of its obligations under the
Transaction Documents, or the use of the proceeds of the Notes by the Issuer
will violate any provision of the Investment Company Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
(i) No Violation of Securities Act. The Issuer has not offered or sold,
and will not offer or sell, any Notes in any manner that would render the
issuance and sale of the Notes a violation of the Securities Act, or any state
securities or "blue sky" laws or require registration pursuant thereto, nor has
it authorized, nor will it authorize, any Person to act in such manner. No
registration under the Securities Act is required for the sale of the Notes as
contemplated hereby, assuming the accuracy of the Noteholder's representations
and warranties set forth in the Purchase Agreement.
(j) Truth and Completeness of Private Placement Memorandum. As of the
Closing Date, the Private Placement Memorandum does not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(k) No Violation of Exchange Act or Regulations T, U or X. None of the
transactions contemplated in the Transaction Documents (including the use of the
proceeds from the sale of the Notes) will result in a violation of Section 7 of
the Exchange Act, or any regulations issued pursuant thereto, including
Regulations T, U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter II. The Issuer does not own nor does it intend to carry or
purchase any "margin security" within the meaning of said Regulation U,
including margin securities originally issued by it or any "margin stock" within
the meaning of said Regulation U.
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(l) No Tax Returns. No tax returns were required to be filed by the
Issuer by the Closing Date.
(m) No Restriction on Issuer Affecting its Business. The Issuer is not
a party to any contract or agreement, or subject to any charter or other
restriction which materially and adversely affects its business nor has it
agreed or consented to cause any of its properties to become subject to any Lien
other than the Lien created hereby.
(n) Perfection of Security Interest. All filings and recordings as may
be necessary to perfect the interest of the Issuer in the Receivables and such
other portion of the Trust Estate as to which a security interest may be
perfected under the UCC, have been accomplished and are in full force and
effect. All filings and recordings against the Issuer required to perfect the
Lien of the Trustee on such Receivables and such other portion of the Trust
Estate as to which a security interest may be perfected under the UCC, have been
accomplished and are in full force and effect. The Issuer will from time to
time, at its own expense, execute and file such additional financing statements
(including continuation statements) as may be necessary to ensure that at any
time, the interest of the Issuer in all of the Receivables and such other
portion of the Trust Estate as to which a security interest may be perfected
under the UCC, and the Lien of the Trustee on all of the Receivables and such
other portion of the Trust Estate as to which a security interest may be
perfected under the UCC are fully protected.
(o) All Taxes, Fees and Charges Relating to Transaction and Transaction
Documents Paid. Any taxes, fees and other governmental charges in connection
with the execution and delivery of the Transaction Documents and the execution
and delivery and sale of the Notes have been or will be paid by the Issuer at or
prior to the Closing Date.
(p) No Requirement that Issuer File a Registration Statement. There are
no contracts, agreements or understandings between the Issuer and any person
granting said person the right to require the Issuer to file a registration
statement under the Securities Act with respect to any Notes owned or to be
owned by such person.
(q) No Broker, Finder or Financial Adviser Other Than Rothschild.
Neither the Issuer nor any of its officers, directors, employees or agents has
employed any broker, finder or financial adviser other than Rothschild Inc. or
incurred any liability for fees or commissions to any person other than
Rothschild Inc. in connection with the offering, issuance or sale of the Notes.
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(r) Notes Authorized, Executed, Authenticated, Validly Issued and
Outstanding. The Notes have been duly and validly authorized and, when duly and
validly executed and authenticated by the Trustee in accordance with the terms
of this Agreement and delivered to and paid for by each Noteholder as provided
herein, will be validly issued and outstanding and entitled to the benefits
hereof.
(s) Location of Principal Executive Office and Records. The principal
place of business and principal executive office of the Issuer, and the office
where Issuer maintains all of its records, is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; PROVIDED that, at any time after the Closing Date, upon 30
days' prior written notice to each of the Servicer and the Trustee, the Issuer
may relocate its principal place of business and principal executive office,
and/or the office where it maintains all of its records, to another location
within the United States to the extent that the Issuer shall have taken all
actions necessary or reasonably requested by the Servicer, the Trustee or the
Controlling Party to amend its existing financing statements and continuation
statements, and file additional financing statements and to take any other steps
reasonably requested by the Servicer or the Trustee to further perfect or
evidence the rights, claims or security interests of the Servicer or the Trustee
under any of the Transaction Documents.
(t) Ownership of the Issuer. One hundred percent (100%) of the Units of
the Issuer are directly owned (both beneficially and of record) by Creditrust
Corporation. Such Units are validly issued, fully paid and nonassessable and no
one other than Creditrust Corporation has any options, warrants or other rights
to acquire Units from the Issuer.
(u) Solvency. The Issuer (i) is not "insolvent" (as such term is
defined in ss. 101(32)(A) of the Bankruptcy Code); (ii) is able to pay its debts
as they become due; and (iii) does not have unreasonably small capital for the
business in which it is engaged or for any business or transaction in which it
is about to engage.
(v) Reporting and Accounting Treatment. For reporting and accounting
purposes, and in its books of account and records, the Issuer will treat the
transfer of the Receivables pursuant to the Receivables Contribution Agreement
as an absolute assignment of Creditrust Corporation's full right, title and
ownership interest in the Receivables and the Issuer has not in any other manner
accounted for or treated the transactions.
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(w) Governmental and Other Consents. No consents, approvals,
authorization or orders of, registration or filing with, or notice to any
governmental authority or court is required for the execution, delivery and
performance of, or compliance with, the Transaction Documents by the Issuer,
except such consent, approvals, authorizations, filings and notices that have
already been made or obtained.
(x) Accuracy of Information. The representations and warranties of the
Issuer in the Transaction Documents are true and correct in all material
respects as of the Closing Date.
(y) Separate Identity. The Issuer is operated as an entity separate
from Creditrust Corporation. In addition, the Issuer:
(i) has its own board of managers,
(ii) has at least one Independent Member, who is not a direct,
indirect, or beneficial stockholder, officer, director, employee,
affiliate, associate, customer or supplier of any of the Servicer or
its Affiliates (other than, in the case of the Issuer, managers
thereof) or relatives of any thereof,
(iii) maintains its assets in a manner which facilitates their
identification and segregation from those of the Servicer,
(iv) has all office furniture, fixtures and equipment
necessary to operate its business,
(v) conducts all intercompany transactions with the Servicer
on terms which the Issuer reasonably believes to be on an arm's-length
basis,
(vi) has not guaranteed any obligation of the Servicer or any
of its Affiliates, nor has it had any of its obligations guaranteed by
any such entities and has not held itself out as responsible for debts
of any such entity or for the decisions or actions with respect to the
business affairs of any such entity,
(vii) has not permitted the commingling or pooling of its
funds or other assets with the assets of the Servicer or any of its
Affiliates (other than in respect of items of payment and funds
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which may be commingled until deposited into the Collection Account in
accordance with this Agreement),
(viii) has separate deposit and other bank accounts to which
neither the Servicer nor any of its Affiliates has any access and does
not at any time pool any of its funds with those of the Servicer or any
of its Affiliates, except for such funds which may be commingled until
deposited into the Collection Account in accordance with this
Agreement,
(ix) maintains financial records which are separate from those
of the Servicer or any of its Affiliates,
(x) compensates all employees, consultants and agents, or
reimburses the Servicer from the Issuer's own funds, for services
provided to the Issuer by such employees, consultants and agents,
(xi) conducts all of its business (whether in writing or
orally) solely in its own name,
(xii) is not, directly or indirectly, named as a direct or
contingent beneficiary or loss payee on any insurance policy covering
the property of the Servicer or any of its Affiliates and has entered
into no agreement to be named as such a beneficiary or payee,
(xiii) acknowledges that the Trustee and the Noteholders are
entering into the transactions contemplated by this Agreement and the
other Transaction Documents in reliance on the Issuer's identity as a
separate legal entity from the Servicer, and
(xiv) practices and adheres to company formalities such as
complying with its By-laws and resolutions and the holding of regularly
scheduled board of managers meetings.
(z) ERISA Compliant. The Issuer and all ERISA Affiliates are in
compliance with all applicable federal or state laws, including the rules and
regulations promulgated thereunder, relating to discrimination in the hiring,
promotion or pay of employees, any applicable federal or state wages and hours
law, and the provisions of the ERISA applicable to its business, except where
such noncompliance would not, individually or in the aggregate, have a Material
Adverse Effect. The employee benefit plans, including employee
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welfare benefit plans (the "Employee Plans") of the Issuer and all ERISA
Affiliates have been operated in compliance with the Code, all regulations,
rulings and announcements promulgated or issued thereunder and all other
applicable governmental laws and regulations (except to the extent such
noncompliance would not, individually or in the aggregate, have a Material
Adverse Effect). No reportable event under Section 4043(b) of ERISA or any
prohibited transaction under Section 406 of ERISA has occurred with respect to
any Employee Plan maintained by the Issuer or any ERISA Affiliate. There are no
pending or, to the Issuer's best knowledge, threatened, claims by or on behalf
of any Employee Plan, by any employee or beneficiary covered under any such plan
or by any governmental authority or otherwise involving such plans or any of
their respective fiduciaries (other than for routine claims for benefits). All
Employee Plans that are group health plans have been operated in compliance with
the group health plan continuation coverage requirements of Section 4980B of the
Code in all material respects. "Material Adverse Effect" means, when used in
connection with the Issuer, any development, change or effect that is materially
adverse to the business, properties, assets, net worth, condition (financial or
other), or results of operations of the Issuer or that reasonably could be
expected to be materially adverse to the prospects of the Issuer. Neither the
Issuer nor any of its ERISA Affiliates have a "defined benefit plan" as defined
in ERISA.
SECTION 6.02 REPAYMENT IN RESPECT OF RECEIVABLES UPON BREACH.
Upon discovery by the Issuer or the Servicer (which discovery shall be
deemed to have occurred upon the receipt of notice by a Responsible Officer of
the Issuer or the Servicer) or upon the actual knowledge of a Responsible
Officer of the Trustee of a breach of any of the representations and warranties
of the Issuer set forth in Section 6.01, the party discovering such breach shall
give prompt written notice to the others. If such breach has or would have a
material adverse effect on the rights or interests of the Noteholders with
respect to all or a portion of the Receivables, the Issuer shall pay an amount
equal to the Release Payment related to such Receivables and, if necessary, the
Issuer shall enforce the obligation of the Seller under the Receivables
Contribution Agreement to reacquire the Receivables from the Issuer, unless such
breach (and the resulting material adverse effect) shall have been cured within
30 days after the earlier to occur of the discovery of such breach by the Issuer
or receipt of written notice of such breach by the Issuer, such that the
relevant representation and warranty shall be true and correct in all material
respects as if made on such day, and the Issuer shall have delivered to the
Trustee a certificate of any Responsible Officer of the Issuer describing the
nature of such
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breach and the manner in which the relevant representation and warranty became
true and correct. This repayment obligation shall pertain to all representations
and warranties of the Issuer contained in Section 6.01, whether or not the
Issuer has knowledge of the breach at the time of the breach or at the time the
representations and warranties were made. The Issuer will be obligated to make
the repayment related to such Receivables as set forth above on the Remittance
Date next succeeding the date on which such repayment obligation arises. In
consideration of the release of the Receivables, on such Remittance Date, the
Issuer shall remit the aggregate Release Payments of the Receivables to the
Collection Account in the manner specified in Section 4.03.
Upon any such repayment, the Trustee on behalf of the Noteholders
shall, without further action, be deemed to have released its security interest
in, to and under the Removed Receivables, all monies due or to become due with
respect thereto after the aforementioned Remittance Date and all proceeds
thereof. The Trustee shall execute such documents and instruments and take such
other actions as shall be reasonably requested by the Issuer to effect the
security interest release pursuant to this Section. Notwithstanding the
foregoing, the Controlling Party may by delivery of prior written notice waive
any breach and repayment obligation of the Issuer pursuant to this Section 6.02.
The Trustee shall have no duty to conduct any affirmative investigation as to
the occurrence of any condition requiring the repayment for any Receivables
pursuant to this Section, except as otherwise provided in Section 9.02.
SECTION 6.03 LIABILITY OF ISSUER.
The Issuer shall be liable in accordance with this Agreement only to
the extent of the obligations in this Agreement specifically undertaken by the
Issuer in such capacity under this Agreement and shall have no other obligations
or liabilities hereunder.
SECTION 6.04 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE ISSUER; CERTAIN LIMITATIONS.
(a) Merger, Etc. Any corporation or limited liability company (i) into
which the Issuer may be merged or consolidated, (ii) which may result from any
merger, conversion or consolidation to which the Issuer shall be a party, or
(iii) which may succeed to all or substantially all of the business of the
Issuer,
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which corporation or limited liability company in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Issuer
under this Agreement, shall be the successor to the Issuer under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties to this Agreement, except that if the Issuer in any of the
foregoing cases is not the surviving entity, then the surviving entity shall
execute an agreement of assumption to perform every obligation of the Issuer
hereunder, and the surviving entity shall have taken all actions necessary or
reasonably requested by the Issuer or the Trustee or the Controlling Party to
amend its existing financing statements and continuation statements, and file
additional financing statements and to take any other steps reasonably requested
by the Issuer, the Trustee or the Controlling Party to further perfect or
evidence the rights, claims or security interests of any of the Issuer or the
Trustee under any of the Transaction Documents. The Issuer (1) shall provide
notice of any merger, consolidation or succession pursuant to this Section to
the Rating Agency, the Trustee, the Noteholders and the Placement Agent, (2) for
so long as the Notes are outstanding, shall receive from the Rating Agency a
letter to the effect that such merger, consolidation or succession will not
result in a qualification, downgrading or withdrawal of the then-current rating
on the Notes, and (3) shall receive from the Controlling Party its prior written
consent to such merger, consolidation or succession, absent which consent, the
Issuer shall not become a party to such merger, consolidation or succession.
(b) Certain Limitations. (i) The business, activities and purpose of
the Issuer shall be limited as specified in its LLC Agreement.
(ii) So long as any outstanding debt of the Issuer or the
Notes is rated by the Rating Agency, the Issuer shall not issue unsecured notes
or otherwise borrow money unless (A) the Issuer has made a written request to
the Rating Agency to issue unsecured notes or incur indebtedness and such notes
or borrowings are rated by the Rating Agency the same as or higher than the
rating afforded any outstanding rated debt (including the Notes), and (B) such
notes or borrowings (1) are fully subordinated (and which shall provide for
payment only after payment in respect of all outstanding rated debt and/or the
Notes) or are nonrecourse against any assets of the Issuer other than the assets
pledged to secure such notes or borrowings, or (2) do not constitute a claim
against the Issuer in the event such assets are insufficient to pay such notes
or borrowings.
(iii) The Issuer shall not issue unsecured notes or otherwise
borrow money, or otherwise grant any consensual Lien in favor of any Person
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(other than the Lien granted pursuant hereto) absent the prior written consent
of the Controlling Party.
(c) Unanimous Consent. Notwithstanding any other provision of this
Section and any provision of law, the Issuer shall not do any of the following
without the affirmative unanimous vote of all Members of the Issuer (which
includes the Independent Member),
(i) (A) dissolve or liquidate, in whole or in part, or
institute proceedings to be adjudicated bankrupt or insolvent, (B) consent to
the institution of bankruptcy or insolvency proceedings against it, (C) file a
petition seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, (D) consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the limited liability company or a substantial part of its
property, (E) make any assignment for the benefit of creditors, (F) admit in
writing its inability to pay its debts generally as they become due, or (G) take
any action in furtherance of the actions set forth in clauses (A) through (F)
above;
(ii) merge or consolidate with or into any other person or
entity or sell or lease its property and all or substantially all of its assets
to any person or entity; or
(iii) modify any provision of its LLC Agreement or By-laws.
SECTION 6.05 LIMITATION ON LIABILITY OF ISSUER AND OTHERS.
The Issuer and any manager or officer or employee or agent of the
Issuer may rely in good faith on the advice of counsel or on any document of any
kind, prima facie properly executed and submitted by any proper Person
respecting any matters arising under this Agreement. The Issuer shall not be
under any obligation to appear in, prosecute or defend any legal action that is
not incidental to its obligations as Issuer under this Agreement or as the
Purchaser under the Receivables Contribution Agreement and that in its opinion
may involve it in any expense or liability.
SECTION 6.06 ISSUER MAY OWN NOTES.
The Issuer and any Affiliate thereof may, in its individual or any
other capacity, become the owner or pledgee of one or more Notes with the same
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rights as it would have if it were not the Issuer or an affiliate thereof,
except as otherwise specifically provided in the definition of the term
"Noteholder." The Notes so owned by or pledged to the Issuer or such Affiliate
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority or distinction as among any of the
Notes, except as set forth herein with respect to, among other things, certain
rights to vote, consent or give directions to the Trustee as a Noteholder. The
Issuer may not pledge any Note acquired by the Issuer.
SECTION 6.07 COVENANTS OF ISSUER.
(a) LLC Agreement and By-laws. The Issuer hereby covenants not to
change, or agree to any change of, its LLC Agreement or By-laws without notice
to the Trustee and the Rating Agency, and (ii) the prior written consent of the
Controlling Party.
(b) Merger of the Issuer, Asset Sales and Purchases. Without the prior
written consent of the Controlling Party, the Issuer shall not merge with or
into, or transfer or sell all or substantially all of its assets to, or buy all
or substantially all the assets of, any person.
(c) Preservation of Existence. The Issuer hereby covenants to do or
cause to be done all things necessary on its part to preserve and keep in full
force and effect its existence as a limited liability company, and to maintain
each of its licenses, approvals, registrations or qualifications in all
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such licenses, approvals, registrations or qualifications,
except for failures to maintain any such licenses, approvals, registrations or
qualifications which, individually or in the aggregate, would not have a
material adverse effect on the ability of Issuer to perform its obligations
hereunder or under any of the other Transaction Documents.
(d) Compliance with Laws. The Issuer hereby covenants to comply in all
material respects with all applicable laws, rules and regulations and orders of
any governmental authority, the noncompliance with which would have a material
adverse effect on the business, financial condition or results of operations of
the Issuer or on the ability of the Issuer to repay the Notes, or perform any of
its other obligations under this Agreement or the other Transaction Documents.
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(e) Payment of Taxes. The Issuer hereby covenants to pay and discharge
promptly or cause to be paid and discharged promptly all taxes, assessments and
governmental charges or levies imposed upon the Issuer or upon its income and
profits, or upon any of its property or any part thereof, before the same shall
become in default, provided that the Issuer shall not be required to pay and
discharge any such tax, assessment, charge or levy so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Issuer shall have set aside on its books adequate reserves with respect to
any such tax, assessment, charge or levy so contested, or so long as the failure
to pay any such tax, assessment, charge or levy would not have a material
adverse effect on the ability of the Issuer to perform its obligations
hereunder.
(f) Exercise of Rights Under the Transaction Documents. The Issuer
hereby covenants to exercise its rights as the Purchaser under the Receivables
Contribution Agreement and take such other action in connection with the
Transaction Documents as may be appropriate or desirable, taking into account
the associated costs, to maximize the collection of amounts payable to the Trust
Estate.
(g) Investments. The Issuer hereby covenants that it will not without
the prior written consent of the Controlling Party, acquire or hold any
indebtedness for borrowed money of another person, or any capital stock,
debentures, partnership interests or other ownership interests or other
securities of any Person, other than the Receivables acquired under the
Receivables Contribution Agreement.
(h) Keeping Records and Books of Account. The Issuer hereby covenants
and agrees to maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing the
Receivables in the event of the destruction or loss of the originals thereof)
and keep and maintain, all documents, books, records and other information
reasonably necessary or advisable for the collection of all Receivables
(including, without limitation, records adequate to permit the daily
identification of all collections with respect to, and adjustments of amounts
payable under, each Receivable).
(i) Benefit Plan. The Issuer hereby covenants and agrees to comply in
all material respects with the provisions of ERISA, the Code, and all other
applicable laws, and the regulations and interpretations thereunder to the
extent applicable, with respect to each Benefit Plan. Issuer covenants that it
will not, and it will cause any ERISA Affiliate to not:
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(i) engage in any non-exempt prohibited transaction (within the
meaning of Code Section 4975 or ERISA Section 406) with respect to any Benefit
Plan which would result in a material liability to the Issuer or the Servicer;
(ii) permit to exist any accumulated funding deficiency, as
defined in Section 302(a) of ERISA and Section 412(a) of the Code, with respect
to any Benefit Plan of the Issuer or any ERISA affiliate which is subject to
Section 302(q) of ERISA or 412 of the Code;
(iii) terminate any Benefit Plan of the Issuer or any ERISA
Affiliate so as to result in any material liability to the Issuer or an ERISA
Affiliate; or
(iv) create any defined benefit plan (as defined in ERISA).
(j) No Release. The Issuer shall not take any action and shall use its
best efforts not to permit any action to be taken by others that would release
any Person from any of such Person's covenants or obligations under any
document, instrument or agreement included in the Trust Estate, or which would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such document, instrument or
agreement.
(k) Separate Identity. The Issuer hereby covenants and agrees to take
all actions required to maintain the Issuer's status as a separate legal entity.
Without limiting the foregoing, the Issuer shall:
(i) conduct all of its business, and make all communications to
third parties (including all invoices (if any), letters, checks and other
instruments) solely in its own name (and not as a division of any other Person),
and require that its employees, if any, when conducting its business identify
themselves as such (including, without limitation, by means of providing
appropriate employees with business or identification cards identifying such
employees as the Issuer's employees);
(ii) compensate all employees, consultants and agents directly
or indirectly through reimbursement of the Servicer, from the Issuer's bank
accounts, for services provided to the Issuer by such employees, consultants and
agents and, to the extent any employee, consultant or agent of the Issuer is
also an employee, consultant or agent of the Servicer, allocate the compensation
of such employee, consultant or agent between the Issuer and
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the Servicer on a basis which reflects the respective services rendered to the
Issuer and the Servicer;
(iii) (A) pay its own incidental administrative costs and
expenses from its own funds, and (B) allocate all other shared overhead expenses
(including, without limitation, telephone and other utility charges, the
services of shared employees, consultants and agents, and reasonable legal and
auditing expenses) which are not reflected in the Servicing Fee, and other items
of cost and expense shared between the Issuer and the Servicer, on the basis of
actual use to the extent practicable, and to the extent such allocation is not
practicable, on a basis reasonably related to actual use or the value of
services rendered;
(iv) at all times have at least one Independent Member, with at
least one independent director, and have at least one officer responsible for
managing its day-to-day business and manage such business by or under the
direction of its board of managers;
(v) maintain its books and records separate from those of any
Affiliate;
(vi) prepare its financial statements separately from those of
its Affiliates and ensure that any consolidated financial statement have notes
to the effect that the Issuer is a separate entity whose creditors have a claim
on its assets prior to those assets becoming available to its equity holders and
therefore to any creditors, as the case may be;
(vii) not commingle its funds or other assets with those of any
of its Affiliates (other than in respect of items of payment or funds which may
be commingled until deposited into the Collection Account in accordance with
this Agreement), and not to hold its assets in any manner that would create an
appearance that such assets belong to any such Affiliate, not maintain bank
accounts or other depository accounts to which any such Affiliate is an account
party, into which any such Affiliate makes deposits or from which any such
Affiliate has the power to make withdrawals, and not act as an agent or
representative of any of its Affiliates in any capacity;
(viii) not permit any of its Affiliates to pay the Issuer's
operating expenses;
(ix) not guarantee any obligation of any of its Affiliates nor
have any of its obligations guaranteed by any such Affiliate (either directly or
by
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seeking credit based on the assets of such Affiliate), or otherwise hold itself
out as responsible for the debts of any Affiliate;
(x) maintain at all times stationery separate from that of any
Affiliate and have all its officers and employees conduct all of its business
solely in its own name;
(xi) hold regular meetings of its board of managers in
accordance with the provisions of its LLC Agreement and otherwise take such
actions as are necessary on its part to ensure that all corporate procedures
required by its LLC Agreement and By-laws are duly and validly taken;
(xii) respond to any inquiries made to it with respect to
ownership of a Receivable by stating that it is the owner of such Receivable,
and, if requested to do so, that the Trustee has been granted a security
interest in such Receivable;
(xiii) on or before March 31 of each year, beginning in 2000,
the Issuer shall deliver to the Trustee and each of the Noteholders an Officer's
Certificate stating that Issuer has, during the preceding year, observed all of
the requisite company formalities and conducted its business and operations in
such a manner as required for the Issuer to maintain its separate company
existence from any other entity; and
(xiv) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the non-consolidation opinion
delivered by Issuer's counsel remain true and correct at all times.
(l) Compliance with all Transaction Documents. The Issuer hereby
covenants and agrees to comply in all material respects with the terms of,
employ the procedures outlined in and enforce the obligations of the parties to
all of the Transaction Documents to which the Issuer is a party, and take all
such action to such end as may be from time to time reasonably requested by the
Trustee, and/or the Controlling Party, maintain all such Transaction Documents
in full force and effect and make to the parties thereto such reasonable demands
and requests for information and reports or for action as the Issuer is entitled
to make thereunder and as may be from time to time reasonably requested by the
Trustee.
(m) No Sales, Liens, Etc. Against Receivables and Trust Property. The
Issuer hereby covenants and agrees, except for releases contemplated hereunder,
not to sell, assign (by operation of law or otherwise) or otherwise
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dispose of, or create or suffer to exist, any Lien (other than the Lien created
hereby) upon or with respect to, any Receivables or Trust Estate, or any
interest in either thereof, or upon or with respect to any Account, or assign
any right to receive income in respect thereof. The Issuer shall immediately
notify the Trustee of the existence of any Lien on any Receivables or Trust
Estate, and the Issuer shall defend the right, title and interest of each of the
Issuer and the Trustee in, to and under the Receivables and Trust Estate,
against all claims of third parties.
(n) No Change in Business. The Issuer covenants that it shall not make
any change in the character of its business.
(o) No Change in Name, Etc. The Issuer covenants that it shall not make
any change to its corporate name, or use any trade names, fictitious names,
assumed names or "doing business as" names.
(p) No Institution of Insolvency Proceedings. The Issuer covenants that
it shall not institute Insolvency Proceedings with respect to the Issuer or any
Affiliate thereof or consent to the institution of Insolvency Proceedings
against the Issuer or any affiliate thereof or take any action in furtherance of
any such action, or seek dissolution or liquidation in whole or in part of the
Issuer or any Affiliate thereof.
(q) No Change in Principal Executive Office or Location of Records. The
Issuer covenants that it shall maintain its principal place of business and
principal executive office, and the office where it maintains all of its
records, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; PROVIDED that, at any time
after the Closing Date, upon 30 days' prior written notice to each of the
Servicer and the Trustee, the Issuer may relocate its principal place of
business and principal executive office, and/or the office where it maintains
all of its records, to another location within the United States to the extent
that the Issuer shall have taken all actions necessary or reasonably requested
by the Servicer, the Trustee or the Controlling Party to amend its existing
financing statements and continuation statements, and file additional financing
statements and to take any other steps reasonably requested by the Servicer or
the Trustee to further perfect or evidence the rights, claims or security
interests of any of the Servicer or the Trustee under any of the Transaction
Documents. As of the Closing Date, each Receivable File shall be kept by the
Servicer at its offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(r) Access to Certain Documentation and Information. The Issuer shall
provide the Trustee and the Noteholders with access to the
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documentation relating to the Receivables required to be maintained at the
location described in Section 6.07(q), and will make available for discussion
about the Receivables, Responsible Officers of the Issuer having knowledge of
such matters. In each case, access to documentation relating to the Receivables
shall be afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Issuer. Nothing in this Section
shall impair the obligation of the Issuer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, which obligation
shall be evidenced by an Opinion of Counsel to such effect, and the failure of
the Issuer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
ARTICLE VII
THE SERVICER
SECTION 7.01 REPRESENTATIONS OF SERVICER.
The Servicer hereby makes the following representations on which the
Trustee is relying in accepting the grant of a security interest in the
Receivables and authenticating the Notes, and on which the Noteholders are
relying in purchasing the Notes. The representations shall speak as of the
execution and delivery of this Agreement and shall survive the grant of a
security interest to the Trustee.
(a) Organization and Good Standing. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the State
of Maryland, with corporate power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and now has, corporate
power, authority and legal right to acquire, own, hold, transfer, convey and
service the Receivables and to hold the Receivable Files as custodian on behalf
of the Issuer and the Trustee.
(b) Due Qualification. The Servicer is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the Receivables as
required by this Agreement) requires such qualification, licenses and approvals,
except where the failure to be qualified or to obtain such
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qualifications, licenses and approvals would not materially and adversely affect
the rights or interests of any of the Noteholders or the Trust Estate.
(c) Power and Authority. The Servicer has the corporate power and
authority to execute and deliver this Agreement and each of the other
Transaction Documents to which it is a party, and to carry out its terms; and
the execution, delivery and performance of this Agreement has been duly
authorized by the Servicer by all necessary corporate action.
(d) Binding Obligations. This Agreement and each of the other
Transaction Documents to which the Servicer is a party constitutes a legal,
valid and binding obligation of the Servicer enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally or by general principles of equity.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and each of the other Transaction Documents and the fulfillment
of the terms of this Agreement and each of the other Transaction Documents does
not conflict with, result in any breach of any of the terms and provisions of,
nor constitute (with or without notice or lapse of time) a default under, the
articles of incorporation, as amended and restated, or bylaws of the Servicer,
or conflict with or breach any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Servicer is a party or by
which it shall be bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than this Agreement); nor violate, any law,
order, rule or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties; which
breach, default, conflict, Lien or violation would have, or would have, a
material adverse effect on the rights or interests of the Noteholders.
(f) No Proceedings. There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now pending, or
to the Servicer's knowledge, threatened, against or affecting the Servicer: (i)
asserting the invalidity of this Agreement, the Notes, or any of the other
Transaction Documents, (ii) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or any of
the other Transaction Documents, (iii) seeking any determination or ruling that
might materially and adversely affect the performance by the
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Servicer of its obligations under, or the validity or enforceability of, this
Agreement, the Notes or any of the other Transaction Documents, or (iv) relating
to the Servicer and which might adversely affect the federal income tax
attributes of the Notes.
(g) No Subsidiaries. As of the Closing Date, Servicer has no
subsidiaries, other than the Issuer, Creditrust Mortgage Corporation, Creditrust
Card Services Corporation, Creditrust SPV99-2, LLC, and other limited liability
companies formed solely for the purpose of securitization transactions,
including Creditrust SPV2, LLC, Creditrust Funding I LLC and Creditrust SPV98-2,
LLC.
(h) Not an Investment Company. The Servicer is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act, and none of the issuance of the Notes, the
execution and delivery of the Transaction Documents to which the Servicer is a
party, or the performance by the Servicer of its obligations thereunder, will
violate any provision of the Investment Company Act, or any rule, regulation or
order issued by the Securities and Exchange Commission thereunder.
(i) Year 2000. The Servicer has replaced or modified all of its
critical computer systems and business applications software so that its
computer systems would properly utilize dates beyond December 31, 1999 ("Year
2000 Compliant") and does not believe that any further material expenditures
will be necessary to make these systems Year 2000 Compliant.
(j) Ownership of the Issuer. One hundred percent (100%) of the Units of
the Issuer are directly owned (both beneficially and of record) by the Servicer.
Such Units are validly issued, fully paid and nonassessable and no one other
than the Servicer has any options, warrants or other rights to acquire Units
from the Issuer.
(k) Solvency. The Servicer is, and shall remain, after giving effect to
the transactions contemplated by this Agreement, Solvent. For purposes of this
definition, "Solvent" means, with respect to the Servicer on a particular date,
that on such date (a) the fair market value of the Servicer's assets is greater
than the total amount of liabilities, including contingent liabilities, of the
Servicer; (b) the Servicer does not intend to, and does not believe that it
will, incur debts or liabilities beyond the Servicer's ability to pay as such
debts and liabilities mature; and (c) the Servicer is not engaged in a business
or
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transaction, and is not about to engage in a business or transaction, for which
the Servicer's property would constitute an unreasonably small capital.
(l) Arm's Length Transaction. The Servicer has entered into the
transactions contemplated by this Agreement (including, in the case of
Creditrust Corporation, in its capacity as Seller under the other Transaction
Documents) on an arm's length basis, and has made its own analysis and decisions
in entering into such transactions.
SECTION 7.02 LIABILITY OF SERVICER; INDEMNITIES
(a) Obligations. The Servicer shall be liable in accordance herewith
only to the extent of the obligations specifically undertaken by the Servicer
under this Agreement and shall have no other obligations or liabilities under
this Agreement. Such obligations shall include the following:
(i) the Servicer shall indemnify, defend and hold harmless the
Trustee, the Noteholders and the Trust Estate from and against any taxes that
may at any time be asserted against the Trustee, the Noteholders or the Trust
Estate with respect to the transactions contemplated in this Agreement or any of
the other Transaction Documents, including, without limitation, any sales, gross
receipts, general corporation, tangible or intangible personal property,
privilege or license taxes (but not including any taxes asserted with respect
to, and as of the date of, the transfer of the Receivables to the Trust, the
issuance and original sale of the Notes, or asserted with respect to ownership
of the Receivables, or federal or other income taxes arising out of payments on
the Notes) and costs and expenses in defending against the same;
(ii) the Servicer shall indemnify, defend and hold harmless
the Trustee, the Trust Estate and the Noteholders from and against any and all
costs, expenses, losses, claims, damages and liabilities to the extent that such
cost, expense, loss, claim, damage or liability arose out of, and was imposed
upon the Trustee, the Trust Estate or any Noteholder through the negligence,
willful misfeasance or bad faith of the Servicer in connection with the
transactions contemplated by this Agreement and the other Transaction Documents,
or by reason of the breach by the Servicer of any of its representations,
warranties or covenants hereunder or under any of the other Transaction
Documents; and
(iii) the Servicer shall indemnify, defend and hold harmless
the Trustee from and against all costs, expenses, losses, claims, damages and
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liabilities arising out of or incurred in connection with the acceptance or
performance of the trusts and duties contained in this Agreement, except to the
extent that such cost expense, loss, claim, damage or liability: (A) shall be
due to the willful misfeasance, bad faith or negligence of the Trustee, (B)
shall arise from the breach by the Trustee of any of its representations or
warranties set forth in Section 9.14, (C) relates to any tax other than the
taxes with respect to which either the Issuer or the Servicer shall be required
to indemnify the Trustee, or (D) shall arise out of or be incurred in connection
with the performance by the Trustee of the duties as the Backup Servicer under
this Agreement.
(b) Expenses. Indemnification under this Section shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer has made any indemnity payments pursuant to this Section and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts collected to the Servicer, without interest,
so long as no amounts are outstanding to the Trustee.
(c) Survival. The provisions of this Section shall survive the
resignation or removal of the Servicer or the Trustee and the termination of
this Agreement.
(d) Successor Servicer Liability. Notwithstanding anything to the
contrary contained in this Agreement, the Successor Servicer shall have no
liability or obligation with respect to any Servicer indemnification obligations
of any prior Servicer. Upon assuming its role as Successor Servicer, the
Successor Servicer shall be responsible only for the indemnification obligations
set forth in Section 7.02(a)(ii).
SECTION 7.03 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER.
Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Servicer shall be a party, or (iii) which may succeed to all or
substantially all of the business of the Servicer, which corporation in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, shall be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement; PROVIDED,
HOWEVER, that (i) such merger, consolidation or conversion shall not cause a
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Servicer Default, and (ii) prior to any such merger, consolidation or conversion
the Servicer shall have provided to the Trustee and the Noteholders a letter
from the Rating Agency indicating that such merger, consolidation or conversion
will not result in the qualification, reduction or withdrawal of the rating then
assigned to the Notes by the Rating Agency. The Servicer shall provide notice of
any merger, consolidation or succession pursuant to this Section to the Trustee,
the Noteholders, the Rating Agency and the Placement Agent.
SECTION 7.04 LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
(a) Neither the Servicer nor any of its directors, officers, employees
or agents shall be under any liability to the Trustee or the Noteholders, except
as provided in this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement, or for errors in judgment;
PROVIDED HOWEVER, that this provision shall not protect the Servicer or any such
person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence of the Servicer in connection with
the transactions contemplated by this Agreement and any of the other Transaction
Documents, or the breach by the Servicer of any of its representations,
warranties or covenants hereunder or under any of the other Transaction
Documents. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; PROVIDED, HOWEVER, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties to this Agreement and the interests of the
Noteholders under this Agreement.
(c) The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on the advice of counsel or on any document of
any kind, prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement.
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SECTION 7.05 SERVICER NOT TO RESIGN.
Subject to the provisions of Section 7.03, neither Creditrust
Corporation nor any Successor Servicer shall resign from the obligations and
duties hereby imposed on it as Servicer under this Agreement except upon
determination that the performance of its duties under this Agreement shall no
longer be permissible under applicable law. Notice of any such determination
permitting the resignation of Creditrust Corporation shall be communicated to
the Trustee, the Noteholders and the Rating Agency at the earliest practicable
time and any such determination shall be evidenced by an Opinion of Counsel to
such effect delivered to the Trustee and the Noteholders concurrently with or
promptly after such notice. No such resignation shall become effective until the
Backup Servicer or a Successor Servicer shall have assumed the responsibilities
and obligations of Creditrust Corporation in accordance with Sections 8.02 or
8.03.
SECTION 7.06 BACKUP SERVICING.
(a) Norwest Bank Minnesota, National Association is hereby appointed to
act as Backup Servicer with respect to this Agreement and the transactions
contemplated hereby and by the other Transaction Documents. The Backup Servicer
hereby acknowledges that the format of and information contained on the computer
diskette or other acceptable data to be supplied by the Servicer pursuant to
Section 7.06(b) below is compatible with and can be read by the computer systems
maintained by the Backup Servicer and that all tests necessary to confirm such
compatibility and readability have been made.
(b) The Servicer agrees to provide monthly to the Backup Servicer a
computer diskette with all information necessary for the Backup Servicer to
perform all of the servicing obligations of the Servicer under this Agreement.
However, during the continuation of either a Servicer Default, or any event
which with the passage of time or the giving of notice or both, would become a
Servicer Default, the Servicer will provide such a diskette up to three times
per month if reasonably requested by Backup Servicer, but Backup Servicer's use
thereof shall be limited as set forth in Section 9.19. The Servicer further
agrees to provide all updates with respect to its computer processing necessary
for the Backup Servicer to maintain a continuous ability to fulfill the role of
Successor Servicer under this Agreement.
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(c) The Backup Servicer shall assume its duties as Successor Servicer
in accordance with Sections 8.02 and 8.03 except upon determination that the
Backup Servicer is legally unable to perform the duties of the Servicer under
this Agreement as provided in Section 8.03.
(d) On or before 11 a.m., New York, New York time on each Determination
Date, the Servicer will deliver to the Backup Servicer a computer diskette (or
other electronic transmission) in a format acceptable to the Backup Servicer
containing the fields listed in Exhibit E hereto, which fields contain
information with respect to the Receivables as of the close of business on the
last day of the related Collection Period. The Backup Servicer shall not be
obligated to verify the information contained in such transmission or the
Monthly Servicer Report.
(e) Other than the duties specifically set forth in this Agreement, the
Backup Servicer shall have no obligations hereunder, including without
limitation to supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the Backup Servicer shall
be determined solely by the express provisions of this Agreement and no implied
covenants or obligations shall be read into this Agreement against the Backup
Servicer. The Backup Servicer shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers (other than
in the ordinary course of the performance of such duties or the exercise of such
rights or powers), if the repayment of such funds or adequate written indemnity
against such risk or liability is not reasonably assured to it in writing prior
to the expenditure or risk of such funds or incurrence of financial liability.
(f) Neither the Backup Servicer nor any of its directors, officers,
employees or agents shall be under any liability to any of the parties hereto,
except as specifically provided in this Agreement, for any action taken or for
refraining from the taking of any action pursuant to this Agreement or for
errors in judgment; PROVIDED HOWEVER, that this provision shall not protect the
Backup Servicer against any misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement. The Backup Servicer and any of its directors,
officers, employees or agents may rely in good faith on the advice of counsel or
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
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SECTION 7.07 GENERAL COVENANTS OF SERVICER.
Creditrust Corporation covenants and agrees that from the Closing Date
until it is no longer the Servicer hereunder:
(a) Related Person Transaction. Without the prior written consent of
the Controlling Party, Servicer shall not enter into any Related Person
Transaction other than on terms that are no less favorable to Servicer than
those that would have been obtained in a comparable transaction by Servicer with
a non-Related Person. The term "Related Person" means, as to Servicer, any
stockholder, director, officer or employee thereof or any relative thereof. The
term "Related Person Transaction" means, (i) any sale, lease, transfer or other
disposition of Servicer's property to any Related Person, or (ii) the purchase,
lease or other acquisition by Servicer of any property from any Related Person,
or (iii) the making of any contract, agreement, understanding, loan, advance,
guarantee, or other credit support with or for the benefit of any Related
Person.
(b) Sale of Assets. Without the prior written consent of the
Controlling Party, Servicer shall not convey, sell, lease, license, transfer or
otherwise dispose of, in one transaction or in a series of transactions, all or
substantially all of its assets, other than with respect to securitization
transactions of its receivables.
(c) Bankruptcy. Servicer shall not take any action in any capacity to
file any bankruptcy, reorganization or Insolvency Proceedings against Issuer, or
cause Issuer to commence any reorganization, bankruptcy proceedings or
Insolvency Proceedings under any applicable state or federal law, including
without limitation any readjustment of debt, or marshaling of assets or
liabilities or similar proceedings.
(d) Legal Existence. Servicer shall do or cause to be done all things
necessary on its part to preserve and keep in full force and effect its
existence as a corporation in the jurisdiction of its incorporation, and to
maintain each of its licenses, approvals, registrations or qualifications in all
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such licenses, approvals, registrations or qualifications;
except for failures to maintain any such licenses, approvals, registrations or
qualifications which, individually or in the aggregate, would not have a
material adverse effect on the
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ability of Servicer to perform its obligations hereunder or under any of the
other Transaction Documents.
(e) Compliance With Laws. Servicer shall comply in all material
respects, with all laws, rules and regulations and orders of any governmental
authority applicable to its operation, the noncompliance with which would have a
material adverse effect on the business, financial condition or results of
operations of the Servicer or on the ability of the Servicer to perform its
obligations hereunder or under any of the other Transaction Documents.
(f) Taxes. Servicer shall pay and discharge all taxes, assessments and
governmental charges or levies imposed upon Servicer or upon its income and
profits, or upon any of its property or any part thereof, before the same shall
become in default, provided that Servicer shall not be required to pay and
discharge any such tax, assessment, charge or levy so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
Servicer shall have set aside on its books adequate reserves with respect to any
such tax, assessment, charge or levy so contested, or so long as the failure to
pay any such tax, assessment, charge or levy would not have a material adverse
effect on the ability of the Servicer to perform its obligations hereunder.
(g) Financial Statements. Servicer shall maintain its financial books
and records in accordance with GAAP. Servicer shall furnish to the Noteholders
and the Backup Servicer:
(i) Quarterly Statements. As soon as available and in any
event within 45 days after the end of each of the calendar quarters of each
fiscal year of the Servicer, the consolidated balance sheet of the Servicer and
the related statements of income, shareholders' equity and cash flows, each for
the period commencing at the end of the preceding fiscal year and ending with
the end of such fiscal quarter, prepared in accordance with GAAP consistently
applied;
(ii) Annual Statements. As soon as available and in any event
within 90 days after the end of each fiscal year of the Servicer, the balance
sheets of the Servicer and the related statements of income, shareholder's
equity and cash flows for the fiscal year then ended, each prepared in
accordance with GAAP consistently applied and reported on by a firm of
nationally recognized independent public accountants; and
(iii) Other Filings. Promptly after the filing thereof, copies
of each Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K and proxy statement of Servicer.
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(h) Compliance with all Transaction Documents. The Servicer hereby
covenants and agrees to comply in all material respects with the terms of,
employ the procedures outlined in and enforce the obligations of the parties to
all of the Transaction Documents to which the Servicer is a party, and take all
such action to such end as may be from time to time reasonably requested by the
Trustee, maintain all such Transaction Documents in full force and effect and
make to the parties thereto such reasonable demands and requests for information
and reports or for action as the Servicer is entitled to make thereunder and as
may be from time to time reasonably requested by the Trustee.
(i) No Change in Principal Executive Office or Location of Records. The
Servicer covenants that it shall maintain its principal place of business and
principal executive office, and the office where it maintains all of its
records, at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; PROVIDED that, at any time
after the Closing Date, upon 30 days' prior written notice to each of the Issuer
and the Trustee, the Servicer may relocate its principal place of business and
principal executive office, and/or the office where it maintains all of its
records, to another location within the United States to the extent that the
Servicer shall have taken all actions necessary or reasonably requested by the
Issuer, the Trustee or the Controlling Party to amend its existing financing
statements and continuation statements, and file additional financing statements
and to take any other steps reasonably requested by the Issuer or the Trustee to
further perfect or evidence the rights, claims or security interests of any of
the Issuer or the Trustee under any of the Transaction Documents. As of the
Closing Date, each Receivable File shall be kept by the Servicer at its offices
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(j) Maintenance of Insurance. The Servicer hereby covenants and agrees
to maintain one or more policies of "all-risk" property and general liability
insurance with financially sound and reputable insurers, providing coverage in
scope and amount which is at least consistent with the scope and amount of such
insurance coverage obtained by prudent and similarly situated Persons in the
same jurisdiction and the same business as Servicer.
(k) Separate Identity. The Servicer hereby covenants and agrees to take
all actions required to maintain the Issuer's status as a separate legal entity.
Without limiting the foregoing, the Servicer shall:
(i) cause Issuer to conduct all of its business, and make all
communications to third parties (including all invoices (if any), letters,
checks and other instruments) solely in its own name (and not as a division of
any other Person), and require that its employees, if any, when conducting its
business identify themselves as such;
(ii) cause Issuer to compensate all employees, consultants and
agents directly or indirectly through reimbursement of the Servicer, from the
Issuer's bank accounts, for services provided to the Issuer by such employees,
consultants and agents and, to the extent any employee, consultant or agent of
the Issuer is also an employee, consultant or agent of the Servicer, allocate
the compensation of such employee, consultant or agent between the Issuer
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and the Servicer on a basis which reflects the respective services rendered to
the Issuer and the Servicer;
(iii) cause Issuer to (A) pay its own incidental
administrative costs and expenses from its own funds, and (B) allocate all other
shared overhead expenses (including, without limitation, telephone and other
utility charges, the services of shared employees, consultants and agents, and
reasonable legal and auditing expenses) which are not reflected in the Servicing
Fee, and other items of cost and expense shared between the Issuer and the
Servicer, on the basis of actual use to the extent practicable, and to the
extent such allocation is not practicable, on a basis reasonably related to
actual use or the value of services rendered;
(iv) cause Issuer to at all times have at least one
Independent Member, with at least one independent director, and have at least
one officer responsible for managing its day-to-day business and manage such
business by or under the direction of its board of managers;
(v) cause Issuer to maintain its books and records separate
from those of any Affiliate;
(vi) cause Issuer to prepare its financial statements
separately from those of its Affiliates and ensure that any consolidated
financial statement have notes to the effect that the Issuer is a separate
entity whose creditors have a claim on its assets prior to those assets becoming
available to its equity holders and therefore to any creditors, as the case may
be;
(vii) cause Issuer to not commingle its funds or other assets
with those of any of its Affiliates (other than in respect of items of payment
or funds which may be commingled until deposited into the Collection Account in
accordance with this Agreement), and not to hold its assets in any manner that
would create an appearance that such assets belong to any such Affiliate, not
maintain bank accounts or other depository accounts to which any such Affiliate
is an account party, into which any such Affiliate makes deposits or from which
any such Affiliate has the power to make withdrawals, and not act as an agent or
representative of any of its Affiliates in any capacity;
(viii) not permit any of its Affiliates to pay the Issuer's
operating expenses;
(ix) not permit Issuer to guarantee any obligation of any of
its Affiliates nor have any of its obligations guaranteed by any such Affiliate
(either directly or by seeking credit based on the assets of such Affiliate), or
otherwise hold itself out as responsible for the debts of any Affiliate;
(x) cause Issuer to maintain at all times stationery separate
from that of any Affiliate and have all its officers and employees conduct all
of its business solely in its own name;
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(xi) cause Issuer to hold regular meetings of its board of
managers in accordance with the provisions of its LLC Agreement and otherwise
take such actions as are necessary on its part to ensure that all company
procedures required by its LLC Agreement and By-laws are duly and validly taken;
(xii) cause Issuer to respond to any inquires made directly to
it with respect to ownership of a Receivable by stating that it is the owner of
such contributed Receivable, and, if requested to do so, that the Trustee has
been granted a security interest in such Receivable; and
(xiii) cause Issuer to take such other actions as are
necessary on its part to ensure that the facts and assumptions set forth in the
non-consolidation opinion delivered by Issuer's counsel remain true and correct
at all times.
(l) Benefit Plan. The Servicer hereby covenants and agrees to comply in
all material respects with the provisions of ERISA, the Code, and all other
applicable laws, and the regulations and interpretations thereunder to the
extent applicable, with respect to each Benefit Plan. Servicer covenants that it
will not, and it will cause any ERISA Affiliate to not:
(i) engage in any non-exempt prohibited transaction (within the
meaning of Code Section 4975 or ERISA Section 406) with respect to any Benefit
Plan which would result in a material liability to the Servicer;
(ii) permit to exist any accumulated funding deficiency, as
defined in Section 302(a) of ERISA and Section 412(a) of the Code, with respect
to any Benefit Plan of the Servicer or any ERISA affiliate which is subject to
Section 302(q) of ERISA or 412 of the Code;
(iii) terminate any Benefit Plan of the Servicer or any ERISA
Affiliate so as to result in any material liability to the Servicer or an ERISA
Affiliate; or
(iv) create any defined benefit plan (as defined in ERISA).
(m) Stockholders' Equity. Servicer shall not permit its stockholders'
equity as required to be shown on its financial statements in accordance with
GAAP to be less than $50,000,000.
(n) Board. Servicer will maintain an independent board of directors
with a majority of "qualified outside directors" (as defined in the NASD Rules
for National Market Designations).
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In the case of each of subsections 7.07(a) and (b) above, the consent of the
Controlling Party referred to therein shall not be unreasonably delayed or
unreasonably withheld.
ARTICLE VIII
SERVICER DEFAULT; EVENTS OF DEFAULT
SERVICER EVALUATION EVENT; REMEDIES
SECTION 8.01 SERVICER DEFAULT.
For purposes of this Agreement, each of the following shall constitute
a "Servicer Default":
(a) Any failure by the Servicer to deliver to the Trustee the Monthly
Servicer Report for the related Collection Period, or any failure by the
Servicer to make any payment, transfer or deposit, or deliver to the Trustee any
proceeds or payment required to be so delivered under the terms of the Notes,
this Agreement or any of the other Transaction Documents to which it is a party,
in each case that continues unremedied for a period of one Business Day after
the earlier to occur of (x) discovery by a Responsible Officer of the Servicer,
or (y) the date on which written notice has been given to the Servicer by the
Trustee or the Controlling Party or to the Trustee and the Servicer by any
Noteholder;
(b) Any failure on the part of the Servicer duly to observe or perform
any other covenants or agreements of the Servicer set forth in the Notes, this
Agreement, or any of the other Transaction Documents to which the Servicer is a
party, which failure (i) would have a material adverse effect on the rights or
interests of the Noteholders, the Trustee or the Trust Estate and (ii) continues
unremedied for a period of 30 days after the earlier to occur of (x) discovery
by a Responsible Officer of the Servicer or (y) the date on which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Controlling Party or the Trustee, or to the Trustee and the
Servicer by Noteholders evidencing not less than 25% of the Voting Interests; or
the Servicer delegates its duties under the Notes, this Agreement, or any of the
other Transaction Documents to which it is a party (except as specifically
permitted pursuant to Section 8.07), and such delegation continues unremedied
for a period of 15 days after written notice, requiring such delegation to be
remedied, shall have been given to the Servicer by the Trustee
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or the Controlling Party, or to the Trustee and the Servicer by Noteholders
evidencing not less than 25% of the Voting Interests;
(c) The entry of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a trustee
in bankruptcy, conservator, receiver or liquidator for the Servicer in any
bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding up or liquidation of
their respective affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 30 consecutive days;
(d) The consent by the Servicer to the appointment of a trustee in
bankruptcy, conservator or receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Servicer or substantially all of its property,
or the Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations;
(e) Any representation, warranty or certification made by Creditrust
Corporation in any capacity or any Successor Servicer in this Agreement or in
any other Transaction Document to which it is a party, or in any certificate
delivered pursuant to this Agreement or in any other Transaction Document to
which it is a party, proves to have been incorrect when made, which (i) would
have a material adverse effect on the rights of the Noteholders or the Trust
Estate, respectively (without regard to any amount deposited in the Reserve
Account), and (ii) if capable of remedy, continues unremedied for a period of 30
days after the earlier to occur of (x) discovery by a Responsible Officer of the
Servicer or (y) the date on which written notice thereof, requiring the same to
be remedied, shall have been given to the Servicer by the Controlling Party or
the Trustee or to the Trustee and the Servicer by Noteholders evidencing not
less than 25% of the Voting Interests;
(f) Commencing February 29, 2000, and on the last day of each February
and August thereafter, the cumulative amount of Net Proceeds in respect of all
Receivables from the Closing Date to such date is less than the amounts
specified in Schedule B;
(g) Servicer suffers the loss, suspension or other material impairment
of any required license or permit in any state or commonwealth of the United
States (or the District of Columbia) where Obligors are located which, in the
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aggregate for such state or commonwealth (or the District of Columbia), accounts
for more than $50,000,000 in the initial Charged-Off Balances of Receivables,
unless such loss, suspension or impairment is cured within 60 days after any
Responsible Officer of the Servicer has knowledge of such loss, suspension or
material impairment;
(h) Either ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ terminates or shall
have terminated his respective employment with the Servicer, or become disabled
for a period of three consecutive months or more, or die and a replacement
reasonably satisfactory to the Controlling Party has not been appointed within
90 days after such death, termination or disability;
(i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall (i) cease to be Chief Executive Officer or
Chairman of the Board of Servicer, unless a replacement reasonably satisfactory
to the Controlling Party is appointed within 90 days thereafter, or (ii) engage
in material business activities other than the management of Servicer;
(j) There occurs any reduction of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ personal
investment in Servicer below an amount equal to 35% of the outstanding common
stock of Servicer, or such lesser amount as may be acceptable to the Controlling
Party;
(k) Servicer sells, transfers, pledges or otherwise disposes of any of
its membership interest in Issuer, whether voluntarily or by operation of law,
foreclosure or other enforcement by a Person of its remedies against the
Servicer, except pursuant to a merger, consolidation or a sale of all or
substantially all the assets of Servicer in a transaction not prohibited by this
Agreement; PROVIDED, HOWEVER, that the Servicer may pledge its membership
interest in the Issuer to a secured lender (x) in connection with a pledge of
all or substantially all of the assets of the Servicer to secure indebtedness
owed to such lender for borrowed money, or (y) with the prior written consent of
the Controlling Party; or
(l) The existence of an Event of Default (or similar event which
permits the acceleration of the obligations) and the expiration of any
applicable cure period in (i) any securitization transactions to which
Creditrust Corporation or any of its Affiliates is a party or (ii) any
obligation of Creditrust Corporation or any of its Affiliates for the repayment
of borrowed money with a principal balance then exceeding $100,000.
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Notwithstanding the foregoing, the cure periods referred to in each of
clauses (a), (g) and (h) above may be extended for an additional period of five
Business Days each, or such longer period not to exceed 30 Business Days as may
be acceptable to the Controlling Party, if such delay or failure was caused by
an act of God or other similar occurrence. Upon the occurrence of any such event
the Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Trustee, the Rating Agency, the Placement
Agent and the Noteholders prompt notice of such failure or delay by it, together
with a description of its effort to so perform its obligations. The Servicer
shall notify the Trustee in writing of any Servicer Default that it discovers
within one Business Day of such discovery. The Trustee shall have no duty or
obligation to determine whether or not a Servicer Default has occurred.
SECTION 8.02 CONSEQUENCES OF A SERVICER DEFAULT.
(a) If a Servicer Default shall occur and be continuing, so
long as such Servicer Default has not been cured or waived pursuant to Section
8.05, the Trustee shall, upon the direction of the Controlling Party, and may
(with the written consent of the Controlling Party), at its discretion, by
notice then given in writing to the Servicer terminate all (but not less than
all) of the rights and obligations of the Servicer, as Servicer under this
Agreement and the other Transaction Documents, in and to the Receivables and
proceeds thereof. On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Notes, the Receivables, the Transaction Documents or
otherwise, shall, without further action, pass to and be vested in the Backup
Servicer pursuant to and under this Section or such Successor Servicer as may be
appointed under Section 8.03; and, without limitation, the Backup Servicer or
such Successor Servicer shall be hereby authorized and empowered to execute and
deliver, on behalf of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Receivables and related documents, or otherwise. The predecessor Servicer shall
cooperate with the Backup Servicer or the Successor Servicer, as applicable, in
effecting the termination of the responsibilities and rights of the predecessor
Servicer under this Agreement, including, without limitation, the transfer to
the Backup Servicer or the Successor Servicer, as applicable, for administration
by it of all cash amounts that shall at the time be held by the predecessor
Servicer for deposit with respect to the Receivables, or have been
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deposited by the predecessor Servicer in the Accounts with respect to the
Receivables or thereafter received by the predecessor Servicer with respect to
the Receivables. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the Backup
Servicer or the Successor Servicer, as applicable, and amending this Agreement
to reflect such succession as Servicer pursuant to this Section shall be paid
first, pursuant to Section 4.04(b)(ii), and second, by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses;
PROVIDED, HOWEVER, that the amount of such costs and expenses shall not exceed
$100,000 (the amount of such costs and expenses are referred to herein as the
"Transition Fees").
(b) In addition to the remedial provisions set forth in clause
(a) above, and not by way of limitation of any remedies to which any of the
Trustee or the Noteholders are entitled upon the occurrence of a Servicer
Default, the Issuer and the Servicer acknowledge and agree that, so long as a
Servicer Default shall occur and be continuing, and such Servicer Default has
not been cured or waived pursuant to Section 8.05, the Trustee shall, upon the
direction of the Controlling Party and may (with the written consent of the
Controlling Party), at its discretion, by notice then given in writing to the
Servicer, direct the Servicer (or Backup Servicer or Successor Servicer as the
case may be) to (x) deposit all checks and other items of collections received
in respect of Receivables directly into an Account immediately upon receipt,
and/or (y) instruct each Obligor to remit all collections in respect of
receivables directly to an Account designated for such purpose.
SECTION 8.03 BACKUP SERVICER TO ACT; APPOINTMENT OF SUCCESSOR SERVICER.
On and after the time the Servicer receives a notice of termination
pursuant to Section 8.02 or tenders its resignation pursuant to Section 7.05,
the Backup Servicer shall, by an instrument in writing, assume the rights and
responsibilities of the Servicer in its capacity as Servicer under this
Agreement and the transactions set forth or provided for in this Agreement, and
shall be subject to all the responsibilities, restrictions, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
of this Agreement; PROVIDED, HOWEVER, that the Backup Servicer shall not be
liable for any acts, omissions or obligations of the Servicer that occurred
prior to such succession or for any breach by the Servicer of any of its
representations and warranties contained in this Agreement or in any related
Transaction Document. In addition, the Backup Servicer, shall have (i) no
obligation to perform any
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repurchase or advancing obligations, if any, of the Servicer, (ii) no obligation
to pay any taxes required to be paid by the Servicer, (iii) no obligation to pay
any of the fees and expenses of any other party involved in this transaction
(other than of any agent of the Backup Servicer or of persons owed Third Party
Fees) and (iv) no liability or obligation with respect to any Servicer
indemnification obligations of any prior Servicer including the original
Servicer. Furthermore, notwithstanding anything contained in this Agreement to
the contrary, the Backup Servicer as Servicer is authorized to accept and rely
on all of the accounting, records and work of the prior Servicer relating to the
Receivables (collectively, "Predecessor Servicer Work Product") without any
audit or other examination thereof, and the Backup Servicer as Servicer shall
have no duty, responsibility, obligation or liability for the acts and omissions
of any prior Servicer. If any error, inaccuracy or omission (collectively,
"Errors") exist in any Predecessor Servicer Work Product received by the Backup
Servicer from the prior Servicer and such Errors should cause or materially
contribute to the Backup Servicer as Servicer making or continuing any Errors
(collectively, "Continued Errors"), the Backup Servicer as Servicer shall have
no duty, responsibility, obligation or liability for such Continued Errors;
provided, however, that the Backup Servicer agrees to perform its duties as
Successor Servicer in accordance with the standard of care set forth in Section
3.04. In the event that the Backup Servicer as Servicer becomes aware of Errors
or Continued Errors, the Backup Servicer shall give notice thereof to the
Noteholders and the Trustee and shall use its best efforts to reconstruct and
reconcile such data as is commercially reasonable to correct such Errors and
Continued Errors and to prevent future Continued Errors. The Backup Servicer as
Servicer shall be entitled to recover from the Trust its costs thereby expended
solely pursuant to Section 4.04(b)(vii). As compensation therefor, the Backup
Servicer shall be entitled to such compensation (whether payable out of the
Collection Account or otherwise) as the Successor Servicer would have been
entitled to under this Agreement, determined in the manner set forth below but
shall no longer be entitled to receive the Backup Servicer Fee. Notwithstanding
anything herein to the contrary, Norwest Bank Minnesota, National Association
shall not resign from the obligations and duties imposed on it as Backup
Servicer under this Agreement except upon determination that the performance of
its duties under this Agreement shall no longer be permissible under applicable
law. Notice of any such determination permitting the resignation of Norwest Bank
Minnesota, National Association shall be communicated to the Issuer, the
Trustee, the Noteholders, and the Rating Agency at the earliest practicable time
and any such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the Noteholders concurrently with or
promptly after such notice. In the event the Backup Servicer is unable or
unwilling so to act, it shall appoint or petition
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a court of competent jurisdiction to appoint any established institution having
a net worth of not less than $50,000,000 and whose regular business includes the
servicing of consumer receivables as a successor servicer (a "Successor
Servicer"). In connection with such appointment and assumption, or the
assumption by the Backup Servicer of the status of Successor Servicer, the
Backup Servicer may make such arrangements for the compensation of such
Successor Servicer (including itself) out of payments on or in respect of the
Receivables as provided in the second succeeding sentence. Any Successor
Servicer appointed pursuant to this Section 8.03 must have, and must certify
that it has, the experience and ability to service the Receivables in accordance
with the obligations of the Servicer hereunder, and the ability to make the same
relevant representations regarding the servicing of the Receivables as the
Servicer makes hereunder, including being Year 2000 Compliant. The Successor
Servicer shall be entitled to compensation equal to a fee calculated in
accordance with the first sentence in the definition of "Servicing Fee" except
that the percentage in that sentence shall be deemed to be thirty-seven and
one-half percent (37.5%) rather than twenty percent (20%). The Backup Servicer
and such Successor Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. The Backup
Servicer shall not be relieved of its duties as Successor Servicer under this
Section until the newly appointed Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer under this Agreement.
The parties expressly acknowledge and consent to Norwest Bank
Minnesota, National Association acting in the possible dual capacity of Backup
Servicer or successor Servicer and in the capacity as Trustee. Norwest Bank
Minnesota, National Association may, in such dual capacity, discharge its
separate functions fully, without hindrance or regard to conflict of interest
principles, duty of loyalty principles or other breach of fiduciary duties to
the extent that any such conflict or breach arises from the performance by
Norwest Bank Minnesota, National Association of express duties set forth in this
Agreement in any of such capacities, all of which defenses, claims or assertions
are hereby expressly waived by the other parties hereto except in the case of
negligence (other than errors in judgment) and willful misconduct by Norwest
Bank Minnesota, National Association.
SECTION 8.04 NOTIFICATION TO NOTEHOLDERS, RATING AGENCY AND PLACEMENT
AGENT.
Upon a Responsible Officer of the Trustee obtaining actual knowledge of
(i) the occurrence of a Servicer Default or (ii) any termination of, or
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appointment of a successor to, the Servicer pursuant to this Agreement, the
Trustee shall give prompt written notice thereof to Noteholders at their
respective addresses appearing in the Note Register and to the Rating Agency and
the Placement Agent.
SECTION 8.05 WAIVER OF PAST SERVICER DEFAULTS.
The Trustee shall at the direction of the Controlling Party waive any
Servicer Default or other default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in making any
required deposits to or payments from the Accounts in accordance with this
Agreement or in respect of a covenant or provision of this Agreement that under
Section 11.01 cannot be modified or amended without the consent of each
Noteholder. Upon any such waiver of a past default, such default shall cease to
exist, and any Servicer Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
SECTION 8.06 [DELETED]
SECTION 8.07 SUBSERVICERS.
(a) The Backup Servicer, in its capacity as either Backup Servicer or
Successor Servicer, may, at its own expense, enter into subservicing agreements
with subservicers (the "Subservicers") for the servicing and administration of
all or any part of the Receivables. References in this Agreement to actions
taken or to be taken by the Backup Servicer in servicing and managing the
Receivables include actions taken by a Subservicer on behalf of the Backup
Servicer. Each Subservicer shall be authorized to transact business in the state
or states in which the related Receivables it is to service or manage are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the applicable
subservicing agreement. Each subservicing agreement shall be upon such terms and
conditions as are not inconsistent with this Agreement and as to which the
Backup Servicer and the Subservicer have agreed. For purposes of this Agreement,
the Backup Servicer shall be deemed to have received any payment when the
Subservicer receives such payment. The
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Backup Servicer shall notify the Trustee, the Issuer, and the Rating Agency in
writing promptly upon the appointment of any Subservicer.
(b) As part of its servicing activities hereunder, the Backup Servicer,
for the benefit of the Trustee and the Noteholders, shall enforce the
obligations of each Subservicer under the related subservicing agreement. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of subservicing agreements and pursuit of other appropriate
remedies, shall be in accordance with the servicing standards set forth herein.
The Backup Servicer shall pay the costs of such enforcement at its own expense
and shall be reimbursed therefor only from (i) a general recovery resulting from
such enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Receivables, or (ii) a specific recovery
of costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.
(c) Notwithstanding any subservicing agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Backup
Servicer and a Subservicer, or reference to actions taken through a Subservicer
or otherwise, the Backup Servicer shall remain obligated and liable to the
Trustee and the Noteholders for the servicing, managing, collecting and
administering of the Receivables and the other assets included in the Trust
Estate in accordance with the provisions of Section 2.01 without diminution of
such obligation or liability by virtue of such subservicing agreement or
arrangements or by virtue of indemnification from a Subservicer and to the same
extent and under the same terms and conditions as if the Backup Servicer alone
were servicing, managing, collecting and administering the Receivables and the
other assets included in the Trust Estate.
SECTION 8.08 EVENTS OF DEFAULT.
"Event of Default" wherever used herein, means, with respect to Notes
issued hereunder, any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any amount due and owing on any Note
(which default continues for a period of two Business Days) or failure to pay
the Notes in full on or before the Final Payment Date;
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(b) if the Issuer shall breach or default in the due observance of the
covenants of the Issuer set forth in Section 6.07;
(c) if the Issuer shall breach, or default in the due observance or
performance of, any other of its covenants in this Agreement, which breach or
default would have a material adverse effect on the rights or interests of the
Noteholders, and such default shall continue for a period of 30 days after the
earlier to occur of (x) discovery by a Responsible Officer of the Servicer or
(y) the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Trustee and the Servicer by Noteholders evidencing not less than 25% of the
Voting Interests;
(d) if any representation or warranty of the Issuer made in this
Agreement or any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to have been breached in any material respect as
of the time when the same shall have been made or deemed made, which breach
would have a material adverse effect on the rights or interests of the
Noteholders, and such breach shall continue for a period of 30 days after the
earlier to occur of (x) discovery by a Responsible Officer of the Servicer or
(y) the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Trustee and the Servicer by Noteholders evidencing not less than 25% of the
Voting Interests;
(e) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Issuer in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future
federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or of any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer and the
continuance of any such decree or order unstayed and in effect for a period of
30 consecutive days;
(f) the commencement by the Issuer of a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other present or
future federal or state bankruptcy, insolvency or similar law, or the consent by
the Issuer to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or of any substantial part of its property or the making by the Issuer of
an assignment for the benefit of creditors or the failure by the Issuer
generally to
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pay its debts as such debts become due or the taking of corporate action by the
Issuer in furtherance of any of the foregoing;
(g) the occurrence and continuation of a Servicer Default;
(h) the IRS or the PBGC shall have filed notice of one or more Adverse
Claims against the Servicer, the Issuer or any of their ERISA Affiliates under
ERISA or the Code, which constitutes a Lien on the Receivables, and such notice
shall have remained in effect for more than thirty (30) Business Days unless,
prior to the expiration of such period, such Adverse Claims shall have been
adequately bonded by such Servicer, Issuer, or the ERISA Affiliate (as the case
may be) in a transaction with respect to which the Controlling Party has given
its prior written approval; or
(i) the Issuer or the Trust Estate shall have become subject to
registration as an "investment company" within the meaning of the Investment
Company Act as determined by a court of competent jurisdiction in a final and
non-appealable order.
SECTION 8.09 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in
every such case, so long as such Event of Default has not been cured or waived
pursuant hereto, the Trustee shall, upon the direction of the Controlling Party,
and may with the written consent of the Controlling Party, at its discretion, by
notice then given in writing to the Issuer and the Servicer, declare all of the
Notes to be immediately due and payable and upon any such declaration such
Notes, in an amount equal to the Note Balance of such Notes, together with
accrued and unpaid interest thereon to the date of such acceleration, any other
amount payable to the Noteholders hereunder or under the Purchase Agreement, and
together with all unpaid Trustee Fees, Backup Servicing Fees, Transition Fees
and Servicing Fees, shall become immediately due and payable; provided that upon
the occurrence of an Event of Default described in Section 8.08(e) or Section
8.08(f), such acceleration shall be deemed to occur automatically without any
action by the Controlling Party.
At any time after such a declaration of acceleration of maturity of the
Notes has been made and before a judgment or decree for payment of the money due
has been obtained by the Trustee as hereinafter in this Article provided, the
Controlling Party by written notice to the Issuer and the Trustee, may rescind
and annul such declaration and its consequences if:
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(a) the Issuer has paid or deposited with the Trustee a sum sufficient
to pay:
(i) all payments of principal of, and interest on, all Notes
and all other amounts which would then be due hereunder or upon such Notes if
the Event of Default giving rise to such acceleration had not occurred; and
(ii) all sums paid by the Trustee hereunder and the reasonable
compensation, expenses and disbursements of the Trustee, its agents and counsel;
and
(b) all Events of Default, other than the nonpayment of the principal
of Notes which have become due solely by such acceleration, have been cured or
waived as provided in Section 8.21.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 8.10 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
Subject to the following sentence, if an Event of Default occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Noteholders by any proceedings the Trustee deems
appropriate to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Agreement or in aid of the
exercise of any power granted herein, or enforce any other proper remedy. Any
proceedings brought by the Trustee on behalf of the Noteholders or by any
Noteholder against the Issuer shall be limited to the preservation, enforcement
and foreclosure of the liens, assignments, rights and security interests under
this Agreement and the other Transaction Documents and no attachment, execution
or other suit or process shall be sought, issued or levied upon any assets,
properties or funds of the Issuer, other than the Trust Estate. If there is a
foreclosure of any such liens, assignments, rights and security interests under
this Agreement, by private power of sale or otherwise, no judgment for any
deficiency upon the indebtedness represented by the Notes may be sought or
obtained by the Trustee or any Noteholder against the Issuer. The Trustee shall
be entitled to recover the costs and expenses expended by it pursuant to this
Section 8.10 including reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
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SECTION 8.11 REMEDIES.
If an Event of Default shall have occurred and be continuing
and the Notes have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Trustee (subject to
Section 8.24, to the extent applicable) shall, at the direction of the
Controlling Party, and may (with the written consent of the Controlling Party)
at its discretion, do one or more of the following:
(a) institute proceedings for the collection of all amounts then
payable on the Notes, under this Agreement or under any of the other Transaction
Documents, whether by declaration or otherwise, enforce any judgment obtained,
and collect from the Issuer monies adjudged due, subject in all cases to the
provisions of Section 8.10;
(b) in accordance with Section 8.24, sell the Trust Estate or any
portion thereof or rights or interest therein, at one or more public or private
Sales called and conducted in any manner permitted by law;
(c) institute proceedings from time to time for the complete or partial
foreclosure of this Agreement with respect to the Trust Estate;
(d) exercise any remedies of a secured party under the UCC and take any
other appropriate action to protect and enforce the rights and remedies of the
Trustee or the Noteholders hereunder; and
(e) refrain from selling the Trust Estate and apply all Available Funds
pursuant to Section 8.14.
SECTION 8.12 TRUSTEE MAY FILE PROOFS OF CLAIM
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, composition or other judicial
proceeding relative to the Issuer or any other obligor upon any of the Notes or
the property of the Issuer or of such other obligor or their creditors, the
Trustee (irrespective of whether the Notes shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Issuer for the payment of any overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise to:
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(a) file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Noteholders allowed in such Proceeding, and
(b) collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any receiver,
assignee, trustee, liquidator, or sequestrator (or other similar official) in
any such proceeding is hereby authorized by each Noteholder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Noteholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 9.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting any of the
Notes or the rights of any Noteholder, or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such Proceeding.
SECTION 8.13 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Agreement or any of the
Notes or any of the other Transaction Documents may be prosecuted and enforced
by the Trustee without the possession of any of the Notes or the production
thereof in any proceeding relating thereto, and any such proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express trust,
and any recovery of judgment shall be for the ratable benefit of the Noteholders
in respect of which such judgment has been recovered and shall be paid as
provided in Section 8.14.
SECTION 8.14 APPLICATION OF MONEY COLLECTED.
If the Notes have been declared due and payable following an Event of
Default and such declaration and its consequences have not been rescinded
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and annulled, any money collected by the Trustee with respect to such Notes
pursuant to this Article or otherwise and any other monies that may then be held
or thereafter received by the Trustee as security for such Notes shall be
treated like Available Funds and applied as provided in Section 4.04(b).
SECTION 8.15 LIMITATION ON SUITS.
No Noteholder shall have any right to institute any proceedings,
judicial or otherwise, with respect to this Agreement, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Noteholder has previously given written notice to the Trustee
of a continuing Event of Default;
(b) The Controlling Party shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(c) such Noteholders have offered to the Trustee indemnity in full
against the costs, expenses and liabilities to be incurred in compliance with
such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Controlling Party;
it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Agreement to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Agreement, except in the
manner herein provided and for the equal and ratable benefit of all the
Noteholders.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Noteholders, each representing
less than 50% of the Voting Interests, the Trustee in its sole discretion may
determine what action, if any, shall be taken notwithstanding any other
provision herein to the contrary.
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SECTION 8.16 UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND INTEREST.
Subject to the provisions in this Agreement (including Section 8.10)
limiting the right to recover amounts due on a Note to recovery from amounts in
the Trust Estate, the Noteholder shall have the right to the extent permitted by
applicable law, which right is absolute and unconditional, to receive payment of
principal of and interest on such Note on the Final Payment Date and to
institute suit for the enforcement of any such payment and such right shall not
be impaired without the consent of such Noteholder.
SECTION 8.17 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Noteholder 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 Trustee or to such Noteholder, then and in every such case the Issuer, the
Trustee and the Noteholders shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the
Noteholders shall continue as though no such proceeding had been instituted.
SECTION 8.18 RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the Trustee or
to the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 8.19 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Noteholder to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right
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or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
SECTION 8.20 CONTROL BY CONTROLLING PARTY.
The Controlling Party shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee; PROVIDED that:
(a) such direction shall not be in conflict with any rule of law or
with this Agreement;
(b) any direction by Noteholders to the Trustee to undertake a Sale of
the Trust Estate shall be by the Controlling Party; and
(c) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction; PROVIDED, HOWEVER, that, subject
to Section 9.01, the Trustee need not take any action which it determines might
involve it in liability or be unjustly prejudicial to the Noteholders not
consenting.
SECTION 8.21 WAIVER OF PAST DEFAULTS.
The Controlling Party may on behalf of all the Noteholders waive any
past default hereunder and its consequences, except a default:
(a) in the payment of any installment of principal of or interest on,
any Note; or
(b) in respect of a covenant or provision hereof which under Section
11.01 cannot be modified or amended without the consent of all of the
Noteholders.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Agreement; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
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SECTION 8.22 UNDERTAKING FOR COSTS.
All parties to this Agreement agree, and each Noteholder by his
acceptance of a Note hereunder shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Agreement, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 8.22 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Noteholder, or group of Noteholders
representing more than 10% of the Voting Interests, or to any suit instituted by
any Noteholder for the enforcement of the payment of principal of or interest on
any Note on the Final Payment Date.
SECTION 8.23 WAIVER OF STAY OR EXTENSION LAWS.
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension of law wherever enacted,
now or at any time hereafter in force, which may affect the covenants in, or the
performance of, this Agreement; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 8.24 SALE OF TRUST ESTATE.
(a) The power to effect any sale (a "Sale") of any portion of the Trust
Estate pursuant to Section 8.11 shall not be exhausted by any one or more Sales
as to any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate shall have been sold or all amounts
payable on the Notes and under this Agreement with respect thereto
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shall have been paid. The Trustee may from time to time postpone any public Sale
by public announcement made at the time and place of such Sale.
(b) To the extent permitted by law, the Trustee shall not in any
private Sale sell or otherwise dispose of the Trust Estate, or any portion
thereof, unless the Controlling Party shall consent to, or direct the Trustee to
make such Sale.
(c) Unless the Controlling Party has otherwise consented or directed
the Trustee, at any public Sale of all or any portion of the Trust Estate at
which a minimum bid equal to or greater than the entire amount that would be
distributable to the Noteholders in full payment of the Notes in accordance with
Section 8.14 has not been established by the Trustee and no Person bids an
amount equal to or greater than such amount, the Trustee shall prevent such sale
and bid an amount at least $1.00 more than the highest other bid in order to
preserve the Trust Estate. The purchase by the Trustee of all or any portion of
the Trust Estate at a private Sale shall not be deemed a Sale or disposition
thereof for purposes of this Section 8.24(c).
(d) In connection with a Sale of all or any portion of the Trust
Estate:
(i) any of the Noteholders may bid for and purchase the
property offered for Sale, and upon compliance with the terms of sale may hold,
retain and possess and dispose of such property, without further accountability,
and may, in paying the purchase money therefor, deliver any of the Notes or
claims for interest thereon in lieu of cash up to the amount which shall, upon
distribution of the net proceeds of such Sale, be payable thereon, and such
Notes, in case the amounts so payable thereon shall be less than the amount due
thereon, shall be returned to the holders thereof after being appropriately
stamped to show such partial payment;
(ii) the Trustee may bid for and acquire the property offered
for Sale in connection with any public Sale thereof, and, in lieu of paying cash
therefor, may make settlement for the purchase price by crediting the gross Sale
price against the sum of (A) the amount which would be distributable to the
Noteholders as a result of such Sale in accordance with Section 8.14 on the
Payment Date next succeeding the date of such Sale and (B) the expenses of the
Sale and of any proceedings in connection therewith which are reimbursable to
it, without being required to produce the Notes in order to complete any such
Sale or in order for the net Sale price to be credited against such Notes and
any property so acquired by the Trustee shall be held and dealt with by it in
accordance with the provisions of this Agreement;
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(iii) the Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the Trust
Estate in connection with a Sale thereof;
(iv) the Trustee is hereby irrevocably appointed the agent and
attorney-in-fact of the Issuer to transfer and convey its interest in any
portion of the Trust Estate in connection with a Sale thereof, and to take all
action necessary to effect such Sale; and
(v) no purchaser or transferee at such a Sale shall be bound
to ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(e) Notwithstanding anything in this Agreement to the contrary, if an
Event of Default specified in Section 8.08(a) is the Event of Default, or one of
the Events of Default, on the basis of which the Notes have been declared due
and payable, then the Trustee shall, at the direction of the Controlling Party,
or may, in its discretion (together with the written consent of the Controlling
Party), sell the Trust Estate without compliance with this Section 8.24.
SECTION 8.25 ACTION ON NOTES.
The Trustee's right to seek and recover judgment under this Agreement
shall not be affected by the seeking, obtaining or application of any other
relief under or with respect to this Agreement. Neither the Lien of this
Agreement nor any rights or remedies of the Trustee or the Noteholders shall be
impaired by the recovery of any judgment by the Trustee against the Issuer or by
the levy of any execution under such judgment upon any portion of the Trust
Estate.
SECTION 8.26 NO RECOURSE TO OTHER TRUST ESTATES OR OTHER ASSETS OF THE
ISSUER.
The Trust Estate granted to the Trustee as security for the Notes
serves as security only for the Notes. Holders of the Notes shall have no
recourse against the trust estate granted as security for any other series of
notes issued by the Issuer, and no judgment against the Issuer for any amount
due with respect to the Notes may be enforced against either the trust estate
securing any other series or any other assets of the Issuer, nor may any
prejudgment lien or other attachment be sought against any such other trust
estate or any other assets of the Issuer.
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SECTION 8.27 LICENSE.
Servicer hereby licenses to each "Qualified Successor
Servicer" (hereinafter defined) on a non-exclusive basis, a copy of Servicer's
"Mozart" software currently in use by Servicer for the collection of accounts by
Servicer, solely for the limited purpose of collecting the Receivables. The
licensee shall have no right to copy the software or sub-license or assign this
license except to another "Qualified Successor Servicer". The licensee shall not
be obligated to pay any royalty or other fee to Servicer for such license. The
term "Qualified Successor Servicer" means any Successor Servicer (or Subservicer
thereof) which has not, nor has any Affiliate thereof, within the two year
period immediately prior to its appointment as Successor Servicer (or
Subservicer, as the case may be), purchased accounts for the purpose of
collecting them and retaining all or a portion of the proceeds for itself. The
Qualified Successor Servicer shall sign a confidentiality agreement reasonably
satisfactory to Servicer in form and substance under which it agrees to maintain
the confidentiality of the software. The Servicer hereby represents that it has
all right, title and interest in and to its "Mozart" software necessary to grant
a royalty-free license to the Qualified Successor Servicer as provided herein.
ARTICLE IX
THE TRUSTEE
SECTION 9.01 DUTIES OF TRUSTEE.
(a) The Trustee, both prior to and after the occurrence of a Servicer
Default, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. The Trustee shall exercise such of the
rights and powers vested in it by this Agreement and use the same degree of care
and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; PROVIDED, HOWEVER, that
if the Trustee in its capacity as Backup Servicer assumes the duties of the
Servicer pursuant to Section 8.02 or 8.03, the Trustee in performing such duties
shall use the degree of skill and attention customarily exercised by a servicer
with respect to defaulted consumer receivables that it services for itself or
others.
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(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that shall be specifically required to be furnished pursuant to
any provision of this Agreement shall examine them to determine whether they
conform to the requirements of this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, its own bad faith or its own willful misfeasance; PROVIDED, HOWEVER,
that:
(i) prior to the occurrence of a Servicer Default actually
known to a Responsible Officer of the Trustee, and after the curing or waiving
of all such Servicer Defaults that may have occurred, the duties and obligations
of the Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement, no
implied rights or obligations shall be read into this Agreement against the
Trustee, the permissive right of the Trustee to do things enumerated in this
Agreement shall not be construed as a duty and, in the absence of bad faith on
the part of the Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer of the Trustee, unless
it shall be proved that the Trustee was negligent in performing its duties in
accordance with the terms of this Agreement; and
(iii) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken in good faith in accordance
with the direction of Noteholders evidencing not less than 25% of the Voting
Interests (unless a different percentage is otherwise specifically set forth
herein with respect to any applicable action);
in each case relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
under this Agreement, or in the exercise of any of its rights or powers, if
there
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shall be reasonable grounds for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee in its capacity as Backup Servicer shall be
the successor to, and be vested with the rights, duties, powers and privileges
of, the Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the security interests
created or existing under any Receivable or to impair the value of any
Receivable.
(f) All information obtained by the Trustee regarding the Obligors and
the Receivables, whether upon the exercise of its rights under this Agreement or
otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person, unless such disclosure is required by this
Agreement or any applicable law or regulation.
SECTION 9.02 TRUSTEE'S CERTIFICATE.
On or as soon as practicable after each date on which the Servicer or
Issuer acquires Removed Receivables, the Trustee, upon receipt of written notice
of such acquisition, shall submit to the Servicer or the Issuer, as applicable,
a Trustee's Certificate (substantially in the form attached hereto as Exhibit
B), identifying the acquirer and the Receivables so acquired, executed by the
Trustee and completed as to its date and the date of this Agreement, and
accompanied by a copy of the Monthly Servicer Report and the Servicer's
Remittance Date Certificate for the related Collection Period. The Trustee's
Certificate submitted with respect to such Payment Date shall operate, as of
such Payment Date, as an assignment without recourse, representation or
warranty, to the Issuer or the Servicer, as the case may be, of all the
Trustee's right, title and interest in and to such Removed Receivable and to the
other property conveyed to the Trust Estate pursuant to Section 2.01 with
respect to such Removed Receivable, and all security and documents relating
thereto, such assignment being an assignment outright and not for security.
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SECTION 9.03 TRUSTEE'S RELEASE OF REMOVED RECEIVABLES.
With respect to all Removed Receivables, the Trustee shall, by a
Trustee's Certificate (substantially in the form attached hereto as Exhibit B),
release all the Trustee's right, title and interest in and to each Removed
Receivable and the other property included in the Trust Estate pursuant to
Section 2.01 with respect to such Removed Receivable, and all security and any
documents relating thereto; and the Issuer or the Servicer, as applicable, shall
thereupon own each such Removed Receivable, and all such related security and
documents, free of any further obligation to the Trustee or the Noteholders with
respect thereto. If in any enforcement suit or legal proceeding it is held that
the Servicer may not enforce a Removed Receivable on the ground that it is not a
real party in interest or a holder entitled to enforce such Removed Receivable,
the Trustee on behalf of the Noteholders shall, at the Servicer's written
direction and expense, take such reasonable steps as the Trustee deems necessary
to enforce the Removed Receivable, including bringing suit in the Trustee's name
or the names of the Noteholders.
SECTION 9.04 CERTAIN MATTERS AFFECTING THE TRUSTEE.
Except as otherwise provided in Section 9.01:
(i) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate, certificate
of auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and any advice of
counsel or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it under
this Agreement in good faith and in accordance with such advice of counsel or
Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation under this Agreement or in relation to this Agreement,
at the request, order or direction of any of the Noteholders pursuant to the
provisions of this Agreement, unless such Noteholders shall have offered to the
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Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby (the general obligation of
an institutional investor that is investment grade rated being sufficient
indemnity); nothing contained in this Agreement shall, however, relieve the
Trustee of the obligations, upon the occurrence of a Servicer Default actually
known to a Responsible Officer of the Trustee (that shall not have been cured or
waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(v) prior to the occurrence of a Servicer Default or Event of
Default and after the curing or waiving of all Servicer Defaults or Event of
Defaults that may have occurred, the Trustee shall not be bound to make any
investigation into the facts of matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by the Noteholders evidencing not less than 25% of the Voting Interests;
PROVIDED, HOWEVER, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to so proceeding; the reasonable expense of every such
examination shall be paid by the Issuer or, if paid by the Trustee, shall be
reimbursed by the Issuer upon demand; and nothing in this clause shall derogate
from the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors; and
(vi) the Trustee may execute any of the trusts or powers under
this Agreement or perform any duties under this Agreement either directly or by
or through agents or attorneys or a custodian and shall not be liable or
responsible for the misconduct or negligence of any of its agents or attorneys
or a custodian appointed with due care by the Trustee.
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SECTION 9.05 LIMITATION ON TRUSTEE'S LIABILITY.
The Trustee makes no representations as to the validity or sufficiency
of this Agreement or of the Notes (other than the certificate of authentication
thereon, as applicable), or of any Receivable or related document. The Trustee
shall have no obligation to perform any of the duties of the Issuer or the
Servicer unless explicitly set forth in this Agreement. The Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any security interest in any Receivable, or the
perfection and priority of such a security interest or the maintenance of any
such perfection and priority, or for or with respect to the efficacy of the
Trust Estate or its ability to generate the payments to be paid to Noteholders
under this Agreement, including without limitation the existence and contents of
any Receivable or any computer file or other record thereof; the validity of the
assignment of any Receivable to the Trustee or of any intervening assignment;
the completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by the Issuer or the Servicer with any covenant or
the breach by the Issuer or the Servicer of any warranty or representation made
under this Agreement or in any related document and the accuracy of any such
warranty or representation prior to the Trustee's receipt of notice or other
discovery of any noncompliance therewith or any breach thereof, any investment
of monies by the Issuer or any loss resulting therefrom (it being understood
that the Trustee shall remain responsible as Trustee for any property that it
may hold as part of the Trust Estate); the acts or omissions of the Issuer, the
Servicer or any Obligor; any action of the Servicer taken in the name of or as
the agent of the Trustee; or any action by the Trustee taken at the instruction
of the Servicer; PROVIDED HOWEVER, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement. Except
with respect to a claim based on the failure of the Trustee to perform its
duties under this Agreement or based on the Trustee's negligence, willful
misconduct or bad faith, no recourse shall be had for any claim based on any
provision of this Agreement, the Notes or any Receivable or assignment thereof
against the institution serving as Trustee in its individual capacity. The
Trustee shall not have any personal obligation, liability or duty whatsoever to
any Noteholder or any other Person with respect to any such claim, and any such
claim shall be asserted solely against the Trust Estate or any indemnitor who
shall furnish indemnity as provided in this Agreement. The Trustee shall not be
accountable for the use or application by the Issuer of the Notes or the
proceeds thereof, if any, or for the use or application of any funds paid to or
collected by the Servicer in respect of the Receivables. The Trustee shall have
no responsibility for filing any financing or continuation statement in any
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public office at any time or to otherwise perfect or maintain the perfection of
any security interest or lien granted to it hereunder (unless the Trustee in its
capacity as Backup Servicer shall have become the Successor Servicer) or to
prepare or file any Securities and Exchange Commission filing with respect to
the Notes or to record this Agreement.
The recitals contained in this Agreement and in the Notes, except the
certificates of authentication on the Notes, shall be taken as the statements of
the Issuer, and the Trustee assumes no responsibility for their correctness or
completeness. The Trustee makes no representations as to the validity or
condition of any Trust Estate or any part thereof, or as to the title of the
Issuer thereto or as to the security afforded thereby or hereby, or as to the
validity or genuineness of any securities at any time pledged and deposited with
the Trustee hereunder or as to the validity or sufficiency of this Agreement or
the Notes. The Trustee shall not be accountable for the use or application by
the Issuer of the Notes or the proceeds thereof or of any money paid to the
Issuer under any provisions hereof.
The Trustee will not be responsible for any losses incurred in
connection with investments in Permitted Investments made in accordance with the
terms of this Agreement, other than losses arising out of the Trustee's
negligence, bad faith or willful misconduct.
SECTION 9.06 TRUSTEE MAY OWN NOTES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes. The Trustee in its individual or any other capacity
may deal with the Issuer and the Servicer in banking transactions, with the same
rights as it would have if it were not the Trustee.
SECTION 9.07 TRUSTEE'S FEES AND EXPENSES.
The Trustee shall be entitled to reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts created by this Agreement and in the exercise and performance of any
of the powers and duties of the Trustee under this Agreement, which shall equal
the Trustee Fee, paid as provided in Section 4.04, and payment or reimbursement
for all reasonable expenses and disbursements (including the reasonable
compensation and the expenses and disbursements of its counsel
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and of all persons not regularly in its employ) incurred or made by the Trustee
in defense of any action brought against it in connection with this Agreement
except any such expense or disbursement as may arise from its negligence,
willful misfeasance or bad faith or that is the responsibility of Noteholders
under this Agreement. Additionally, the Servicer, pursuant to Section 7.02,
shall indemnify the Trustee with respect to certain matters.
SECTION 9.08 INDEMNITY OF TRUSTEE, BACKUP SERVICERS AND SUCCESSOR
SERVICER.
Upon the appointment of a Backup Servicer or a Successor Servicer
pursuant to Section 8.02 or 8.03, such Backup Servicer, Successor Servicer and
the Trustee and their respective agents and employees shall be indemnified by
the Trust Estate and held harmless against any loss, liability, or expense
(including reasonable attorney's fees and expenses) arising out of or incurred
in connection with the acceptance of performance of the trusts and duties
contained in this Agreement to the extent that (i) the Successor Servicer,
Backup Servicer or the Trustee, as the case may be, shall not be indemnified for
such loss, liability or expense by the Servicer pursuant to Section 8.02 or
8.03; (ii) such loss, liability, or expense shall not have been incurred by
reason of the Successor Servicer's, the Backup Servicer's or the Trustee's
willful misfeasance, bad faith or negligence; and (iii) such loss, liability or
expense shall not have been incurred by reason of the Successor Servicer's, the
Backup Servicer's or the Trustee's breach of its respective representations and
warranties pursuant to Sections 8.02, 8.03, 9.09 and 9.14, respectively.
The Successor Servicer, the Backup Servicer and/or the Trustee shall be
entitled to the indemnification provided by this Section only to the extent all
amounts due the Servicer and all Noteholders pursuant to Section 4.04 have been
paid in full and all amounts required to be deposited in the Reserve Account
with respect to any Payment Date pursuant to Section 4.05 have been so
deposited.
SECTION 9.09 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
Except as otherwise provided in this Agreement, the Trustee under this
Agreement shall at all times be a Person having its corporate trust office in
the same state (or the District of Columbia or the Commonwealth of Puerto Rico)
as the location of the Corporate Trust Office as specified in this Agreement;
organized and doing business under the laws of such state (or the District of
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Columbia or the Commonwealth of Puerto Rico) or the United States; authorized
under such laws to exercise corporate trust powers; having a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authorities; and shall have the highest available long-term
unsecured debt rating by the Required Rating Agencies then providing such a
rating or be otherwise acceptable to the Rating Agency and the Controlling
Party, as evidenced by a letter to such effect from the Rating Agency (which
acceptance may be evidenced in the form of a letter, dated on or shortly before
the Closing Date, assigning an initial rating to the Notes).
If the Trustee shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 9.10.
SECTION 9.10 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign and be discharged from the
trusts created by this Agreement by giving at least 30 days' prior written
notice thereof to the Servicer and the Noteholders. Upon receiving such notice
of resignation, the Servicer shall promptly appoint a successor Trustee
acceptable to the Noteholders by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.09, or shall breach its representations or
duties hereunder in any material respect, and shall fail to resign after written
request therefor by the Servicer, or the Controlling Party, or if at any time
the Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the
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Controlling Party may remove the Trustee. If the Trustee is removed under the
authority of the immediately preceding sentence, the Servicer shall promptly
appoint a successor Trustee acceptable to the Controlling Party, by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor Trustee, and pay all fees owed
to the outgoing Trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.11. The Servicer shall give the Rating Agency, the
Placement Agent and the Noteholders notice of any such resignation or removal of
the Trustee and appointment and acceptance of a successor Trustee.
SECTION 9.11 SUCCESSOR TRUSTEE.
Any successor Trustee appointed as provided in Section 9.10 shall
execute, acknowledge and deliver to the Servicer and to its predecessor Trustee
an instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee. The predecessor Trustee shall deliver to the successor Trustee all
documents and statements held by it under this Agreement; and the Servicer and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations. No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 9.09. Upon acceptance of appointment by
a successor Trustee as provided in this Section, the Servicer shall mail notice
of the successor of such Trustee under this Agreement to all Noteholders at
their addresses as shown in the Note Register and shall give notice by mail to
the Rating Agency and the Placement Agent. If the Servicer fails to mail such
notice within ten days after acceptance of appointment by the successor Trustee,
the successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
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SECTION 9.12 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person (i) into which the Trustee may be merged or consolidated,
(ii) which may result from any merger, conversion, or consolidation to which the
Trustee shall be a party or (iii) which may succeed to all or substantially all
the corporate trust business of the Trustee, which Person executes an agreement
of assumption to perform every obligation of the Trustee under this Agreement,
shall be the successor of the Trustee hereunder, provided such Person shall be
eligible pursuant to Section 9.09, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. Notice of any such merger shall be given
by the Trustee to the Rating Agency, the Placement Agent and the Noteholders.
SECTION 9.13 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate may at the time be located, the Servicer and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee, jointly with the Trustee or separate trustee or separate trustees,
of all or any part of the Trust Estate, and to vest in such Person, in such
capacity and for the benefit of the Noteholders, such title to the Trust Estate,
or any part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in the case a Servicer Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee under this Agreement shall be required to meet the terms of
eligibility as a successor trustee pursuant to Section 9.09 and no notice of a
successor Trustee pursuant to Section 9.11 and no notice to the Noteholders of
the appointment of any co-trustee or separate trustee shall be required pursuant
to Section 9.11.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
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(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or performed by
the Trustee and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act separately
without the Trustee joining in such act), except to the extent that under any
law of any jurisdiction in which any particular act or acts are to be performed
(whether as Trustee under this Agreement or as successor to the Servicer under
this Agreement), the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement;
(iii) the Servicer and the Trustee acting jointly (or during
the continuation of a Servicer Default, the Trustee alone) may at any time
accept the resignation of or remove any separate trustee or co-trustee; and
(iv) the Trustee shall remain primarily liable for the actions
of any separate trustees and co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Section. Each separate trustee and co-trustee, upon its acceptance of
the powers conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
including, but not limited to, every provision of this Agreement relating to the
conduct of, affecting the liability of, or affording protection to, the Trustee.
Each such instrument shall be filed with the Trustee and a copy thereof given to
the Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties,
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rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee. Notwithstanding anything to the contrary in this Agreement, the
appointment of any separate trustee or co-trustee shall not relieve the Trustee
of its obligations and duties under this Agreement.
SECTION 9.14 REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The Trustee hereby makes the following representations and warranties
on which the Issuer and the Noteholders are relying:
(i) Organization and Good Standing. The Trustee is a national
banking association duly organized, validly existing and in good standing;
(ii) Power and Authority. The Trustee has full power,
authority and right to execute, deliver and perform this Agreement and has taken
all necessary action to authorize the execution, delivery and performance by it
of this Agreement;
(iii) No Violation. The execution, delivery and performance by
the Trustee of this Agreement (a) shall not violate any provision of any law
governing the banking and trust powers of the Trustee or, to the best of the
Trustee's knowledge, any order, writ, judgment, or decree of any court,
arbitrator, or governmental authority applicable to the Trustee or any of its
assets, (b) shall not violate any provision of the charter or by-laws of the
Trustee, and (c) shall not violate any provision of, or constitute, with or
without notice or lapse of time, a default under, or result in the creation or
imposition of any Lien on any properties included in the Trust Estate pursuant
to the provisions of any mortgage, indenture, contract, agreement or other
undertaking to which it is a party, which violation, default or Lien could
reasonably be expected to materially and adversely affect the Trustee's
performance or ability to perform its duties under this Agreement or the
transactions contemplated in this Agreement;
(iv) No Authorization Required. The execution, delivery and
performance by the Trustee of this Agreement shall not require the
authorization, consent, or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action in respect of, any
governmental authority or agency regulating the banking and corporate trust
activities of the Trustee; and
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(v) Duly Executed. This Agreement shall have been duly
executed and delivered by the Trustee and shall constitute the legal, valid, and
binding agreement of the Trustee, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
generally or by general principles of equity.
SECTION 9.15 TAX RETURNS.
In the event the Trustee shall be required to file tax returns on
behalf of the Trust Estate, the Servicer shall prepare or shall cause to be
prepared any tax returns required to be filed by the Trust Estate and shall
remit such returns to the Trustee for signature at least five days before such
returns are due to be filed. The Trustee, upon request, shall furnish the
Servicer with all such information known to the Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust
Estate, and shall, upon request, execute such returns.
SECTION 9.16 [DELETED]
SECTION 9.17 SUIT FOR ENFORCEMENT.
If a Servicer Default shall occur and be continuing, the Trustee, in
its discretion may, subject to the provisions of Section 9.01, proceed to
protect and enforce its rights and the rights of the Noteholders under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy as the
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee or the Noteholders.
SECTION 9.18 RIGHTS OF CONTROLLING PARTY TO DIRECT TRUSTEE.
The Controlling Party shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee; PROVIDED, HOWEVER,
that
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subject to Section 9.01, the Trustee shall have the right to decline to follow
any such direction if the Trustee being advised by counsel determines that the
action so directed may not lawfully be taken, or if the Trustee in good faith
shall, by a Responsible Officer of the Trustee, determine that the proceedings
so directed would be illegal or subject it to personal liability or be unduly
prejudicial to the rights of the Noteholders not parties to such direction;
PROVIDED, FURTHER, HOWEVER, that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction by the Noteholders.
SECTION 9.19 CONFIDENTIAL INFORMATION.
The Trustee acknowledges that, in the course of meeting its respective
duties and obligations under this Agreement, it may obtain information relating
to the Servicer or the Issuer which is of a confidential and proprietary nature
("Proprietary Information"). Such Proprietary Information may include, but is
not limited to, non-public trade secrets, know how, invention techniques,
processes, programs, schematics, software source documents, data, and financial
information. The Trustee shall at all times, both during the term of this
Agreement and for a period of three (3) years after its termination, keep in
trust and confidence all such Proprietary Information, and shall not use such
Proprietary Information other than in the course of its duties under this
Agreement, nor shall the Trustee disclose any such Proprietary Information
without the written consent of the Servicer or the Issuer unless legally
required to disclose such information. The Trustee further agrees to immediately
return all Proprietary Information (including copies thereof) in its possession,
custody, or control upon termination of this Agreement for any reason.
The Trustee shall not disclose, advertise or publish the existence or
the terms or conditions of this Agreement without prior written consent of the
Servicer or the Issuer. Notwithstanding any provision of this Agreement to the
contrary, this Section 9.19 shall not prohibit disclosure of information that is
required to be disclosed by the Trustee (i) pursuant to federal or state laws or
regulation, or (ii) in a judicial, administrative or governmental proceeding, or
(iii) to a Person which is then acting as Trustee's agent in servicing
activities hereunder, but only (notwithstanding any other provision of this
Agreement) to the extent necessary for such agent to carry out such activities,
and only if such person has signed a confidentiality agreement with Creditrust
Corporation, and only if such disclosure occurs during the continuation of an
Event of Default or Servicer Default In particular the Trustee agrees that it
shall not, without the prior consent of the Servicer or the Issuer, disclose the
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existence of this Agreement or any of the terms herein to any Person other than
counsel to the Trustee or an employee or director of the Trustee with a need to
know in order to implement this Agreement and only if such employee or director
or counsel agrees to maintain the confidentiality of this Agreement. The parties
hereto agree that the Servicer and/or the Issuer shall have the right to enforce
these nondisclosure provisions by an action for specific performance filed in
any court of competent jurisdiction in the State of Maryland.
ARTICLE X
REDEMPTION
SECTION 10.01 REDEMPTION AT THE OPTION OF THE ISSUER; ELECTION TO
REDEEM.
The Issuer shall have the option to redeem the Notes in full on any
Payment Date on or after the Payment Date on which the Note Balance is less than
10% of the Original Note Balance. The election of the Issuer to redeem the Notes
pursuant to this Section shall be evidenced by delivery to the Trustee no later
than the tenth day of the month preceding the month in which the Payment Date as
of which such redemption will be effected occurs of an Officer's Certificate of
the Issuer stating the Issuer's intention to redeem the Notes and specifying the
Redemption Amount therefor. No prepayment premium or penalty is payable with
respect to any such redemption.
SECTION 10.02 DEPOSIT OF REDEMPTION AMOUNT.
In the case of any redemption pursuant to Section 10.01, the Issuer
shall, on or before the Remittance Date preceding the Payment Date on which such
redemption is to be effected, deposit in the Note Payment Account pursuant to
Section 4.03 an amount equal to the Redemption Amount (plus any additional
amount necessary, after taking into account all amounts in the Collection
Account, Note Payment Account and Reserve Account, to pay all due but unpaid
Trustee expenses, Transition Fees and Trustee Fees, collectively, the
"Supplemental Redemption Amount") and shall thereafter succeed to all interests
in and to the Trust Estate subject to Section 2.11. The Redemption Amount and
the Supplemental Redemption Amount shall be paid as provided in Section 4.04(b).
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SECTION 10.03 NOTICE OF REDEMPTION BY THE TRUSTEE.
Upon receipt of notice from the Issuer of its election to redeem the
Notes pursuant to Section 10.01 and deposit by the Issuer of the Redemption
Amount and the Supplemental Redemption Amount pursuant to Section 10.02, the
Trustee shall provide notice of redemption of the Notes by first class mail,
postage prepaid, mailed no later than the Business Day following the date on
which such deposit was made to each Noteholder at such Noteholder's address as
listed in the Note Register. Notice of redemption of Notes shall be given by the
Trustee in the name and at the expense of the Issuer, as applicable.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01 AMENDMENT.
(a) Without notice to or the consent of the Noteholders, the Servicer,
the Issuer and the Trustee may at any time or from time to time supplement,
modify or amend this Agreement for one or more of the following purposes:
(i) to grant to or confer upon the Trustee for the benefit of
the Noteholders any additional rights, remedies, powers, authority or
security that may lawfully be granted to or conferred upon the Trustee
for the benefit of such Noteholders;
(ii) to add to the covenants and agreements of the Servicer or
the Issuer contained in this Agreement;
(iii) to surrender any right, power or privilege reserved to
or conferred upon the Servicer or Issuer by this Agreement;
(iv) to cure any ambiguity or to cure or correct any defect or
inconsistent provisions contained in this Agreement or to make such
provisions in regard to matters or questions arising under this
Agreement as may be necessary or desirable and not contrary to or
inconsistent with this Agreement, or to add or provide any credit
enhancement; or
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(v) to make any other change in this Agreement which the
Issuer determines shall not prejudice in any material respect the
rights of the Noteholders at the date as of which such change shall
become effective.
(b) With the prior written consent of the Controlling Party, the
Servicer, the Issuer and the Trustee may at any time and from time to time
supplement, modify or amend any of the terms or provisions of this Agreement;
PROVIDED, HOWEVER, that nothing contained herein shall permit (i) a change in
any terms of redemption of any Note, the payment of the principal of or interest
on any Note or any reduction in the principal, prepayment or redemption price or
purchase price of or interest rate on any Note, (ii) a preference or priority of
any Note over any other Note or (iii) a reduction in the percentage of Voting
Interests that is required for any supplement, modification or amendment of this
Agreement without the consent of all Noteholders affected thereby.
(c) Prior to the execution of any amendment or consent thereto pursuant
to this Section 11.01, the Trustee shall furnish written notification of the
substance of such amendment or consent to the Rating Agency and the Placement
Agent.
(d) Promptly after the execution of any amendment or consent thereto
pursuant to Section 11.01(b), the Trustee shall furnish written notification of
the substance of such amendment or consent to each Noteholder. It shall not be
necessary for the consent of Noteholders pursuant to Section 11.01(b) to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization by Noteholders of
the execution thereof shall be subject to such reasonable requirements as the
Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise. Any amendment pursuant to subsection (a) shall be
effective only upon receipt by the Trustee of an Opinion of Counsel to the
effect that such amendment will not have a material adverse effect upon the
interests of the Noteholders.
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(f) There will be no change in the identity of the Servicer, the Backup
Servicer or the Trustee without the prior written consent of the Controlling
Party, subject to the rights of the Backup Servicer and the Trustee to resign in
accordance with the provisions of this Agreement.
SECTION 11.02 PROTECTION OF TITLE TO TRUST ESTATE.
(a) Either of the Issuer or the Servicer or both shall execute and file
such financing statements and cause to be executed and filed such continuation
and other statements, all in such manner and in such places as may be required
by law fully to preserve, maintain and protect the interests of the Noteholders
and the Trustee under this Agreement in the Receivables and in the proceeds
thereof and any other Trust Property. Each of the Issuer and the Servicer shall
deliver (or cause to be delivered) to the Trustee file-stamped copies of, or
filing receipts for, any document filed as provided, above, as soon as available
following such filing.
(b) Neither the Issuer nor the Servicer shall change its name, identity
or organizational structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with paragraph
(a) above seriously misleading within the meaning of Section 9-402(7) of the
UCC, unless it shall have given the Trustee at least 10 days' prior written
notice thereof and shall have filed within 30 days after such change appropriate
amendments to all such previously filed financing statements or continuation
statements.
(c) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each, if applicable) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Accounts (or any
of them) in respect of such Receivables.
(d) The Servicer shall maintain its computer records so that, from and
after the time of the grant of a security interest in the Receivables and other
Trust Property under this Agreement to the Trustee for the benefit of the
Noteholders, the Servicer's master computer records (including any back-up
archives) that refer to any Receivables indicate clearly the interest of the
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Trustee in such Receivables. Indication of the Trustee's interest in a
Receivable shall be deleted from or modified on the Servicer's computer records
when, and only when, the Receivable has been paid in full, acquired or assigned
pursuant to this Agreement.
(e) If at any time Issuer or Servicer propose to assign, convey, grant
a security interest in, or otherwise transfer any interest in defaulted consumer
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective acquirer, lender or other transferee
computer tapes, records or print-outs (including any restored from back-up
archives) that, if they refer in any manner whatsoever to any Receivable,
indicate clearly that such Receivable is subject to a security interest in favor
of the Trustee unless such Receivable has been paid in full, acquired or
assigned pursuant to this Agreement.
(f) The Servicer shall permit the Trustee and its agents, upon not less
than two Business Days' prior written notice and during normal business hours,
to inspect, audit and make copies of and abstracts from the Servicer's records
regarding any Receivables then or previously included in the Trust Estate.
Nothing in this Section shall impair the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the Obligors,
and the failure of the Servicer to provide access as provided in this Section as
a result of such obligation shall not constitute a breach of this Section.
(g) Upon request, the Servicer shall furnish to the Trustee, within
five Business Days of such request, a list of all Receivables (by account number
and name of Obligor) then held as part of the Trust Estate.
(h) The Servicer shall deliver to the Trustee, promptly after the
execution and delivery of each amendment to any financing statement, an Opinion
of Counsel stating that, in the opinion of such Counsel, either (i) all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Trustee in
the Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (ii) no such action is
necessary to preserve and protect such interest.
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SECTION 11.03 LIMITATION OF RIGHTS OF NOTEHOLDERS.
(a) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Trust Estate, nor entitle its legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust
Estate, nor otherwise affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.
(b) No Noteholder shall have any right to vote (except as expressly
provided in this Agreement) or in any manner otherwise control the operation and
management of the Trust Estate, or the obligations of the parties to this
Agreement, nor shall anything set forth in this Agreement, or contained in the
terms of the Notes, be construed so as to constitute the Noteholders from time
to time as partners or members of an association; nor shall any Noteholder be
under any liability to any third person by reason of any action pursuant to any
provision of this Agreement.
SECTION 11.04 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and the obligations, rights and remedies of
the parties under this Agreement shall be determined in accordance with such
laws, including Section 5-1401 of the General Obligation Law of New York, but
otherwise without regard to conflict of laws provisions.
SECTION 11.05 NOTICES.
All demand, notices and communications under this Agreement shall be in
writing, and either personally delivered, mailed by certified mail, return
receipt requested, or sent by facsimile transmission, and shall be deemed to
have been duly given upon receipt (i) in the case of the Issuer or the Servicer,
to the agent for service as specified in Section 2.10 of this Agreement, or at
such other address as shall be designated by the Issuer or the Servicer in a
written notice to the Trustee; (ii) in the case of the Backup Servicer or
Trustee, at the Corporate Trust Office; and (iii) in the case of the Rating
Agency at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇. Any notice required or
permitted to be mailed to a Noteholder shall be given by first class mail,
postage prepaid, at the address of such Noteholder as shown in the Note
Register. Any notice so
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mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Noteholder shall receive
such notice.
SECTION 11.06 SEVERABILITY OF PROVISIONS; COUNTERPARTS.
(a) If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid or
unenforceable in any jurisdiction, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the Notes, or the
rights of the Noteholders.
(b) This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original, and all of which
shall constitute but one and the same instrument.
SECTION 11.07 ASSIGNMENT.
Notwithstanding anything to the contrary contained in this Agreement,
except as provided in Sections 6.04 and 7.03 and as provided in the provisions
of this Agreement concerning the resignation of the Servicer, this Agreement may
not be assigned by the Issuer or the Servicer without the prior written consent
of the Noteholders evidencing not less than 66 2/3% of the Voting Interests.
SECTION 11.08 NO PETITION.
Each of the Servicer and the Trustee covenants and agrees that prior to
the date which is one year and one day after the termination of this Agreement,
it will not institute against, or join any other Person in instituting against,
the Issuer any bankruptcy, reorganization arrangement, insolvency or liquidation
proceeding or other proceedings under any federal or state bankruptcy or similar
law. Notwithstanding the foregoing, nothing herein shall be deemed to prohibit
the Trustee from filing proofs of claim or otherwise participating in any such
proceeding instituted by another person. This Section 11.08 shall survive
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the termination of this Agreement or the termination of the Servicer or the
Trustee, as the case may be, under this Agreement.
SECTION 11.09 NOTEHOLDER DIRECTION.
Notwithstanding anything to the contrary contained in this Agreement,
provided the Trustee has sent out notices to Noteholders in accordance with this
Agreement, the Trustee may act as directed by a majority of the outstanding
Noteholders (but only to the extent the Noteholders are entitled under this
Agreement to so direct the Trustee with respect to such action) responding in
writing to the request contained in such notice; PROVIDED, HOWEVER, that
Noteholders representing at least 66 2/3% of the outstanding principal balance
of the Notes as of the time such notice is sent to Noteholders must have
responded to such notice from the Trustee. In addition, the Trustee shall not
have any liability to any Noteholder with respect to any action taken pursuant
to such notice if the Noteholder does not respond to such notice within the time
period set forth in such Notice.
SECTION 11.10 NO SUBSTANTIVE REVIEW OF COMPLIANCE DOCUMENTS.
Other than as specifically set forth in this Agreement, any reports,
information or other documents provided to the Trustee are for purposes only of
enabling the sending party to comply with its document delivery requirements
hereunder and the Trustee's receipt of any such information shall not constitute
constructive or actual notice of any information contained therein or
determinable from any information contained therein, including the Issuer or the
Servicer's compliance with any of its covenants, representations or warranties
hereunder.
****
[ signatures appear on next page ]
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IN WITNESS WHEREOF, the parties have caused this Indenture and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
CREDITRUST SPV99-1, LLC,
as Issuer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
CREDITRUST CORPORATION,
as Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and
Chief Executive Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as
Trustee and as Backup Servicer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
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EXHIBIT A
Creditrust Corporation
FORM OF Monthly Servicer Report
Collection Period:
Payment Date:
Determination Date:
Pursuant to the Indenture and Servicing Agreement dated as of August 1,
1999 (the "Indenture and Servicing Agreement") among Creditrust SPV99-1, LLC, as
Issuer, Creditrust Corporation, as servicer (the "Servicer"), and Norwest Bank
Minnesota, National Association, as trustee (in such capacity, the "Trustee")
and as backup servicer, the Servicer is required to provide the Trustee with
certain information each Determination Date with respect to the Creditrust
Receivables-Backed Notes, Series 1999-1. Capitalized terms used in this
certificate have the meanings set forth in the Indenture and Servicing
Agreement.
A. Collections $
Third Party Fees ________
Net Proceeds $
Repurchases
Sales
Interest on Collections Account
Interest on Note Account ________
Available Funds received for the related Collection Period $
Total funds in the Collection Account as of Determination Date ===============
Customer refunds due to servicer
Accrued legal and court costs due to servicer
Non Collection Period Net Proceeds in the Collection Account
Interest on Note Account ________
Available Funds $
===============
B. Information Regarding the Trustee Fee and Backup Servicing Fee
(I) the total amount of the Trustee Fee and Backup Servicing
Fee accrued with respect to such Payment Date $_______
(II) the total amount of the accrued and past due Trustee Fee
and Backup Servicing Fee with respect to prior Payment Date
$_______
(III) the total amount of payments made on such Payment Date
with respect to the Trustee Fee and Backup Servicing Fee $_______
(IV) the total amount of the accrued and unpaid Trustee Fee and Backup
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Servicing Fee to be carried forward to subsequent Payment Dates
$_______
C. Information Regarding the Servicing Fee
(I) the total amount of the Servicing Fee accrued with respect to
such Payment Date $_______
(II) the total amount of the accrued and past due Servicing Fee
with respect to prior Payment Dates $_______
(III) the total amount of payments made on such Payment Date
with respect to the Servicing Fee $_______
(IV) the total amount of the accrued and unpaid Servicing Fee to
be carried forward to subsequent Payment Dates $_______
D. Amount of Transition Fees $_______
E. Information Regarding Payments With Respect to Notes
(I) the total Interest Distributable Amount for such Payment Date $_______
(a) the total amount of accrued interest for such Payment Date $_______
(b) the total amount of Interest Carryover Shortfall from
the immediately proceeding Payment Date $_______
(II) the total amount of payments made on such Payment Date
with respect to the Interest Distributable Amount $_______
(III) the total amount from clause (II) derived from withdrawal
from the Reserve Account $_______
(IV) the total amount of the reduction of the Note Balance made
on such Payment Date $_______
(V) the total amount from clause (IV) derived from a withdrawal
from the Reserve Account $_______
(VI) the outstanding Note Balance after payments made in respect
thereof on such Payment Date $_______
F. Information Regarding the Reserve Account
(I) the Reserve Fund Reimbursement Amount for such Payment
Date, to be deposited in the Reserve Account $_______
(II) the total amount of any deposits to the Reserve Account on
such Payment Date $_______
(III) the total amount required in the Reserve Account after
withdrawals, if any, from such account made on such payment Date $_______
(IV) Interest credited to the account due Issuer $_______
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(V) Current Reserve Account Balance $_______
(VI) Excess Reserve Fund Balance due Issuer $_______
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G. Information Regarding Removed Receivables
(I) the account number of each Removed Receivables with
respect to such Payment Date $_______
(II) the amount of the Release Payment with respect to the
Removed Receivables described in clause (I) $_______
H. The Company's stockholder's equity meets the requirements
of Section 7.07(m) of the Indenture and Servicing Agreement
Stockholder's Equity at [date] $_______
I. Number of account officers and number of active accounts at
end of Collection Period $_______
$
===========
Creditrust Corporation,
as Servicer
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President and Chief Financial Officer
Dated: _________________
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EXHIBIT B
FORM OF TRUSTEE'S CERTIFICATE
Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") of Creditrust Receivables Backed Notes, Series 1999-1 Trust created
pursuant to the Indenture and Servicing Agreement dated as of August 1, 1999
(the "Indenture and Servicing Agreement") among Creditrust SPV99-1, LLC, as
Issuer, Creditrust Corporation, as Servicer, and Norwest Bank Minnesota,
National Association, as trustee and backup servicer, does hereby release its
security interest in and to all of the Receivables identified in the attached
Servicer's Remittance Date Certificate as "Removed Receivables," for which [the
Issuer has a repayment obligation pursuant to Section 2.05 or 6.02] [the
Servicer has a repayment obligation pursuant to Section 3.04] of the Indenture
and Servicing Agreement, and all security and documents relating thereto.
Capitalized terms used herein that are not otherwise defined shall have
the meanings ascribed thereto in the Indenture and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
___________, ____.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By: _______________________________
Name:
Title:
-125-
EXHIBIT C
FORM OF NOTE
Creditrust SPV99-1, LLC
Creditrust Receivables - Backed Notes, Series 1999-1
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS. THE TRANSFER OF THIS NOTE IS SUBJECT
TO CERTAIN RESTRICTIONS AND CONDITIONS SET FORTH IN THE INDENTURE AND
SERVICING AGREEMENT UNDER WHICH THIS NOTE IS ISSUED (A COPY OF WHICH IS
AVAILABLE FROM THE TRUSTEE UPON REQUEST).
Note Number: U.S. $__________
CUSIP #_____________________
Creditrust SPV99-1, LLC, a limited liability company organized under
the laws of Delaware, (the "Issuer"), for value received, hereby promises to pay
[ ] or registered assigns, (a) upon presentation and surrender of this Note
(except as otherwise permitted by the Indenture referred to below), the
principal sum of _______________________________ United States Dollars (U.S.
$____________) on ______ 15, 2004 (the "Final Payment Date") unless the unpaid
principal of this Note becomes due and payable at an earlier date by declaration
of acceleration, call for redemption or otherwise, (b) interest on the fifteenth
day of each month, commencing October 15, 1999, at the rate equal to [ %] per
annum on the unpaid principal amount hereof until the principal hereof is paid
or duly provided for. Interest shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. The interest so payable on any Payment Date
will, as provided in the Indenture hereinafter referred to, be paid to the
Person in whose name this Note is registered at the close of business on the
Record Date for such interest payment.
Payments in respect of principal and interest due on any Payment Date
of this Note shall be payable by wire transfer in immediately available funds to
a Dollar account maintained by the Noteholder or, if a wire transfer cannot be
effected, by Dollar check delivered to the Noteholder. Notwithstanding the
foregoing, the final payment of interest and principal due on
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this Note shall be made (except as otherwise provided in the Indenture) only
upon presentation and surrender of this Note at the Corporate Trust Office of
the Trustee. The person in whose name this Note is registered shall be treated
as the owner hereof for all purposes.
Except as specifically provided herein and in the Indenture, the Issuer
shall not be required to make any payment with respect to any tax, assessment or
other governmental charge imposed by any government or any political subdivision
or taxing authority thereof or therein.
Unless the certificate of authentication hereon has been executed by
the Trustee by the manual signature of one of its Responsible Officers, this
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
This Note is one of a duly authorized issue of Creditrust Receivables -
Backed Notes, Series 1999-1 of the Issuer (the "Notes"), limited in principal
amount to U.S. $[_______] issued and to be issued under an indenture dated as of
August 1, 1999 (the "Indenture") between (among others) the Issuer and Norwest
Bank Minnesota, National Association (the "Trustee," which term includes any
successor trustee as permitted under the Indenture). Reference is hereby made to
the Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Issuer, the Trustee and the Noteholders
and the terms upon which the Notes are, and are to be, authenticated and
delivered.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Indenture.
The Notes are issuable only in definitive, fully registered form
without coupons, in minimum denominations of $1,000,000 and integral multiples
of $1,000 in excess thereof.
The principal of each Note shall be payable at the Final Payment Date
thereof unless the unpaid principal of such Note becomes due and payable on an
earlier date by declaration of acceleration, call for redemption, or otherwise.
Title to Notes shall pass by registration in the Note Register kept at
the Corporate Trust Office. No service charge shall be made for exchange or
registration of transfer of this Note.
If an Event of Default shall occur and be continuing, the Notes may
become or be declared due and payable in the manner and with the effect provided
in the Indenture. The remedies of the Noteholder hereof, as provided herein or
in the Indenture, shall be cumulative and concurrent and may be pursued solely
against the assets of the Issuer consisting of the Trust Estate. No failure on
the part of the Noteholder in exercising any right or remedy hereunder shall
operate as a waiver or release thereof, nor shall any single or partial exercise
of any such right or remedy preclude any other further exercise thereof or the
exercise of any other right or remedy hereunder.
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AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated as of: August ____, 1999
Creditrust SPV99-1, LLC
By:
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
Norwest Bank Minnesota, National Association
as Trustee
By:
----------------------------------
Responsible Officer
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EXHIBIT D-1
FORM OF TRANSFEROR CERTIFICATE
______ __, 199_
Norwest Bank Minnesota, National Association
Norwest Center
Sixth and Marquette
MAC ▇▇▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Operations (Creditrust Receivables-Backed Notes,
Series 1999-1)
Re: Creditrust Receivables-Backed Notes, Series 1999-1
(the "Notes")
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by ____________________ (the "Transferor") to _______________________
(the "Transferee") of a Note (the "Transferred Note") [having an initial
principal balance as of August __, 1999 (the "Closing Date") of $_____________].
The Notes were issued pursuant to the Indenture and Servicing Agreement (the
"Indenture and Servicing Agreement"), dated as of August 1, 1999, among
Creditrust SPV99-1, LLC, as issuer, Creditrust Corporation, as servicer, and
Norwest Bank Minnesota, National Association, as trustee. All terms used herein
and not otherwise defined shall have the meanings set forth in the Indenture and
Servicing Agreement. The Transferor hereby certifies, represents and warrants to
you, as Note Registrar, that:
1. The Transferor is the lawful owner of the Transferred Note
with the full right to transfer such Note free from any and all claims
and encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has
(a) offered, transferred, pledged, sold or otherwise disposed of any
Note, any interest in any Note or any other similar security to any
person in any manner, (b) solicited any offer to buy or accepted a
transfer, pledge or other disposition of any Note, any interest in any
Note or any other similar security from any person in any manner, (c)
otherwise approached or negotiated with respect to any Note, any
interest in any Note or any other similar security with any person in
any manner, (d) made any general solicitation by means of general
advertising or in any other manner, or (e) taken any other action,
which (in the case of any of the acts described in clauses (a) through
(d) hereof) would constitute a distribution of any Note under the
Securities Act of 1933, as amended (the "Securities Act"), or would
render the disposition of any Note a violation of Section 5 of the
Securities Act or any state securities laws, or would require
registration or qualification of any Note pursuant to the Securities
Act or any state securities laws.
-129-
Very truly yours,
------------------------------
(Transferor)
By:___________________________
Name:_________________________
Title:________________________
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EXHIBIT D-2
FORM OF TRANSFEREE CERTIFICATE
______ __, 199_
Norwest Bank Minnesota, National Association
Norwest Center
Sixth and Marquette
MAC ▇▇▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Operations (Creditrust Receivables-Backed Notes,
Series 1999-1)
Re: Creditrust Receivables-Backed Notes, Series 1999-1
(the "Notes")
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by ____________________ (the "Transferor") to _______________________
(the "Transferee") of a Note (the "Transferred Note") [having an initial
principal balance as of August __, 1999 (the "Closing Date") of $_____________].
The Notes were issued pursuant to the Indenture and Servicing Agreement (the
"Indenture and Servicing Agreement"), dated as of August 1, 1999, among
Creditrust SPV99-1, LLC, as issuer, Creditrust Corporation, as servicer and
Norwest Bank Minnesota, National Association, as trustee. All terms used herein
and not otherwise defined shall have the meanings set forth in the Indenture and
Servicing Agreement. The Transferee hereby certifies, represents and warrants to
you, as Note Registrar, that:
1. The Transferee is acquiring the Transferred Note for its
own account for investment and not with a view to or for sale or transfer in
connection with any distribution thereof, in whole or in part, in any manner
which would violate the Securities Act of 1933, as amended (the "Securities
Act"), or any applicable state securities laws.
2. The Transferee understands that (a) the Notes have not been
and will not be registered under the Securities Act or registered or qualified
under any applicable state securities laws, (b) neither the Issuer nor the
Trustee is obligated so to register or qualify the Notes and (c) the Notes may
not be resold or transferred unless they are (i) registered pursuant to the
Securities Act and registered or qualified pursuant to any applicable state
securities laws or (ii) sold or transferred in transactions which are exempt
from such registration and qualification and the Note Registrar has received
either (A) certifications from both the Transferor and the Transferee
(substantially in the forms attached to the Indenture and Servicing Agreement)
setting forth the facts surrounding the transfer or (B) an Opinion of Counsel
satisfactory to the Note Registrar with respect to the availability of such
exemption, together with copies of the certification(s) from the Transferor
and/or Transferee setting forth the facts surrounding the transfer upon which
such opinion is based.
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3. The Transferee understands that it may not sell or
otherwise transfer any portion of its interest in the Transferred Note except in
compliance with the provisions of Section 5.03 of the Indenture and Servicing
Agreement, which provisions it has carefully reviewed, and that the Transferred
Note will bear a legend substantially to the following effect:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND MAY
NOT BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT IN
COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THE
TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN RESTRICTIONS AND CONDITIONS SET
FORTH IN THE INDENTURE AND SERVICING AGREEMENT UNDER WHICH THIS NOTE IS ISSUED,
A COPY OF WHICH IS AVAILABLE FROM THE TRUSTEE UPON REQUEST.
4. Neither the Transferee nor anyone acting on its behalf has
(a) offered, pledged, sold, disposed of or otherwise transferred any Note, any
interest in any Note or any other similar security to any person in any manner,
(b) solicited any offer to buy or accept a pledge, disposition or other transfer
of any Note, any interest in any Note or any other similar security from any
person in any manner, (c) otherwise approached or negotiated with respect to any
Note, any interest in any Note or any other similar security with any person in
any manner, (d) made any general solicitation by means of general advertising or
in any other manner, or (e) taken any other action, that (in the case of any of
the acts described in clauses (a) through (d) hereof) would constitute a
distribution of any Note under the Securities Act, would render the disposition
of any Note a violation of Section 5 of the Securities Act or any state
securities law or would require registration or qualification of any Note
pursuant thereto. The Transferee will not act, nor has it authorized or will it
authorize any person to act, in any manner set forth in the foregoing sentence
with respect to any Note.
5. The Transferee has been furnished with all information
regarding (a) the Issuer, (b) the Notes and distributions thereon, (c) the
Indenture and Servicing Agreement, and (d) all related matters, that it has
requested.
6. The Transferee is an "accredited investor" as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act and has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Notes; the Transferee has sought
such accounting, legal and tax advice as it has considered necessary to make an
informed investment decision; and the Transferee is able to bear the economic
risks of such an investment and can afford a complete loss of such investment.
-132-
Very truly yours,
------------------------------
(Transferee)
By:___________________________
Name:_________________________
Title:________________________
-133-
EXHIBIT D-3
FORM OF TRANSFEREE CERTIFICATE
FOR QIBs
______ __, 199_
Norwest Bank Minnesota, National Association
Norwest Center
Sixth and Marquette
MAC ▇▇▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Operations (Creditrust Receivables-Backed Notes,
Series 1999-1)
Re: Creditrust Receivables-Backed Notes, Series 1999-1
(the "Notes")
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by ____________________ (the "Transferor") to _______________________
(the "Transferee") of a Note (the "Transferred Note") [having an initial
principal balance as of August __, 1999 (the "Closing Date") of $_____________].
The Notes were issued pursuant to the Indenture and Servicing Agreement (the
"Indenture and Servicing Agreement"), dated as of August 1, 1999, among
Creditrust SPV99-1, LLC, as issuer, Creditrust Corporation, as servicer, and
Norwest Bank Minnesota, National Association, as trustee. All terms used herein
and not otherwise defined shall have the meanings set forth in the Indenture and
Servicing Agreement. The Transferee hereby certifies, represents and warrants to
you, as Note Registrar, that:
1.The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A ("Rule 144A") under the Securities Act of
1933, as amended (the "Securities Act"), and has completed one of the
forms of certification to that effect attached hereto as Annex 1 and
Annex 2. The Transferee is aware that the sale to it is being made in
reliance on Rule 144A. The Transferee is acquiring the Transferred Note
for its own account or for the account of a qualified institutional
buyer, and understands that such Note may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that
the resale, pledge or transfer is being made in reliance on Rule 144A,
or (ii) pursuant to another exemption from registration under the
Securities Act.
-134-
2. The Transferee has been furnished with all information
regarding (a) the Notes and distributions thereon, (b) the nature,
performance and servicing of the Receivables, (c) the Indenture and
Servicing Agreement, and (d) any credit enhancement mechanism
associated with the Notes, that it has requested.
Very truly yours,
------------------------------
(Transferee)
By:___________________________
Name:_________________________
Title:________________________
-135-
ANNEX 1 TO EXHIBIT D-3
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and Norwest Bank Minnesota, National Association, as Note
Registrar, with respect to the Note being transferred (the "Transferred Note")
as described in the Transferee Note to which this certification relates and to
which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial officer,
a person fulfilling an equivalent function, or other executive officer of the
entity purchasing the Transferred Note (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933 ("Rule 144A") because (i)
the Transferee owned and/or invested on a discretionary basis $ / in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) [Transferee must own and/or invest on a discretionary
basis at least $100,000,000 in securities unless Transferee is a dealer, and, in
that case, Transferee must own and/or invest on, a discretionary basis at least
$10,000,000 in securities.] and (ii) the Transferee satisfies the criteria in
the category marked below.
(0) Corporation, etc. The Transferee is a corporation (other than
a bank, savings and loan association or similar institution),
business trust, partnership, or any organization described in
Section 501(c)(3) of the Internal Revenue Code of 1986.
(0) Bank. The Transferee (a) is a national bank or a banking
institution organized under the laws of any State, U.S.
territory or the District of Columbia, the business of which
is substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto, as of a date not more than 16 months
preceding the date of sale of the Note in the case of a U.S.
bank, and not more than 18 months preceding such date of sale
for a foreign bank or equivalent institution.
(0) Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
-136-
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto, as of a date not more than 16 months
preceding the date of sale of the Note in the case of a U.S.
savings and loan association, and not more than 18 months
preceding such date of sale for a foreign savings and loan
association or equivalent institution.
(0) Broker-dealer. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934 and we
owned and invested, on a discretionary basis, for our own
account or the accounts of other qualified institutional
buyers, in the aggregate at least the amount of securities
specified below (not less than $10 million), calculated as
provided in Rule 144A, as of the date specified below.
(0) Insurance Company. The Transferee is an insurance company
whose primary and predominant business activity is the writing
of insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by the
insurance commissioner or a similar official or agency of a
State, U.S. territory or the District of Columbia.
(0) State or Local Plan. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
(0) ERISA Plan. The Transferee is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
(0) Investment Advisor. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940.
(0) Other. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under
subsection (a)(1) of Rule 144A pursuant to which it qualifies.
Note that registered investment companies should complete
Annex 2 rather than this Annex 1.)
--------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
3. The term "securities" as used herein does not include (i securities
of issuers that are affiliated with the Transferee, (ii) securities that are
part of an unsold allotment to or subscription by the Transferee, if the
Transferee is a dealer, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned
-137-
but subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the Transferee
did not include any of the securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the Transferee
used the cost of such securities to the Transferee, unless the Transferee
reports its securities holdings in its financial statements on the basis of
their market value, and no current information with respect to the cost of those
securities has been published, in which case the securities were valued at
market. Further, in determining such aggregate amount, the Transferee may have
included securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it is familiar with Rule 144A
and understands that the parties to which this certification is being made are
relying and will continue to rely on the statements made herein because one or
more sales to the Transferee may be in reliance on Rule 144A.
--- -- Will the Transferee be purchasing
Yes No the Transferred Note only for the
Transferee's own account?
6. If the answer to the foregoing question is "no", then in each
case where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Transferred Note
will constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties any
updated annual financial statements that become available on or before the date
of such purchase, promptly after they become available.
-138-
-------------------------------------------
Print Name of Transferee or Adviser
-------------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-139-
ANNEX 2 TO EXHIBIT D-3
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and Norwest Bank Minnesota, National Association, as Note
Registrar, with respect to the mortgage pass-through certificate being
transferred (the "Transferred Note") as described in the Transferee Note to
which this certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive officer
of the entity purchasing the Transferred Note (the "Transferee") or, if the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because the Transferee is
part of a Family of Investment Companies (as defined below), is an executive
officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in
Rule 144A because (i) the Transferee is an investment company registered under
the Investment Company Act of 1940, and (ii) as marked below, the Transferee
alone owned and/or invested on a discretionary basis, or the Transferee's Family
of Investment Companies owned, at least $100,000,000 in securities (other than
the excluded securities referred to below) as of the end of the Transferee's
most recent fiscal year. For purposes of determining the amount of securities
owned by the Transferee or the Transferee's Family of Investment Companies, the
cost of such securities was used, unless the Transferee or any member of the
Transferee's Family of Investment Companies, as the case may be, reports its
securities holdings in its financial statements on the basis of their market
value, and no current information with respect to the cost of those securities
has been published, in which case the securities of such entity were valued at
market.
(0) The Transferee owned and/or invested on a discretionary basis
$ in securities (other than the excluded securities referred
to below) as of the end of the Transferee's most recent fiscal
year (such amount being calculated in accordance with Rule
144A).
(0) The Transferee is part of a Family of Investment Companies
which owned in the aggregate $______in securities (other than
the excluded securities referred to below) as of the end of
the Transferee's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or
-140-
investment advisers that are affiliated (by virtue of being majority owned
subsidiaries of the same parent or because one investment adviser is a majority
owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps. For purposes of determining the aggregate
amount of securities owned and/or invested on a discretionary basis by the
Transferee, or owned by the Transferee's Family of Investment Companies, the
securities referred to in this paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands tha
the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A.
--- --- Will the Transferee be
Yes No purchasing the Transferred
Note only for the
Transferee's own account?
6. If the answer to the foregoing question is "no", then in each
case where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Transferred Note will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
-----------------------------------------
Print Name of Transferee or Adviser
-----------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
-141-
IF AN ADVISER:
----------------------------------------
Print Name of Transferee
Date:
----------------------------------
-142-
EXHIBIT E
BACKUP SERVICER FIELDS
Customer Information Fields Receivable Information Fields
--------------------------- -----------------------------
Primary Debtor's Name Type of Account
Primary Debtor's Social Security Number Date Purchased
Primary Debtor's Mailing Address Charged-off Balance
Secondary Debtor's Name Charged-off Date
Secondary Debtor's Social Security Number Name of Seller
Account Home Phone Number Seller Assigned Account Number
Account Work Phone Number Negotiated Settlement Amount
Debtor ID Last Payment Date
Total Amount Paid to Date
Next Payment Amount
Total Amount Outstanding
Package ID
-143-
EXHIBIT F
With respect to Creditrust Receivables-Backed Notes, Series 1999-1, pursuant to
Sections _____ and _____ of the related Indenture and Servicing Agreement dated
August ___, 1999, we will:
For the period ended December 31, 1999, and for every four month period
thereafter by the 60th day after month end,
1. Test for daily transfer of funds from First Union Deposit Account
________________ into First Union Trust Department Collections
Account _________________ (the blocked account).
2. Trace daily deposit from Mozart receivables ledger to First Union
deposit account.
3. Select randomly for each month, 30 customer payment items from the
Mozart daily deposit summaries for Pool 1999-1 and:
A) Trace individual payment item to timely posting in Mozart
receivables ledger.
B) Verify that the individual payment item was properly applied to
Pool 1999-1.
4. Select randomly for each month, 30 customer payment items from the
Company's receivables ledger (i.e. Mozart database) and:
A) Trace total for the day to First Union Deposit Account deposit
slip.
B) Agree the following to the Mozart daily deposit summary for that
day
1) Amount of payment.
2) Date of payment (must be within one business day of posting to
the receivables ledger (i.e. Mozart database)).
5. Agree Mozart receivables daily postings to Mozart monthly summary of
daily deposits.
6. Select the last two days of each month and three random dates
during each month and verify the prior ending day balances to
beginning day cumulative payments received.
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7. If any exceptions are found in either sample, expand that sample to
60 items and report all exceptions.
8. Recalculate all calculations on each monthly servicer report.
9. Agree all other amounts that are greater than or equal to $1,000 in
the four month servicer reports for each four month period to the
Company's bank statements, subsidiary ledgers, Norwest investment
revenue summaries, the Indenture and Servicing Agreement (dated August
___, 1999), or prior period servicer report, as appropriate.
10. Report all exceptions.
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SCHEDULE A
SCHEDULE OF RECEIVABLES
[See CD-ROM delivered to Trustee]
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(EXECUTION COPY)
SCHEDULE B
MINIMUM CUMULATIVE NET PROCEEDS
Period Ending Minimum Cumulative Net Proceeds
($)
February 2000 *
August 2000 *
February 2001 *
August 2001 *
February 2002 *
August 2002 *
February 2003 *
August 2003 *
February 2004 *
August 2004 *
*Text omitted pursuant to a request for confidential treatment filed separately
with the Securities and Exchange Commission.
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